How do entrepreneurs pay off

Taxes for the self-employed

Paying taxes as a self-employed person

You have to pay taxes on the sales and profits that you generate from your business activities. The taxes for the self-employed depend, among other things, on the legal form of the company. However, you should already deal with the subject of taxes for the self-employed before setting up a business, even if you consider the subject of taxes to be difficult.

Admittedly, taxes for the self-employed can be confusing at first if you have little knowledge in this area. For this reason, we have listed the most important taxes for the self-employed and will explain them in more detail below.

Who pays what? Control at a glance

In the following table you will find the different types of tax at a glance. Then we will explain these in more detail.

Taxes for the self-employedWho pays the tax?
Sales tax or sales taxevery company can be claimed as input tax at the tax office; You then have to pay the sales tax that you show on your invoice to the tax office; if you use the small business regulation, you do not have to show sales tax on the invoice
Income taxnatural persons, small businesses or GbR
Corporation taxCorporations such as GmbH, UG, Limited, AG, cooperative
Business taxall traders - freelancers do not pay any trade tax
Input tax deductionAll entrepreneurs subject to VAT can deduct input tax
income taxEmployer pays for employees, find out more about payroll taxes and payroll accounting

How do you do taxes and accounting?

Taxes, bookkeeping, annual financial statements - a tax advisor will help you reliably. The tax advisor can relieve you of a lot of work so that you can concentrate on the core tasks of your company. We would be happy to recommend a suitable tax advisor on site at a transparent price - let us make you a non-binding offer.

But accounting software can also relieve you of a lot of work and, for example, automatically make the monthly advance tax return and create an annual financial statement according to EÜR. The software also saves you a lot of time when you create offers and invoices.

Income tax for the self-employed

  • All natural persons must pay income tax.
  • If you have a partnership (sole proprietorship, merchant, GbR or OHG), you pay income tax on the profit that you receive proportionately from the company's profit.
  • If you are making a loss, you will not have to pay any income tax.
  • The basic tax-free allowance, which increases annually, is not taxable for the self-employed.

Corporate income tax for the self-employed

  • Legal entities have to pay corporation tax instead of income tax.
  • Corporate income tax is payable on the profits of corporations such as GmbH or AG.
  • There are two tax liabilities. One is fully liable to corporation tax if the company's registered office is in Germany. Limited corporation tax liability if the registered office and management are abroad, but there is income in Germany.
  • Since 2010 this tax has been 15% for the self-employed.

Business tax for the self-employed

  • This tax for the self-employed affects the company. Agriculture and the liberal professions are excluded from this.
  • This means that almost all domestic companies and sole proprietorships are subject to trade tax, which is levied by the municipalities in which the company is based.
  • A lot of money can be saved every year through the optimal choice of location.
  • Companies subject to trade tax submit their trade tax returns as part of their tax returns.

Input and sales tax for the self-employed

  • Every self-employed person is obliged to invoice the sales tax, or sales tax, which is paid to the tax office. This is generally 19%, for food 7%.
  • Sales tax is therefore levied on almost all sales that you make domestically.
  • If, on the other hand, you purchase goods or services in advance, you can deduct the VAT calculated on them from the VAT you have to pay.

Tax ABC for the self-employed

  • The subject of taxes for the self-employed is sometimes tough. It's good that you know where to ask and see.
  • Here you will find information on current tax issues, frequently asked questions and important details. Specialist articles from tax consultants also provide assistance.

Avoid mistakes in taxes for the self-employed

Taxes for the self-employed and the legal form: Choose the right legal form for your self-employment. Because the establishment of a GmbH means that you have to pay wage tax for the managing director's salary right from the start. However, at the beginning of the establishment, there is hardly any talk of profit.

Taxes for the self-employed and missing contracts: If founders get help from family members and friends without paying them, the company gives away taxes. Because every family member has numerous income tax exemptions that are so wasted.

Taxes for the self-employed and low prepayments: If the income tax prepayments are too low, the back payment can cause financial problems. A voluntary upward adjustment therefore makes sense.

Taxes for the self-employed and sales tax: The extension of the deadline for the pre-registration of the sales tax also means the delay in the possible input tax reimbursement. You should also keep your receipts in a safe place, otherwise you will be giving away input tax deductions.

Taxes for the self-employed and insufficient bookkeeping: Missing or incorrect receipts or incorrect account management lead to late or underpaid sales tax.

Put taxes in safe hands: We recommend a tax advisor for your company.

Find a tax advisor

Tax and accounting

In addition to the individual taxes that arise for companies, you will also be confronted with numerous accounting questions in everyday business life. Be it how to write the invoice correctly, make the advance VAT return or prepare the annual financial statements. We have put together the bookkeeping chapter for you.

Author: Für-Grü editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Grü for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Grü, he advised listed companies in the field of financial market communication.