English Deutsch

What is self-employment
and how does it work?

Before you start

Before you register as a self-employed, you need a solid understanding of the differences compared to a job as an employee and how exactly you want to build your business. 
Here we answer the most difficult questions most people ask our Tax-Coaches

What you need to know about self-employment

I’m an employee, thinking to become self-employed. What do I need to consider?

Before you start, you should have developed a clear business idea. Have your offer clearly defined and know who your ideal target audience is. You might also have to research the regulations and specific permits or licenses for your business type.
Also, know what financial resources you need to get your business off the ground. Remember that next to business expenses you will need to set aside money for insurance costs and taxes. With software like Accountable, you always see how much you earn and how much taxes you have to pay.
Then, you will have to register your business with the tax office and apply for a tax number.

What are the requirements to start? Do I need a degree or anything specific?

In most cases, you can start as a self-employed professional without a specific degree or qualifications.
However, some professions, like doctors or lawyers, require specific degrees and professional qualifications. Others, such as web designers or consultants, may not require formal qualifications, but having relevant skills, experience, and certifications can enhance your credibility and competitiveness.

How much money do I need to become self-employed? Can I get founder grants?

There is no fixed amount required by law to start as a self-employed individual in Germany, but you should have enough capital to cover your initial business expenses, including registration fees, office space, living expenses, and taxes. Here are some potential sources of funding and support:

  • Gründerzuschuss: If you are currently receiving unemployment benefits (Arbeitslosengeld I), you may be eligible for this founder’s grant. It provides financial support, whereas the amount and duration of the grant can vary based on your specific circumstances.
  • KfW Start-up Loan: The KfW Bank Group offers a range of financing options for founders and small businesses, including low-interest loans and equity financing.
  • EXIST Business Start-up Grant: If your business idea is based on technology, the EXIST program supports you start-up phase with funding, coaching, and access to networks.
  • Local Grants and Support: Depending on your location in Germany, there may be regional support programs available to entrepreneurs. You find them listed here.
Can I start a side gig when I’m also an employee?

Yes, you can generally start a self-employed part-time job while being employed at the same time. But before you do:

  • Check that there are no restrictions in your employment contract related to starting a side gig
  • Make sure you understand what additional tax obligations you have and what taxes you have to pay
  • Remember that your main job has to take up most of your working time and is your main income. Because if your side gig income exceeds a certain threshold, you may be required to make additional social security contributions
  • Make sure you register your self-employment with the Finanzamt, even if it’s a side gig
I’m currently unemployed, can I become self-employed?

Yes, generally it is totally possible to become self-employed if you were previously unemployed. Also, it can be difficult to finance your start into self-employment. Therefore you can apply for the Gründungszuschuss (start-up subsidy) or the Einstiegsgeld (introductory grant), to receive financial support so that you can successfully become self-employed from unemployment.

Consider that, if you are receiving unemployment benefits (Arbeitslosengeld I) and you register a self-employed business, you are typically no longer seen as unemployed, and your benefits may be adjusted or suspended.
Also, if you receive Arbeitslosengeld II, also known as Hartz IV, the Arbeitsagentur (Job Center) will assess your business income, and if it’s below a certain threshold, you may still be eligible for some benefits to supplement your income.

What types of self-employment are there?

In Germany, there are different types of self-employment, depending on the activity and legal status. Here are the most relevant types:

  • Freiberufler are self-employed persons working in so-called “free professions,” such as doctors, lawyers, tax consultants, architects, artists, and journalists.
  • Freie Mitarbeiter are persons who usually work for a company on a fee basis. They are self-employed but are often tied to one or more companies on a long-term basis
  • Freelancers usually offer their services on a project basis to private clients or companies. They are not tied to a specific employer but work independently.
  • Gewerbetreibende (trade persons) are entrepreneurs who require a business registration. They engage in commercial activities to make a profit. Examples include retailers, craftsmen, and restaurateurs.
  • Kleinunternehmer (small business owners) are self-employed people who earn less than the limit of 22,000€ per year and can thus benefit from the small business regulation.
  • Unternehmergesellschaft (UG) is a legal form that makes it possible to start a business with little capital. It can later be converted into a GmbH if sufficient profit is made.

Ask a Tax Coach

Would you like to know more about self-employment in Germany? You can send us your individual questions and our Accountable Tax Coaches will personally respond within one day.