Small business register in NRW

A small business is a company that does not exceed a profit of 80,000 euros and an annual turnover of 800,000 euros**.

Small Business Registration: Advantages and disadvantages

A small business offers many advantages. On the one hand, the foundation is quick and uncomplicated, as there are no complex formalities. On the other hand, small businesses can benefit from various tax advantages, such as the small business scheme. Other benefits include the low start-up and administration costs, as well as the flexibility offered by a small business.

So you can also ideally operate your company or your self-employment with a small business on a part-time basis or expand or reduce it at any time.

Disadvantages for small businesses are the unlimited personal liability with your private assets, turnover limits, restrictions on the company name and also a possibly lower reputation among business partners due to a mostly lack of share capital.

To start a business, you must register a business and provide information about the type of business, the form of business and the persons involved. You can register a small business either in person, in writing or electronically.

In North Rhine-Westphalia, you can also easily register a small business online via the [online application for a business registration] (/application/business registration service selection/).

On the Wirtschafts-Service-Portal.NRW, the fees are based on the General Administrative Fees Regulation NRW. For natural persons and authorized partners of partnerships that are not legal persons, the fees on the Wirtschafts-Service-Portal.NRW amount to 26 euros.

The notification obligation to register a small business exists from the beginning of the commercial activity. Whether or not you need to register a trade at all for an activity depends on several factors. It is advisable to clarify at the beginning of the self-employment whether it is a freelance activity (according to the Income Tax Act). Information can be provided here by tax consultants, the tax office or organisations such as the [Institut für Freie Berufe (IFB)] (https://ifb.uni-erlangen.de/). When registering as a business, it is irrelevant whether the business should be a small business or not. The registration process is the same.

If you want to run a small business, there are a few things to consider. A small business usually has less bureaucratic effort than a GmbH or AG, but you should still be well informed and advised in advance so as not to overlook important steps. The following steps must be taken into account for you when registering a small business:

• Develop idea: Think about what you want to do as a small business or small business owner.
• Create business plan: Create a business plan that describes your business idea, audience, marketing strategies, financing, and other important aspects.
• Check legal requirements: Check if you meet the legal requirements to start a small business. In Germany there is freedom of trade, i.e. no special permit is required for the exercise of most trades. In some industries, however, special permission is still required.
• Commercial registration: Register your small business with the relevant trade authority. All traders (according to [§ 14 GewO Gewerbeordnung] (https://www.gesetze-im-internet.de/gewo/__14.html)) are obliged to notify the commencement of their commercial activity. Our [Foundation Assistant](/Enterprise Foundation/Foundation Assistant/) will help you to find the correct applications for your request.
• Request tax number: Apply for a tax number and a VAT identification number for your small business at the tax office by submitting the questionnaire for tax registration to the tax office.
• Complete insurance: Take out any necessary insurance. Check which insurance policies make sense for your small business. These include, for example, company liability insurance or occupational disability insurance.
• Registration with the Chamber of Commerce or Chamber of Commerce: All traders are obliged to become members of the Chamber of Industry and Commerce (IHK) or the Chamber of Crafts (HWK). You will receive the registration form from the competent chamber.
• Registration with the Employment Agency: If you want to employ employees, you must apply for a company number (BBNR) at the Employment Agency.

As a small business or small business owner, you must file an annual tax return. A distinction is made between VAT and income tax. Up to a turnover of 25,000 euros per year, you do not have to calculate and pay sales tax. However, you may not claim any input tax in this case. For the income tax return, there are special forms that you will receive from the tax office. The following rules apply to taxes in the small business sector:

• Income tax return: Entrepreneurs who run a small business as a sole proprietorship are obliged to declare their profits in their income tax return.
• Commercial tax: Small businesses are subject to trade tax. The amount of the tax depends on the profit of the small trade and the respective trade tax levies of the respective municipality. Up to the exemption of 24,500 euros, there is no business tax.
• VAT: A small business must pay taxes on turnover from its supplies and services if it is not subject to the small business scheme. As a small business operator or small business operator, you have the option of actual taxation here. The sales tax is only due in the context of the sales tax advance declaration when the payment is received. This is how liquidity can be maintained.
• Wage tax: If you want to employ your own employees in the small business, you must also pay the wage tax to the tax office.

Accounting for small businesses
As a small business operator or small business operator, you are not affected by many provisions of the Commercial Code. For example, you are not obligated to keep a record of inputs and outputs. However, it is recommended and may also be necessary from a tax point of view. Here, the simple accounting as well as the income-surplus-account (EAA) is sufficient for the determination of profits. If you have no experience with accounting, it is recommended to hire a tax consultant or an accountant.

Note that in some cases you may need a permit or a permit to carry out the activity, in addition to the business license, for example if you want to work in the food or health sector.

As small business operators, all partners are personally and fully liable with their private assets – i.e. you or other partners involved (e.g. in the form of a GbR).

Starting a small business can be a great way to start as an entrepreneur. Here are some tips that can help you create a successful start-up with a small business:

• Early planning: Good and early planning is helpful in starting a small business.
• Considered funding: Check if you need funding. There are various options for this, such as loans, promotions or crowdfunding.
• Overview of bureaucracy: Find out about the bureaucratic requirements when starting a small business (e.g. registrations for the business, with the CCI and with the tax office).
• Effective marketing: Plan a marketing strategy right from the start to successfully place your products or services on the market.
• Possible exemption from contributions: Under the IHK Act, small business operators can be exempted from the payment of the IHK or HWK contribution in full for two years and in part for a further two years. To do so, the following conditions must be met: The annual profit of the small business must be less than 25,000 euros. If the annual profit is less than 5,200 euros, you as a small business operator or small business operator can be completely exempted from the payment of the membership fee.
• Promotion: If you want to start a business in North Rhine-Westphalia or have already set up your own business, you can in many cases benefit from funding.