The individual company
The individual company is the smallest form of personal enterprise. There is only one farmer who must also bear the entire risk of the company. A limitation of liability is, unfortunately, not possible, so that private property could also be used as a liability.
- Establishment / formal requirements: The sole proprietorship can be established informally. In the case of commercial activities, it is sufficient to register a relevant trade with the responsible trade office.
- What do freelancers have to consider? Freelancers only have to inform the tax office that they are now self-employed.
- Liability risks: The sole proprietor is fully and directly liable to the creditors of the company. A limitation of liability - for example on the assets of the company - is not possible.
- Costs / formalities: The sole proprietorship is the cheapest option to become self-employed. Since a minimum capital requirement is not required by law, a sole proprietorship can be set up very quickly.
- Running costs: The running costs are also very manageable as a result, as there are no special requirements for the preparation of the annual financial statements or the appointment of representative bodies. Taxation: The profit of the sole proprietorship is subject to immediate taxation by the owner as part of his income tax return.
- The type of profit determination - balance sheet or income surplus calculation - depends on the sales and profit situation of the company. If the revenue amounts to more than EUR 350.000 pa or the profit is more than EUR 30.000 pa, a balance sheet must be prepared upon request by the tax office (§ 141 Tax Code - AO). Freelancers, on the other hand, are not obligated to produce a balance sheet even if these limits are exceeded, but can continue to determine their profit through a revenue surplus calculation.
- In a commercial Company There is also the trade tax to be paid, which arises from a profit of EUR 24.500.
- Crediting of trade tax: The double tax burden on profit - through income and trade tax - is reduced by the fact that the trade tax is largely offset against the income tax to be paid (Section 35 EStG).
- Financing: As a result of the full liability of the entrepreneur, this legal form enjoys a high degree of trust from the financing banks. Collateral is usually initially provided by the company itself or in whole or in part by the entrepreneur himself.
If several people want to pursue a freelance or commercial activity together, then the legal form of a company under civil law (GbR) offers itself. The foundation is quick, inexpensive and without any great formalities; if only liability were not ...
- Formation / Formalities: The GbR is created by the conclusion of a corresponding company agreement. There is no written form for this, so that a GbR can be established by oral agreement or conclusive behavior.
- If no written company agreement has been concluded, the statutory provisions of the German Civil Code (BGB) which are generally disadvantageous for all parties concerned shall apply. It is therefore advisable to conclude a written company agreement at least for the main points (especially representation, tasks, distribution of profits).
- In the case of a commercial GbR, the company is registered with the responsible commercial office; freelance companies are registered exclusively with the financial authorities.
- Liability risks: Creditors of a GbR can in any case avail themselves of the company itself for possible payment arrears. In addition, however, they have the right to claim the payment directly from the shareholders. These are liable for the debts of the company as a joint debtor (§ 421 BGB), ie the creditor can assert his claim either against one, several or all partners. Here, too, the shareholders are liable directly and unrestrictedly with their entire private assets. This possible liability claim is still possible for a period of five years after leaving the company (so-called post-liability, § 736 para. 2 BGB).
- Costs / formalities: The ongoing costs for this legal form are not to be classified as particularly high. Depending on the sales and earnings situation, the GbR can even determine its profit - taking into account the value limits according to § 141 AO - by means of a simplified revenue surplus calculation. There is no obligation to account.
- There are, however, no further formalities, in particular with respect to withdrawals or the distribution of profits. However, since more than one person is affected, all deviations from the original company contract should always be documented and signed by all partners.
- Taxation: GbR is an independent taxable entity in the areas of trade tax - insofar as it is commercial - and VAT is thus the debtor of the corresponding tax amounts.
- The profit is allocated to the respective shareholders on the basis of the agreed profit distribution key under a special taxation procedure (separate and uniform determination of the tax bases) and is subject to the respective individual income tax. It is irrelevant whether the profits are withdrawn from the shareholders or left to the company for capital reinforcement. Accumulation of the profit is therefore only possible to a limited extent.
- Financing: As in the case of individual companies, the legal form of banks and credit institutions enjoys a high reputation due to the direct and unlimited liability of the shareholders. When concluding loan agreements, however, it is important to consider whether the company itself takes out a loan or whether only one shareholder is a borrower (for example, to finance his company share).
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