Micro-enterprisesRisk reduction
Someone starting out alone in business can begin with a micro-enterprise, avoiding major costs and additional responsibilities for employees, and can find out whether the business idea will actually work and whether a market exists for it.
Little need for finance
Someone making a “micro” start can usually manage this from his own pocket and is independent of banks and collateral for loans.
Test phase
Many people starting in business assume that their income from business will be too small to cover their own cost of living. With a micro-enterprise, it is possible to test the waters and see what potential there is. And to find out whether one is suited to self-employment. So a micro-enterprise is suitable for the early phase of a company and for entrepreneurs who also have a regular income from a position in employment.
Time requirements
Not every entrepreneur has time to run a “full-time company”. This is particularly true of women with children. But there may be enough time for a part-time firm. And more time can be found if a company is set up together with other people.
Extra income
A micro-enterprise can be used in order to “top up” a regular salary earned in an employed position.
Taxes
As a small businessperson, you can be exempted from turnover tax if you do not exceed certain thresholds. You must then produce your invoices without value-added tax, and can therefore logically not claim prior tax deduction.
Welfare insurance
As a rule, self-employed people need to pay their own health, pension and long-term care insurance. But there are exceptions: ask your health insurance fund.
Fees to chambers
Businesses and craft firms must be registered with the chamber of industry and commerce or the chamber of crafts. You only pay fees to the chamber of industry and commerce if your revenues exceed a threshold of EUR 5,200. The chambers of crafts can reduce or waive the fees. This is a matter for the respective chamber; there is no uniform arrangement.
Different rules apply to professional services; in some cases, the professional rules prescribe compulsory membership of the relevant chamber (e.g. for doctors, architects).
Watch out for fictitious self-employment
Micro-enterprises (e.g. working for only one contractor) are in many cases “fictitious self-employment” (“scheinselbständig”). They are then treated by the welfare funds like salaried employees and must pay half of the contributions towards pension, health, long-term care and unemployment insurance. The other half must be paid by the (main) contractor. The courts may also force the latter to give the worker a permanent job. For this reason, contractors often take care to find out exactly whether the person working for them is “fictitiously self-employed” or not.
The Association of German Pension Insurance Carriers [Deutsche Rentenversicherung Bund] offers a status determination procedure. The result tells you and your contractor whether you are fictitiously self-employed or actually self-employed. You can find more on this topic on the Internet at
www.deutsche-rentenversicherung-bund.de (www)
You can also call for information at: 0800 10 00 480 70