5 Thinks You Need To Know Before You Open an Online Business in Germany

We have to agree on one thing, Germany is one of the biggest markets in Europe.
Not only is it flourishing in e-commerce but also has been flourishing with its offline markets.
According to Worldometers, Germany is ranked as the fourth country in the world with the strongest economy in terms of GDP.
This statement by itself speaks volumes on a venture into the e-commerce market of Germany.
This article takes a step further to give you all the information you need to know before you open an online business in Germany. Let’s have a look;
- Get your Budgeting and finances together
There is no straight answer to how much you can spend when starting a business in Germany.
Starting a business will depend on how much money you have to begin with, and how large will business is.
It is always expensive to start an online business and for this reason, you might have to secure a bank loan.
There are some German loan services that offer favorable interest rates for startups. Find all the information you need before borrowing loans in Germany through reading reviews at De.collected.reviews.
After getting the necessary finances, you have to budget and stick to the budget. Remember the following when writing down your budget;
- The cost of registering your business
- The running costs (Utility costs)
- Operational costs ( supplies, full-time employees, e.t.c.)
- Insurance cost
- Tax money
- Understand how taxes are done in Germany
Every business owner will tell you the importance of knowing your corporate tax chart.
Most countries tend to raise the tax rate for foreign companies.
Good news to all foreign companies in Germany. The tax rate for foreign companies is the same as for resident companies. At the moment the rate is at 15{d5f2c26e8a2617525656064194f8a7abd2a56a02c0e102ae4b29477986671105} company tax, 19{d5f2c26e8a2617525656064194f8a7abd2a56a02c0e102ae4b29477986671105} VAT, 15{d5f2c26e8a2617525656064194f8a7abd2a56a02c0e102ae4b29477986671105} Capital Gains tax.
In Germany, there are about six different types of taxes to pay; Trade tax, VAT, income tax, corporation tax, payroll tax, and Church tax.
Of course, it may vary depending on the set regulations and the type of business you are running.
More information about taxation in Germany should be provided to you by your business financial adviser.
- Business registration
We all know the importance of registering your business. There are many repercussions for failure to do so including heavy fines.
One of the reasons for registering your business is for taxation purposes as well as to legitimize your business.
In Germany, there are no specific requirements for the registration of an online business that is different from the other offline business.
You only have to meet the general requirement for regular business.
To register your business in Germany, you must have the following;
- A Trade license
To register your business you must have a trade license. You apply for your trade license through your trade advisor. A trade license will only apply for trading business as they will be subject to paying trade tax.
- A tax ID
You will receive a tax ID once you have a valid business address.
- A German or European bank account
It is not difficult to open a German or an European bank account only to have his proof of residency and the and other necessary documents.
A European bank account is acceptable however I would recommend that you have a German account for a better experience.
Where to apply for registration will depend on your business address. In most cities application is made to the trade office. In some cities, the application is made to the chambers of industry and e-commerce.
After successful registration, your business will be incorporated in Germany.
- Online regulations
As mentioned in point 3 above, there are no specific regulations in Germany for e-commerce.
However, the e-Commerce Directive of the European Union lays a few pointers regarding the conduct of online business.
For instance, every business must provide all the necessary consumer information regarding their products and services.
Advertisement and marketing have also been regulated here. It is upon a business owner to ensure all the necessary rules have been abided by his/her business.
- Human resource
Another important factor you might need for your online business in Germany is the personnel to help you run the business.
It might be employing a freelancer to manage your website or tech-related activities in your business or employing full-time workers.
You will also need to have a virtual assistant or a translator for better communication with your customers. Not every target audience understands English and you may have to translate all your content to German.
All these are factors to consider before opening your business in Germany.