The sole proprietorship (Einzelunternehmen) is the most common and simplest legal form for small businesses in Germany. It requires no share capital, no notary and no complex corporate procedures.

What an Einzelunternehmen is

An Einzelunternehmen is run by one natural person. The owner trades under their own name, optionally with a business name, and does not create a separate legal entity. The key legal consequence is full, unlimited personal liability with all current and future assets.

Registering in a day

Starting involves just two mandatory steps: registering the trade (Gewerbeanmeldung) with the local authority and then submitting the tax registration questionnaire in ELSTER. Unless the activity is one of the liberal professions (Freiberufler), the trade registration is usually confirmed on the same day, or online within a few days.

Bookkeeping and simplified accounts

Sole traders with annual turnover of no more than €800,000 and profit of no more than €80,000 are exempt from double-entry bookkeeping and preparing a balance sheet. An annual income statement (EÜR) submitted with their personal income tax return is enough.

When an entry in the commercial register (e.K.) is needed

If the business needs a commercial set-up (several employees, a warehouse, high turnover), it becomes a registered merchant – eingetragener Kaufmann (e.K.). The entry in the commercial register (section A) is made through a notary and increases the trust of wholesale partners.

What to check

  • Assess the professional risks of your activity to protect your personal assets.
  • Take out business liability insurance (Betriebshaftpflichtversicherung) before your first deals.
  • Open a separate business account to keep personal and business finances clearly apart.
  • Look out for the IHK's letter: membership starts automatically when you register the trade.

Example situation

A computer repair technician registers an Einzelunternehmen for a small fee at the Hamburg district office (Bezirksamt), opens a business account with an online bank and starts work without any notary appointment.

Next step

An Einzelunternehmen is ideal for quickly launching services with low financial risk; as the business grows, it can be converted into a UG or GmbH.

Official information on this topic

Checklists and examples are organisational recommendations. Requirements depend on the procedure, the city and your situation; check them with the relevant office before you act. Please discuss legal and tax questions with an authorised professional.

This article was prepared with the help of AI. The example illustrates the approach and does not describe a client case.