What tax aspects do I need to consider when starting a business?
March 7, 2024 | 40,00 EUR | answered by Georg Nitsche
Dear tax advisor,
I am currently planning to start my own business and I have some tax-related questions that are making me uncertain. My name is Christian Richter, I am 36 years old and I have been working as an employee so far. Now I want to take the step into self-employment and start my own company in the field of IT services.
My main question is: What tax aspects do I need to consider when starting a business? I am unsure about which taxes I will have to pay, which form of taxation is most suitable for my company, and how to correctly fill out my tax returns. I also wonder if there are special opportunities for self-employed individuals to save taxes and what tax reliefs are available for start-ups.
I am also unsure if I should register as a small business owner according to §19 UStG and be exempt from VAT, or if I should opt for standard taxation. Furthermore, I am curious about how I can deduct my business expenses for tax purposes and what tax obligations I need to fulfill as a business owner.
I am worried that I might make tax mistakes during the business start-up process that could cost me dearly in the future. Therefore, it would be very helpful for me to receive specific information and advice from an experienced tax advisor to ensure that I handle my tax matters correctly from the beginning.
Thank you in advance for your support and I look forward to your expert advice.
Sincerely,
Christian Richter
Dear Mr. Richter,
Thank you for your inquiry and interest in my tax advisory services. It is understandable that you are considering the tax aspects and uncertainties before starting your own business. I would like to explain some important points that you should consider when starting a business.
Firstly, it is important to clarify which taxes you will be subject to as a self-employed individual. As a sole proprietor in the IT services sector, you will generally have to pay income tax on your profits. Additionally, value-added tax (VAT) may be relevant, depending on your revenue and the nature of your services.
Regarding the form of taxation, you have the option to choose between the regular taxation system and the small business regulation according to §19 UStG. Under the regular taxation system, you must charge and pay VAT on your services to the tax office, but you can also claim input tax. As a small business owner, you are exempt from VAT, but you do not need to show VAT on your invoices.
It is advisable to research thoroughly beforehand and possibly seek tax advice to choose the optimal form of taxation for you. Business expenses can also be deducted for tax purposes to reduce the tax burden. It is important to keep all receipts carefully and clearly document expenses.
As a start-up, you may be eligible for tax relief under certain conditions. This includes the use of investment allowances or tax incentives for start-ups. You may also benefit from carrying forward losses in the first few years if you are not making profits yet.
In terms of your tax obligations as a business owner, it is important to submit regular VAT returns, file income tax returns on time, and correctly determine profits. Proper bookkeeping is also essential to avoid any issues in case of a tax audit.
Lastly, I recommend that you contact an experienced tax advisor early on to professionally handle your tax affairs and avoid potential mistakes. A good tax advisor can provide you with personalized tips and information tailored to your specific situation.
I hope this information is helpful to you and I am happy to answer any further questions you may have. I wish you success in starting your own business in the IT services sector.
Sincerely,
Georg Nitsche
