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Starting a business as a side hustle is the ideal way for many to get started with self-employment. It offers the opportunity to test a business idea with manageable risk while maintaining financial security. However, to ensure a successful launch, you should consider a few important aspects.
Part-time businesses can be started, for example:
- in addition to a regular permanent position - provided your employer has agreed - "after work" or during parental leave
- if you are still studying, to try out an idea during your studies.
Part-time business ventures are attractive for various reasons.
- Risk reduction:
By receiving a regular income from your main job, you can reduce the financial risk of starting your own business. - Gradual Development:
Starting a business as a side hustle allows you to slowly build and test the business before fully committing to it. - Security:
Your existing employment or your status as a student offers social security and continuity. - Financing:
Income from the "main activity" can help to finance the initial phase of the start-up. - Experience:
Starting a business as a side hustle allows you to get a taste of entrepreneurship without immediately bearing the full entrepreneurial risk, and based on your experiences, you can perhaps expand your professional independence later – or not pursue it further: In any case, this makes it easier for you to make the right decision.
Legal aspects
Generally, you are allowed to hold multiple jobs or even work freelance on the side, as long as these activities don't overlap in time or negatively impact your work performance.
It's essential to review your employment contract. In many cases, secondary employment requires approval or is subject to specific conditions.
Legal form
For a part-time business, setting up a sole proprietorship is the simplest and most cost-effective option. You don't need any minimum capital or special contracts, and simple accounting (profit and loss statement) is sufficient. While you are liable with your full personal and business assets, the risk should still be manageable. Furthermore, you have the option of changing the legal structure later to reduce your liability.
If you want to start a business with others, a general partnership (GbR) or a limited liability company (GmbH) are good alternatives.
Tip: Regarding legal forms, we recommend our article: " Which legal form is right for my company? ".
Registration
Even a part-time or very small business must be registered with the relevant trade office .
If it is a freelance activity, you must apply for a tax identification number from the relevant tax office .
Tip: You can find out which registrations are necessary and where to do them in our article " Guide to Authorities for Prospective and Established Businesses ".
If you are only looking for the authority responsible for your request, you can also use the " Guide to Authorities - GründerMV ".
Steer
As a part-time entrepreneur, you must pay taxes on both your employment income and your self-employment income. (Note: You may be able to take advantage of the small business regulation according to § 19 of the German Value Added Tax Act!)
Personal insurance
Health insurance companies determine the extent to which self-employed individuals, whether part-time or micro-enterprises, must pay their own health, pension, and long-term care insurance contributions by assessing whether their self-employment is classified as primary or secondary. The contribution amount depends on this classification.
Some self-employed individuals are also required to contribute to the statutory pension insurance scheme (e.g., self-employed teachers, artists, and journalists (see Section 2 of the German Social Code, Book VI )).
Caution: Beware of bogus self-employment! It is advisable to have a status determination procedure carried out by the German Federal Pension Insurance Fund (Deutsche Rentenversicherung Bund) early on to avoid potential back payments to social security.
Chamber membership
Every business (trade or craft) that is registered with the relevant trade office automatically becomes a member of the local Chamber of Industry and Commerce (IHK) or Chamber of Skilled Crafts (HWK).
Chamber of Industry and Commerce (IHK): Small and micro-enterprises are exempt from contributions if they are natural persons or partnerships that are not entered in the commercial register and whose trade income under the Trade Tax Act, or – where no trade tax assessment has been determined for the assessment year – whose profit from business operations calculated under the Income Tax Act does not exceed €5,200 (IHKG § 3).
Chamber of Skilled Crafts (HWK): Founders registering their business for the first time are exempt from membership fees to the Chamber of Skilled Crafts for the year of registration. For the second and third years, they only have to pay half of the basic fee and no additional fee; for the fourth year, they are still exempt from paying the additional fee. Requirements: They must be natural persons (not partnerships or corporations) whose annual profit does not exceed €25,000.
Business owners (natural persons) who do not perform essential sub-activities of a craft (so-called minor craft activities, see Section 1 Paragraph 2 No. 1 of the Crafts Code) are members of either the Chamber of Industry and Commerce or the Chamber of Skilled Crafts. Regardless of which chamber they belong to, they are fully exempt from contributions if their business income or profit from business operations does not exceed €5,200 per year.
Start-up support or financial assistance:
The ERP Start-up Loan – StartGeld – can also be used for part-time start-ups if the project is expected to become full-time in the medium term. The application is submitted to a bank or savings bank and forwarded from there to KfW.
And the Microcredit Fund Germany offers loans of a few thousand euros for founders through its " My Microcredit" program. Small businesses should contact a local microfinance provider, not a bank or savings bank.
Specifically in Mecklenburg-Western Pomerania, there is a microloan program that can be applied for through GSA MV .
If the income generated from self-employment is insufficient to cover living expenses, supplementary social security benefits (formerly known as unemployment benefit II ) can be applied for.
Fact sheet: Tips for small business start-ups
More information
Further information on the topic of starting a business can be found on the website of the Federal Ministry for Economic Affairs and Climate Protection ( BMWK ) under: " Start-up at a glance " or on the start-up platform.
