What tax implications does starting a business have?
January 19, 2023 | 50,00 EUR | answered by Robert Lehmann
Dear Lawyer,
I intend to start my own business and now I am faced with the question of what tax consequences are associated with it. I have no experience in the area of business taxation and therefore I am somewhat unsure about how my tax situation will change with the establishment of a company.
Currently, I am employed and pay taxes on my income based on my tax class. I have heard that there are different types of taxes to consider when starting a business, such as sales tax, trade tax, or corporate tax. I wonder if I as a business owner also have to pay income tax and how my overall tax burden will change.
Furthermore, I am concerned about possible tax pitfalls that I should consider as a founder, in order to avoid unpleasant surprises later on. I would like to know what tax obligations await me and how I can best prepare for the tax situation of my company.
Could you please explain in detail the tax consequences of starting a business and what steps I should take to optimize my tax situation as an entrepreneur? I am grateful for your support and look forward to your expert advice.
Sincerely,
Lorenzo Ullmann
Dear Mr. Ullmann,
thank you for your inquiry regarding the tax implications of starting a business. It is understandable that as a prospective entrepreneur, you may be uncertain and looking to inform yourself about the various tax aspects. I would be happy to explain in detail which types of taxes and obligations you as a business owner need to consider.
First and foremost, it is important to know that when starting a business, various types of taxes may apply. The most important taxes that you as a business owner need to consider are value added tax, trade tax, corporation tax, and income tax.
Value added tax is a consumption tax levied on the sale of goods and services. As a business owner, you are usually required to charge value added tax on your services and remit it to the tax office. The amount of value added tax depends on the respective tax rate and the turnover of your business.
Trade tax is a tax levied on the profits of business owners. It is collected by municipalities and is based on the trade profit of your business. On the other hand, corporation tax applies to corporations such as GmbHs and AGs and is levied on the profits of these companies.
As a business owner, you also need to pay income tax on your profits. Unlike employees who pay income tax through the wage tax class, you as a business owner must calculate your income tax yourself and remit it to the tax office. It is important to accurately record all business expenses and income to ensure an optimal tax situation.
To avoid tax pitfalls, it is advisable to consult with a tax advisor or a specialist lawyer in tax law early on. They can provide comprehensive advice and help you optimize your tax situation as a business owner. Additionally, you should familiarize yourself with the tax obligations that you will face as a business owner to avoid any unpleasant surprises.
Overall, it is important to address the topic of business taxation early on and seek professional assistance to optimize your tax situation as a business owner. I hope that this information has been helpful to you and I am available to answer any further questions you may have.
Sincerely,
Robert Lehmann
Tax Law Attorney
