Registering as self employed - Germany

Any advice/information on this dilemma would be most welcome!

I quit my job at the end May after two years of full time employment. I registered as unemployed afterwards, but as I quit and was not fired I did not receive any money. I incurred a "Sperrzeit" of 12 weeks, which was fine. In the meantime I went on holiday, during which time the arbeitsamt wanted to meet me. I told them I was on holiday and asked if I could reschedule the appointment and incurred another "Sperrzeit" of 4 weeks. Irrelevant, just some background info!

I have now found a new job as a freelance teacher and am currently in the process of registering as self employed. When I received the offer for my job, I immediately informed the arbeitsamt that I had found work. This was almost two weeks ago and I haven't heard from them yet.

I went to my accountant today who is helping me get set up as self employed and he told me that I now need a lot of forms and paperwork from the arbeitsamt before I go to the finanzamt. He also said it could take up to four weeks before I am fully registered, but I can work and send invoices for my services in the meantime.

Has anybody had this experience or been in a similar situation? I find the level of paperwork here rather overwhelming and though my German is quite good, it gets tricky when it comes to things like this where there are lots of technicalities! I thought I could just sign off from the arbeitsamt, as they haven't given me a cent and start working as self employed once all the paperwork was in order, but according to my accountant today it isn't that straight forward.

I would also appreciate any information you can give me about being self employed in general. Seems there are a lot of catches and surprises when it comes to German governmental organisations!

Thanks in advance to those who can help out.

Of course (on switch status and becoming s-e). There are tens of thousands of self-employed people in Germany and, if you look on this site, you'll see a lot of discussion (particularly on the Finance and Business boards).

Being self-employed here is very easy. You fill out one form from Finanzamt to register your status (note- you can get this fom on-line). You produce a year end summary of your net income (as well as doing the usual personal tax returns). You may have to fill out a VAT return (depending on scale / nature). End.

If your accountant is giving you the "it's so difficult and bureaucratic" nonsense, dump them and find one that knows what they are talking about. Life here is much easier if you avoid the common German line of making things seem far, far harder than they are. And you'd be well-advised to forget the "there are catches" line as well. Just because you don't understand it, that doesn't mean it has "catches" in it. It's a straightforward system, very much like, say, the UK one. I find being self-employed in Germany absurdly easy. It's self-fulfilling. Go on about how hard it is, and it probably will be. See it for the easy, low-tax, slacker life it usually is, and it's often a doddle.

Thanks Swimmer,

My problem is not with the registration of being self employed, but doing so having been registered as unemployed. Supposedly that's what makes things more complicated.
Also, I have read through the other posts on this, but none deal with this issue.

Keep all receipts. I usually find it easier to have a box or a file or a cubby-hole for them.


To help make it slightly easier for your accountant (and slightly cheaper for you), before you send the stuff off to your accountant, do this.

1. Take your bank statements.
2. Take your receipts.
3. PUt all the receipts and invoices that are mentioned on each individual sheet of the statement behind the sheet they come up on.

I bank with the Postbank and there are usually about six transactions on each sheet. So money gong out that you have paid to keep your business going (e.g. stamps, toner, stationery etc.) and money coming in (e.g. paid invoices) should be backed up by a piece of paper evidence.

You will need to send out consecutively numbered invoices.

What I do is this. I have a short code for the company (e.g. the initials or if it is just a company name of one word then the first three letters) plus a number. E.g. PWC-1, KPMG-2, AA-3, PWC-4


Also, keep a ledger of what you invoice. I have a nice hardbacked book and use two pages at the same time.

These are my headings (Keep in mind that I translate now):

Customer name
Invoice number
Description (of what I translated in case I have a follow-up translation)
Price (what I charge that company)
Total (price x number of lines) (in your case - price x number of lessons)
VAT (VAT of 19% on that price)
Total (Previous total plus VAT)
Invoice sent (date on the invoice)
Invoice paid (date on the bank statement)


Always ask your customer to mention the invoice number when making a payment. This will make it easier to check what bill has been paid.


You don't need to charge VAT yet, but you can. Keep in mind that you only have to earn EUR 17,500 in one year before you need to charge it. One year I earned quite a bit and didn't realise how low this threshold was. I had to pay VAT in retrospect. Customers aren't so pleased if you charge them retrospectively so I had to absorb most of that.

So... it might be better if you charge VAT from the word go. It will also make you look more successful.



Another thing to do is that whenever you are paid, put a proportion of that into a savings account. I have an instant access account with the Garanti Bank. They do mainly telephone banking. I used to shove 33% of everything that came in into that account. I have now upped it to 40%.

This money is to cover tax (of about 19%) and VAT (of 19%) and health insurance (which I pay yearly).

Oh, and I agree with swimmer. It's so much easier to be self-employed over here than in the UK.

hi, i just wanted to reopen this topic as no answer was ever given really....

I'm in a similar dilemma right now after having just moved to Berlin. I was self-employed until I came here with my husband in September, and plan to register as unemployed. I don't expect much in the way of benefits other than slightly cheaper transport costs, entrance to museums etc.

The thing is I want to start my own business next spring and register as self-employed. I'm starting to wonder if going through with the process of registering unemployed is going to be more hassle than it's worth. My German isn't great either so I'm pretty overwhelmed at the moment.... Any advice greatly appreciated!

As formerly self-employed/freelancing you aren´t entitled to unemployment benefits anyway ...

Good topic! Can someone explain a little more on the VAT? I just did some one-off translating work (I'm currently registered as unemployed with the Agentur fuer Arbeit), and need to write a receipt. Since I haven't earned any money at all in 2009 until now, do I have to worry about charging VAT? There's no way I'll come close to the 17500€ threshold Nina mentioned. Isn't that how 'mini-jobs work? ie if you earn less than 400€/month (average over a year, right?), then there's no worries about taxes?

Back to unemployed benefits, how do you get cheaper entrance to museums? I was just at the Porsche museum, but had no proof that I was unemployed, so didn't even both. I could've saved a few €...

Thanks!

dave

Sorry, I just did a search for VAT and came up with a bunch of hits there too!

When you register with the Finanzamt as a self-employed translator, you can choose whether you want to charge VAT or not (provided your turnover is <17500€). I'm not really sure what you're trying to do/did. You either need to be employed by the company you're working for or registered as self-employed. The Arbeitsagentur will probably want to know about this income too.

You register as unemployed of course (so you have the papers that prove it, otherwise we can all just say we are unemployed). The price you pay for a lot of "cheap" or "free" stuff from any state is usually engaging wih it, being processed by it and meeting the demands and obligations it puts on you in return.

If you go from being unemployed to being self employed, you should find out about getting the Gründungszuschuss from the Arbeit Agentur. If you qualify, you will get Arbeitslosengeld for 6 months even thought you are earning money. It's a lot of paperwork but it's worth it.

Also as a self employed person you can choose to pay for "Freiwillige Weiterversicherung gegen Arbeitslosigkeit" which will entitle you to Arbeitslosengeld if your business fails/you cant find new clients. It costs ca. 25 euro per month.