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Legal accounting aspects to consider in your country

27/06/2022
by Milton Quinteros Salas
GPEessen offers you some legal accounting guidelines that apply in your country and that you must take into account in order to carry out your business activities here on the platform.< /span>

Small business

To register a small business, you must meet certain requirements, observe sales limits and comply with tax obligations. Here is the most important information:

Requirements for registering a small business:

  1. Business registration: You must register your small business with the local trade office.
  2. Tax Office: You need a tax number, which you can apply for at the tax office and pay taxes on your income.
  3. Hygiene regulations: When you process food, you must comply with the necessary hygiene regulations and standards.

 Sales limits for small businesses:

Special sales limits apply to small businesses:

  • Sales limit for the small business regulation: Small businesses have special income limits. In Germany, the turnover limit for small businesses is 22,000 euros per year (as of 2021). This means that you can work up to this amount per year without paying VAT.

It is important to note that as a small business you cannot claim input tax, but you also do not have to show sales tax on your invoices. If your income exceeds the sales limit of 22,000 euros per year, you must convert your business into a regular business and pay sales tax.

Tax obligations for small businesses:

  • Sales Tax: If you apply the small business regulation, you are exempt from sales tax and do not have to submit advance sales tax returns. However, you are also not allowed to claim any input tax.
  • Income tax: You must report your winnings as income on your personal income tax return and pay income tax on them.
  • Trade tax: Small businesses are exempt from trade tax under certain circumstances. This depends on the amount of profit and the municipality in which the business is registered.

It is important to note that sales limits and tax regulations are subject to change. Therefore, it is advisable to contact your local tax office or a tax advisor to find out the current rules and obligations for your specific business.

Requirement: Keep all receipts and invoices related to your business activities so that you can present them to the tax office if necessary.

Sideline business: If you have another full-time job , you can register your hobby cooking activity as a side business.


Commercial

As a hobby chef who wants to offer and sell prepared food in Germany, here are the requirements that the tax office can impose:
  1. Commercial activity:

If you sell food regularly and with the intention of making a profit, the tax office can classify this as a commercial activity. In this case, you must register a business.

  • Tax registration: As soon as you are classified as a trader, you must register for tax purposes with the tax office and apply for a tax number.
  • Accounting and invoicing:You are required to keep proper accounting records and issue invoices for your sales.
  • Sales tax: Depending on the amount of sales, you could be assessed as having to pay sales tax. If applicable, you must calculate and pay sales tax.
  • Income Tax:Your income from selling food may be subject to income tax. You must file an income tax return and declare your income.
  • Operational Ausabeng: You can record operational expenses that are related to your business (e.g. purchasing ingredients, packaging materials ), deduct as business expenses.
  • Requirement to provide receipts:You must carefully keep all receipts and invoices related to your business so that you can present them to the tax office upon request.
  • Income estimate: If you do not declare all income properly, the tax office can make an estimate and demand additional tax payments.

    • It is important to note that tax regulations can be complex and vary depending on individual circumstances. Therefore, I strongly recommend consulting a tax advisor to ensure that you meet all tax requirements and do not have any problems with the tax office. Proper fulfillment of tax obligations is essential to avoid legal consequences.