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MY GERMAN CAREER

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‘Starting my own firm was my best decision’

In this week's My German Career Swede Erik Hansson tells The Local how starting his own translation business put him on the path to a success and how the German tax system holds businesses back.

'Starting my own firm was my best decision'
Photo: Submitted

Where do you live and what do you do?

I live in a small town outside Dresden where I have my own business called Hansson Übersetzungen GmbH; a specialist translation agency and language service provider of technical translations. As a Swedish native, I focus on translations from German into Swedish, but also cooperate with a network of different translators who can handle other language combinations.

What brought you to Germany and how long have you been here?

Being a poor student with empty pockets back in the 1980s, I quite often travelled in eastern and Central Europe. I got to know my German girlfriend here and decided to leave Sweden at the beginning of the 1990s. I have now lived in Germany for more than 22 years.

What is your professional background and how did you end up starting a business?

I have always been fascinated by foreign languages, countries and cultures, and knew as far back as in my early teens that I wanted to live abroad later on in life and if possible work with languages.

When I came to Germany in 1991, I got started as an English teacher for adults more or less by chance. Back in those days, less than one year after German reunification, there was a huge demand for English language trainers in different courses for unemployed adults in the eastern part of Germany.

In 1992, I decided to start my language service business which focused on different language services, covering training sessions, translations and interpreting.

Over the years, my clients who had ordered Swedish translations required translations into other languages as well. This was the start of my agency business.

What advice do you have for anyone considering starting a business as an immigrant?

Even if being your own boss often means that you have to work 16 hours for yourself instead of 8 hours for your employer, the decision to start my own business was one of my best ever.

As in all countries, starting a business takes a lot of energy, but the difference for immigrants in a foreign country is that you have to learn how the system works, i.e. understand the mentality of the people, get along with the bureaucracy, know which authorities to ask and whom to contact about taxes. I was lucky to find reliable and trustworthy consultants and partners right at the start. Knowing the language is definitely another important factor.

How important is it for you to be able to speak German?

Generally, you cannot simply take it for granted that you will get along with English everywhere and in order to integrate in German society, you really need to know the language.

From my personal point of view, it’s crucial to be able to understand and speak more or less perfect German, but honestly, this can also be the high demands I have set myself.

Especially for me as a translator from German into Swedish, it’s not only important to understand the documents I translate, I also need to recognize the language style to be able to catch “the spirit of a text.”

What are the best and worst parts about working in Germany?

The best parts are the friendly people in this region, its culture and the vibrant economy. On the other side, there is a daily struggle to deal with the bureaucracy which in my view still has a long way to go. For example, the taxation system is a riddle to most of the citizens, and even the tax accountants are sometimes at loss.

Do you plan on staying?

I am happy and satisfied with my career and am enjoying life in Germany. At the moment, I don’t see any reason for moving back to Sweden. I suppose time will hold the key for the future.

READ MORE: Germany’s top ten gap year jobs

The Local/tsb

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WORKING IN GERMANY

7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network. 

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