Ask a tax advisor on the topic of Business start-up

Start a side business

April 1, 2014 | 30,00 EUR | answered by Peter Lipp

Since this year, smoke detectors have been mandatory in Baden-Württemberg, and now I would like to start my own business as a part-time specialist for smoke detectors. This would involve selling, installing, and maintaining smoke detectors. I could do all of this as a franchise partner for a one-time fee of 500€ and a monthly fee of 129€. I work full-time as a construction mechanic in a 2-shift system.

One-time investment costs in the first month: 500€

These investment costs include the following:

Products:
- 1 FireAngel smoke detector (ST-620 DET)
- 2 FireAngel wireless detectors (ST-630 DET)
- 2 W2 wireless modules for the FireAngel ST-630 DET detector
- 1 thermosensor (HA-300-CE)
- 1 carbon monoxide detector (CO-9DE)
- 1 extinguishing spray (FA-600-DE)
- 1 adhesive pad

Advertising package:
- 1000 flyers
- 500 business cards
- 100 posters DIN A3
- 20 posters DIN A4
- Company presentation
- 10 x brochure with data sheets (DIN A4, 8 pages)
- 1 x order form block with 2 pages carbon paper
- 1 x installation block with 2 pages carbon paper
- 1 x maintenance contract with 2 pages carbon paper
- 1 x maintenance log with 2 pages carbon paper
- 1 USB stick with all files in digital form

- 1x video clip (approximately 50 seconds long) with listing on Google and YouTube; search engine optimized, specifically for your region

- Certified training "Q" Smoke Detector Specialist

Monthly franchise fee: 129€

This franchise fee includes the following:

- Your website with its own contact form for your region and a monthly total of approximately 12,000 visitors.

- Advertising measures (from flyers and posters to advertisements and promotions by our advertising agency)

- Training on new products

- Always having a point of contact by your side

How should I proceed, what do you advise me?

Peter Lipp

Dear seeker of advice,

For the activity mentioned above, you must first determine whether you are self-employed or employed. In the case of franchise agreements, there may be an obligation to follow instructions, in which case you would be considered a self-employed person similar to an employee.

Since this is not desired, I will assume that you are engaging in self-employment. First, you must register your business with the trade office. This information will automatically be forwarded to the tax office. Subsequently, you will receive a questionnaire for tax registration. This will collect core data on turnover and profit, primarily to determine correct tax prepayments.

Additionally, you must estimate your turnover to clarify the treatment for value added tax. If your turnover remains below €17,500 per year, you can opt for the small business regulation. This means your turnover is tax-free, but you cannot claim input tax.

For ongoing business operations, you must set up accounting and prepare a profit determination and tax returns at the end of the year.

I recommend starting with a small business plan, where you compare estimated income with expected expenses for a forecast period of three years. This will give you an idea of the profitability of your project.

I hope this adequately answers your question, but I am available for further questions if needed.