Duties: What does a tax consultant

Before we go into the matter of tax advisors in detail here, on the special tasks, risks in the selection of tax advisors, as well as tips and the “daily” work with the tax advisor. First, a very general look at the core areas that tax firms cover. This includes accounting, financial accounting, all payroll accounting and payroll for employees, plus other tasks.

What does a tax accountant do simply explained?

7 typical tasks of tax consultants in companies:

1. Advice on tax preparation and structuring
2. Bookkeeping and financial accounting
3. Payroll accounting and payroll
4. Profit and Loss Account (EÜR)
5. Tax returns (much more on this later)
6. Audits of tax assessments
7. Representation vis-à-vis tax office and court

Compare tax accountants: The 3 biggest risks

Are you looking for a good tax consultant nearby? In fact, the choice of tax advisor has long-term effects, because the collaboration is very intense.

Intensive, regular cooperation

After you sign, you are bound to the tax office in financial and tax aspects, from levies to queries, almost every week. Likewise for the payrolls, the advance VAT returns and, of course, for questions about tax structuring. The cooperation is therefore intensive, especially with small companies, self-employed and companies in growth, where many tasks are still done by the management itself.

Accordingly, a change of tax firm is not possible overnight. Companies are very closely intertwined with their tax advisor, through regular and intensive cooperation.

Monthly cost load

Tax accountants do not work for free, accordingly, your business will incur monthly costs.

1. Management costs
2. Cost per employee
3. Additional costs for consulting, testing, etc.

So, the tax consultant costs, more about this later, consist of 3 parts. First, the monthly accounting, it is charged according to the official fee table (later under “Costs”). This means for you, the higher your turnover in the company is, the more may be charged by your tax consultant. In addition, there are costs for the payroll of your employees in the second step. Each employee is charged extra. In the third step comes all that is apart from accounting and employees: additional questions, audits, documents, even the annual financial statement, all this costs money and by time. The hourly rates of your tax advisor, but also of the employees, are also on the invoice at the end of the month.

Losing money due to insufficient advice: training and motivation

The training to become a tax consultant is done relatively quickly, a course with about 200 hours, in the full-time seminar 2 to 4 months. After that comes an exam. This means that many tax consultants learn standards, not tax design.

Many tax advisors are therefore rather tax auditors

You take over the account assignment, bill employees properly and carry out the annual financial statement correctly. The question: Is that enough? Depending on the company, goals and scaling, a tax consultant should possibly bring more.

Lack of advice involves 2 risk factors, on the one hand losses due to missed advice (tax tips, structuring options) and at the same time risks due to too much advice (cost-benefit factor). Because, as you have learned, every additional minute is billed. Suddenly the monthly costs are no longer 400 Euro, 500 Euro or 800 Euro, suddenly there are 4,200 Euro on the bill for the current month, due to the many consultations and work paths (procurement of documents by employees up to examinations and the consulting time itself).

Especially for companies at the beginning, this can be a cost trap if the tax firm is not absolutely reputable. Until owners and managers notice this mistake, as I said, we are talking about small companies, years can pass. Then the costs have already exploded.

Paying tax means losing profits

Did you know? For many companies:

Taxes are the largest cost factor in the company

Speaking of which, what is actually your biggest, monthly expense (once you’re in the 5/6 figures)? Rent? Staff? For the majority of businesses, taxes are actually the biggest cost factor, looking at business tax, capital gains tax, etc. Accordingly, the quality of the advice you get from your tax advisor makes a lot of difference.

The following calculation example is intended to show how costs add up, also through overpaid taxes and through follow-up costs, since the missing money cannot be reinvested to generate more money.

Calculation example: costs and lack of reinvestment

Already 200 euros of additional losses due to lack of advice become 2,400 euros a year. To the losses, by too much taxes, come the costs for the tax consultant (additional services for advice). Even at 1 hour per month, say at a rate of 120 euros, you are again at 1,440 euros. Monthly 320 euros that can not be reinvested, so bring further follow-up costs: You are missing money for investments at the beginning. Every euro that is missing cannot be doubled by wise investments.

Even if after 3, 4 years you realize that the work is not good, how will you check after the fact, which bill was justified, which were not? So do without it and just change the tax advisor.

Keep this in mind if you want to hire a tax professional.

Checklist of the 3 biggest risks

Summarizing 3 risks once again:

• Intensive, regular cooperation; commitment and time for change
• Amount of monthly and additional costs
• In the long term: lose money (pay too much tax, plus costs for tax advisor, lack of reinvestment) due to lack of quality/quantity advice

Remember for the future, tax planning is often in your hands!

Find a tax accountant: The 3 best tips

After the dangers of choosing a tax advisor, now straight to the tips on how to find a good tax advisor.

Advertisements in search results on Google & Co.

First of all, the most important tip: Do not click on the advertisement! You are on the Internet looking for a tax consultant in Berlin-Mitte, Cologne or Hamburg and do it like 92% of the people, you type in your request in one of the popular search engines.

The first places in search engines are always paid ads, disguised as search results. The only indication of this is the small word “Ad”, sometimes “Sponsored”. These ad spots are extremely popular! Why? Almost every click here. From my experience, go directly to page two of the search results, here you will find fewer ads for one thing and also not the companies or tax offices that spend a lot of money on marketing.

Because, who pays the money for the marketing budgets? You, the client of the tax advisor.

Ratings on online portals

Besides search engines, comparison portals, online magazines and other online sources for recommendations are also popular. Pay attention to qualitatively and quantitatively meaningful opinions. So compare the number of reviews, because only one rating is not meaningful, sometimes even bought.

• More than 5-10 reviews
• Ratings with meaningful content

Recommendations from experienced self-employed people

Should you know other entrepreneurs, trust their experience and opinions.

Importantly, these people should be entrepreneurs, not private individuals. After all, the matter, tax advisor for companies, is different than for private individuals and their wages or salaries. But also remember that the contact has been working with the tax advisor for some time, ideally the experience should be longer than three, four years. If you ask entrepreneur friends who have just started their own business and have only been with a tax firm for a few months, the experience may be too short term.

So tax advisor tips are best from contacts who have been running a successful business themselves for more than five or ten years.

These 3 little tips sound simple, but are very effective in finding a good tax accountant near you. Law firms that are reputable, don’t incur unnecessary costs (marketing) and do solid work. Let’s recap these 3 simple tips.

Checklist: Tax consultant in the vicinity, 3 tips

3 Tips from the field, find a tax advisor:

1. Do not click on the advertisement in the search results (go directly to page 2)
2. Rating on online portals (more than 5 opinions)
3. Experiences and recommendations from successful entrepreneurs

Now that you’ve learned a lot, about the risks and dangers of being tied to an accountant, as well as tips on how to find a good accountant, including online, let’s get back to the more specific tasks your accountant performs for your business.

Tasks: Tax structuring, tax returns, wages, balance sheet & co.

If you have found a good tax advisor, then from now on it is mainly about these issues:

• Advice on tax preparation and structuring
• Tax returns (monthly filings and annual evaluations)
• Wages and salaries for employees
• Annual accounts

Advice on tax preparation and structuring

If you want to run a restaurant in the future, a small business with two, three employees, then monthly financial statements, annual financial statements are the A&O for you. But if you want to grow as a company, then the tax structure, or tax avoidance is one of the most important factors in choosing the right tax advisor for your company.

Tax advisors need to know the basics, as well as new tax legislation and, above all, ways to avoid taxes.

We do not want to delve too deeply into the subject of tax avoidance at this point. After all, there are experts for that! But it is important to emphasize, as mentioned before, taxes are, for the majority of businesses, the biggest cost, every month, every year. It gets even better:

Every euro that is not spent on taxes can be reinvested by you and thus generates a further return for you.

However, in the process of growth there are also changes in the legal form of enterprises. Considering a possible sequence, this development of the company could include the following stages:

• Sole proprietorship
• Limited liability company
• Ltd
• Stock corporation (AG)
• Holding (with subsidiaries)

Thus, tax consultants also help with the change of the individual legal forms of companies. Tax structuring has so many facets, each of which takes effect individually, depending on the company and its activities. With the three practical tips (above) to find a tax consultant, you can find such tax firms in any city, even in your district.

In everyday life, however, the tasks of a tax advisor for companies do not lie in the provision of advice, but in the processing of tax matters.

Processing of tax matters

Now we come to the central core of the work of a tax advisor, simply put: accounting. The processing of tax matters is pretty much the regular standard task of any tax office. In doing so, law firms evaluate the current previous month. If all queries are clarified, the preliminary returns, the evaluations, wages and other information, following the preparation, are transmitted directly to the tax office.

So every month the tax returns come in. Depending on the company’s structure, these include the wage tax return, the capital gains tax return and, for the majority of companies, the standard advance return for turnover tax.

Then every year comes the preparation of the various tax returns, depending on the business model and construct. The typical standards of the annual financial statements include, for example, the income tax return, the corporate income tax return, as well as the business tax returns, which in turn bring you to the realization: Taxes are the biggest cost in business!

After that, the tax firm prepares the balance sheets. Balance sheets are the annual evaluations, they are not only transmitted to the tax office, but also to the Federal Gazette. Here the balance sheet of your company, insofar as you are not a sole proprietorship, GbR, or similar, is available for everyone to see.

Checklist: 6 Tasks Areas

Let’s summarize the processing of tax matters once again:

1. Payroll accounting
2. Tax returns / this includes wage tax return, capital gains tax return and advance return for turnover tax
3. Preparation of tax returns / this includes income tax returns, corporate tax returns, trade tax returns, annual VAT returns as well as inheritance tax returns and also gift tax returns for wealthy persons
4. Bookkeeping / this includes setting up the bookkeeping, creating a chart of accounts, bookkeeping itself, but also the account assignment of the documents
5. Preparation of financial statements / this includes the simple income statement, opening balance sheet, annual financial statements, interim financial statements, liquidation balance sheet and the corresponding explanatory reports
6. Applications

For the sake of completeness, tax advisors Hessen, of course, not only in the establishment of the company, but also in the liquidation, should something go wrong.

Assistance in insolvency matters

For the sake of completeness, here is a reference to the assistance in insolvency, which is also given by tax advisors. Companies fail, accordingly, it also needs people who take over the liquidation. Accordingly, the tasks of a tax advisor also include assistance in insolvency.

Read more on the topic here:

• Insolvency

Do I need to hire a tax advisor?

No, hiring a tax advisor is not mandatory, no matter what form of business you have chosen.

Cooperation with the tax consultant: Your tasks

You have now learned a lot about the tasks of a tax advisor, the various financial statements, monthly filing and annual balance sheets. But what does the cooperation with a tax advisor look like in practice?

Practical experience: For whom useful?

First of all, for whom are the following experiences useful? The following areas of collaboration apply more to sole traders, UGs (limited liability), GmbHs, under 10 employees. All businesses under 10 employees are considered small businesses. Then it starts with the SMEs (small and medium-sized enterprises), they have 10 to 250 employees. Here, of course, you are set up quite differently from a tax point of view than when you set up your business.

This area is explicitly not about tax structuring, but about daily cooperation with the law firm. From wages, their billing and calculation for health insurance, the monthly VAT advance return, business tax, as well as the annual financial statements, which will always come back to you. By the way, the annual accounts are not included in the additional costs, but are charged extra by the tax consultant, as described briefly above. But more about that in a moment.

If you own or are building a business that stays under 10, maybe 20 employees, these are the standard processes you will face when working with your tax professional. The following section should give you an overview!

Wages, registration, health insurance, etc.: Levy and appointment

The most important thing in any company is:

Good teamwork!

Only through good, i.e. motivated and trained employees, good results are guaranteed, this is true for 99% of companies. Even if the owners are “strange characters”, employees come first! Accordingly, wages, the registrations of the times with the tax advisor, as well as the calculation of the health insurance are a task, is always an interaction, from the information you give the tax advisor and what she or he makes of it.

What is your job?

You must ensure that wage data is available on time by the 15th of each month.

Not all employees in the company have a fixed number of hours. So now some may ask, how am I supposed to know exactly how many hours employee XY will work? If the hours are flexible, you will need to estimate the number of hours. In the following month, any absences will be compensated again.

Cost factor health insurance – A short excursus

But health insurance is also a big cost factor that is often overlooked by founders. Calculate with costs of 800 to 1500 euros per month per employee alone. Calculated over the year, this is a factor that is easily overlooked when extrapolating and calculating, because health insurance is not part of the salary paid, it is collected separately. 800 Euro in the month alone are a cost factor of 9,600 Euro calculated over the year. Anyone who founds a GmbH with 25,000 in start-up capital will quickly reach a critical point.

Here’s a little example:

• Salary (transfer): 1.500 €
• Health insurance: 700 €
• Settlement tax consultant: 15 €
• Total costs: 2.225 €
• Unconscious costs: + 32,6 %.

The gap between the €1,500 in thought and the €2,225 actually paid is a whopping €725, or +32.6%. So always remember that the cost of wages and salaries ultimately includes not only the actual payment to the employee, but also the health insurance and wage costs that have to be paid additionally for each individual employee.

This calculation error is multiplied with each individual employee. If, for example, you hire 5 employees through an investment or a loan, right at the start of the company, and do not take into account the costs for health insurance and payroll, you will have a monthly deficit of 3,575 euros in the calculation example. With a loan or investment of 50,000 euros, 5 employees are a huge cost. After a period of 6 months, the sudden, supposed loss (which you did not have in mind), amounts to 21,450 euros.

Finance is the number one reason businesses fail.

Therefore, it is important: you must take an interest in taxes and duties yourself.

Do not leave the work (only) to your tax advisor!

However, there are also potential savings for employees that should be communicated by the tax advisor. For example, if special services are provided for employees, such as the assumption of costs for train tickets that would otherwise be purchased by the employee himself for the way to work. Many aspects that need to be considered by a good tax office.

Important for you, is the submission of the wage data, punctually to the 15th of the current month. For employees who do not have fixed times, the expected working time must be estimated.

• Submission of wage data by the 15th of the month
• Submission of actual and estimated working times (depending on employee type)

Monthly taxes: sales tax, trade tax, etc.

Besides employee wages, however, there is a lot more for you and the tax preparer to take care of.

The regular tasks also include the monthly tax (pre-)registrations. Here, the focus is primarily on sales tax, as well as trade tax, if we are talking about regular companies such as a GmbH or an AG.

If there is one continuous factor that plays a role in your business life almost every day, it is accounting. Whether receipts from purchases, incoming invoices from suppliers, outgoing invoices for customers, all account activity is meticulously recorded, documented and archived in accounting.

Golden rule in accounting

For those who have not had any contact with the subject themselves, in quite simply explained:

Each posting a document

This is the classic golden rule in accounting. Means, every single transaction, whether with physical cash or digital transactions, must be justified by a receipt. Depending on whether it is an incoming payment, an outgoing payment, or even just a movement from account to account.

• Incoming invoices
• Outgoing invoices
• Account-to-Account
• Other such as interest

Today, much of the accounting is done through digital systems, accounting software. In the past, there were still classic folders, simply put, each month has a folder. Here the account statements are filed and behind each individual account sheet, the receipts are filed collectively. In this way, all transactions are transparently traceable, for example for one of the most important actors, the tax office. But also for yourself, a neat, orderly bookkeeping is very important, after all, you get only so key figures about your company.

Accounting in the past: folders, bank statements and invoices in chronological order.

In simply explained, that was already a lot of the bookkeeping that goes on in regular businesses.

The monthly accounts must be submitted to the tax office by the 10th of the following month at the latest.

Accordingly, you should plan your financial accounting so that they are ready directly at the turn of the month (1st, 2nd, 3rd). This way, your tax office has enough time to process them and you also have time to answer queries without time pressure.

Tip! If you are late with the accounting, communicate with the tax advisor or the tax office – communication is a very, very effective means in all tax matters.

As soon as there is sufficient turnover, trade tax also becomes an issue for you and your tax advisor. The trade tax is automatically calculated by the tax office. Small companies pay it at the end of the year, companies with the appropriate turnover and history pay monthly, so to speak in advance, so that at the end of the year there is no large tax bill for the company.

Once again summarized the most important tasks:

• Each posting a document
• Accounting almost 1 calendar month economically together
• Submission no later than the 10th of the following month (tax office)

Sales tax regulations: Domestic and foreign

Calculations at home are still easy to organize, as soon as it goes abroad, many have big question marks themselves. Honestly, from my experience, when I first faced the issue, my head exploded. All that came from the accountant was a 15 minute explanation. My simple question: when do I charge sales tax, when not?

Tip. From this question you can quickly see whether a tax advisor can explain facts easily or not. If someone starts to give you long monologues about the “EU joint business…” – do not hire him or her.

Here is the simple answer to the sales tax regulations for domestic and foreign invoices.

For transactions between companies (in Germany):

• Invoicing and invoice recipient in Germany: VAT
• If the invoice recipient is located abroad (EU Schengen area): no sales tax
• If the invoice recipient is located in a third country (outside the EU): no sales tax

There are a few special rules:

• Private customers (B2C) always pay sales tax ( value added tax for private individuals)
• Companies under the small business regulation are exempt from turnover tax

For the sake of completeness, here is a list of the European countries that currently (as of 2021/06) belong to the European Union, or more precisely the Schengen area.

• Schengen States: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.

Source: Federal Foreign Office, Article Schengen States

Annual taxes: annual accounts and example of VAT declaration

At the end of the year, depending on the legal form and company structure, financial statements are sent to the tax office. For almost all companies, this includes, for example, the sales tax return (except for small businesses that are exempt from sales tax [Ust.]). The sales tax return almost once again summarizes all tax transactions that are related to sales tax.

Tip for the monthly sales tax! Especially the sales tax is an important item that must be paid monthly, safely. With many bills there are margins, not with the tax office. Do not pay bills with it.

If the sales tax is not paid, the business account is seized. If you only have one business account at the beginning, you will quickly get into payment difficulties. Because, until the amount has not been cleared, you no longer have access to the account. Therefore, very important: the monthly accounting and the annual closing of the sales tax.

The VAT return is prepared by the tax office. In addition, the annual financial statement is obligatory for all companies.

The annual financial statement is also important. It summarizes everything once again, clearly. While you and your employees still have many tasks of your own in accounting, the annual financial statement is almost completely prepared by the tax advisor. You may only have to answer a few questions about individual transactions in advance. When the annual financial statement has been prepared by the tax consultant, you receive an evaluation and still have to sign it. The submission usually does not happen at the turn of the year, but is tax-efficient, on time, at the latest before the submission deadline.

For completeness: Small businesses and freelancers usually prepare a short EÜR (income surplus account).

Annual accounts: Content

You will then find the following information in the annual financial statements:

• Balance
• Profit and loss account
• Appendix
• Management Report
• Statement of changes in equity; segment reporting (only in connection with consolidated financial statements)

Deadline: Own production / tax consultant

When must the annual financial statements be submitted? The deadline for submitting the annual financial statements to the tax office is currently 31 July. If you are assisted by a tax advisor, the deadline is significantly longer, extended to 28 or 29 February of the following year.

• Own production: 31.07.
• Preparation by tax consultant: 28. or 29.02. (following year)

Costs: How much does a tax consultant cost?

How much does a tax consultant cost? This question can only be answered in part. Tax consultants charge according to the fee table, but they also have room for manoeuvre here. The fee table only covers standard services, i.e. monthly bookkeeping. Even the annual accounts cost extra. Every minute of consultation costs extra. Every time you get documents, records or figures, it costs extra.

For a first, rough overview, this simplified fee table will help you. It should make clear to you that tax advisors charge according to the turnover of the company. Of course, you also have a certain margin on this fee regulation, but the fee table is good for orientation.

Fee table

This is how much a tax consultant costs, with a turnover of 100,000 euros, for balance sheets, EÜR, income tax returns & Co.

Source: fivmagazine.de, tax consultant costs

Last but not least, we have a few typical questions and answers founders have if you haven’t had any experience with tax advisors.

Questions and answers: Tax consultant

Every year tens of thousands of businesses start. Restaurant, fashion boutique, media agency to app or online platform. They all have questions, even founders in real estate. Starting from: “Where do I find a good tax advisor?” to.

Where can I find a good tax advisor? Lists

As described above, there are mainly 3 tips that help to find a good and reputable tax advisor. You will usually get the very best recommendations from well-known business owners who have been in business for years themselves and have a good, commercial understanding. If they are happy with a tax accountant over a long period of time, then they are likely to be a recommendation for your business.

If you don’t have any direct contacts with contractors then you should start your search on the internet, again there are two good tips. One, don’t click on ads in the search results and two, read through reviews and make sure the company has not just 1, 2 or 3 reviews but ideally 10, 20 or even 30 depending on the size of the city.

Find a tax advisor! 3 tips summarized:

• Do not click on the advertisement in the search results (go directly to page 2)
• Rating on online portals (more than 5 opinions)
• Experiences and recommendations from successful entrepreneurs

Should you want direct recommendations now, read more here! Good tax advisor recommendations from Bavaria, over North Rhine-Westphalia to Berlin and Hamburg. With over 30 cities and all free of charge:

• Tax consultants in the vic inity (fivmagazine.de)

How much should a tax consultant cost? Comparison offers

We have already explained the most important aspects of tax advisor costs above.

If you do not yet have a tax advisor and are currently searching, you should proceed as with other service providers, get comparison quotes. This way you can estimate the costs and compare them with other tax consultants. For example, if you have found a few good adresses in their city through the 3 tips to find a tax advisor, get a quote from each of them. This will help you find the best consultant.

What does tax consultant mean in English?

In English, a tax consultant is referred to as a “tax consultant”.

What does it cost to file an income tax return with a tax advisor?

If you earn money, you have to pay income tax (minus the exemption amount). One of the first questions asked by founders: What does an income tax return cost with a tax advisor? As seen above in the table of fees, the tax return costs between 142 and 853 euros.

When is a tax consultant worthwhile?

This in turn leads us to the question: can I do my tax return myself? As learned above, hiring a tax advisor is not mandatory. Therefore, the question of when it is worth hiring a tax advisor cannot be answered in a general way. Simply put, if you have commercial knowledge and interest, you can do your tax return yourself. However, you run the risk of not taking advantage of tax benefits, for example in the case of tax allowances. It is therefore recommended at most for small businesses and sole proprietorships. For any business forms apart, whether GbR, UG, GmbH, you should work with a tax advisor. Finally, it also goes well verification of the data to the tax office.

Setting up a company, legal forms and taxes

Learn even more about taxes, legal forms and the first years of setting up a company here.

Form a company

Founding a company – You want to found your first company? Requirements for you as a founder, share capital, shareholder agreements, costs for the foundation, legal forms and checklists. This sounds complicated for beginners, but it is actually quite simple. The process of founding a company is usually relatively the same. I have summarized the foundation here once in simple steps, for you. Learn how to start your own business. After the great guide to all legal forms or types of companies, today a detailed look at the establishment of a (real estate) company for beginners.

• Form a company

Legal forms in Germany

Legal forms in Germany – What types of company are there? If you want to start your first company, then choosing the legal form is one of the first steps in the process of setting up a company. Whether it is a special real estate company or founding a startup, here I have summarized all types of companies in Germany for you. In this list of companies you will find explanations, advantages, disadvantages, costs, the process with checklists and requirements, for each type of company. In addition, especially for real estate owners, as an extra: real estate GmbH (asset managing GmbH) and family foundation with tax advantages. All legal forms in one list!

• Legal forms in Germany

Taxes in Germany

Taxes in Germany – Corporation Tax (KSt), Income Tax (ESt), Capital Gains Tax (KapESt), Value Added Tax (USt), Trade Tax (GewSt) – who pays what? In this overview of the different types of taxes / tax forms in Germany, you will find relevant taxes for you as an individual and for your company, depending on which legal form you have chosen. In addition, after the tax list: How does the tax cycle work around monthly financial statements, annual financial statements and balance sheets? A little insight for those who are starting their first company and are looking for a good nor a good tax advisor. What taxes are there? Simple explanations, definitions, an insight into taxes.

• Taxes in Germany

US taxes

USA – What taxes do you have to pay when you buy a house in USA? Below you will find a list of all the types of taxes you have to pay, how much they are, where you can read more about them and what they are used for. Everything you need to know about taxes related to buying a property, be it your home or a vacation home. We answer the questions, what are “transfer taxes”? How much is property tax when you buy a property? Here are the answers.

• US taxes

GmbH & Co KG – formation, financing, liability & Co

The limited partnership – in short: Kommandite or KG – is one of the so-called complete companies and, as a partnership, is subject to the German Commercial Code (HGB). The formation process for this legal form of company is quite uncomplicated, as it can be formed informally and requires a minimum of only two founding members. It can be formed by both natural persons and legal entities. A maximum number of permissible shareholders is not specified by law.

If all general partners of a KG consist of limited liability companies (GmbH), they form a so-called Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft – called GmbH & Co KG for short. Such a GmbH is sometimes also referred to as a general partner GmbH, but beware: the general partner GmbH is a corporation and part of the GmbH & Co KG, while the GmbH & Co KG by virtue of its legal form is always a partnership!

Other typical partnerships:

• Limited partnership (KG)
• General partnership (OHG)
• Limited Liability Company and Compagnie General Partnership(GmbH & Co OHG)

Foundation & Company Name

Two persons are required for the formation of a GmbH & Co KG: The GmbH as full partner – i.e. general partner – and a natural person as partial partner – called limited partner. If you are starting from scratch, you must first establish a limited liability company in preparation. To do this, you need the following in a nutshell: a natural person or legal entity as the founder of the company; a tax identification number (tax ID); the confirmation of registration from the trade office; the shareholders’ agreement aka articles of association together with notarial certification; 25,000 euros in share capital; and finally the entry in the commercial register.

You can find out how the process of setting up a GmbH works in detail here:

• Establishment of a limited liability company (GmbH)

You have successfuly founded your GmbH? The limited partner is ready to go? Then the next step is to set up a limited liability company (Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft). Since the GmbH & Co KG is a separate company, you again need a tax ID and must register the company with the trade office. The establishment of articles of association is also mandatory and of course your company needs a suitable company name including the company suffix “GmbH & Co KG”.

Management & power of representation

As a general partner, the GmbH basically has power of representation in the external relationship. However, since a GmbH is a legal entity, the management authority is entrusted to a natural person. This may be a shareholder of the general partner GmbH or the position may be assigned externally to a so-called third-party managing director. In this case, there is often talk of a third party board of directors or external board of directors.

Alternatively, limited partners may also act as managing directors, provided they are expressly appointed to this body. Since limited partners are generally excluded from management, their management authority in this case is, however, limited to the right of objection in the case of extraordinary transactions.

Profit distribution & loss sharing

With regard to the distribution of profits and the sharing of losses, either the statutory principles come into play or corresponding specifications have been anchored in the articles of association. Profits are generally distributed at 4 percent of the capital share plus additional profit “in reasonable proportion”. Losses are also shared appropriately.

It is possible to completely exclude the general partner GmbH from the distribution of profits by means of a declaration in the shareholders’ agreement, whereby higher profits can be distributed to the investors. Insofar as the GmbH has inherent management authority, it can be paid an appropriate remuneration to compensate for its role as managing director, whereby a managing director’s remuneration cannot be deducted in total as a business expense for tax purposes. However, the remuneration is paid irrespective of the profits generated and thereby has the effect, if applicable, that the entire company can save taxes.

General partner, partial partner & tax liability

Usually, the general partners of a limited partnership are liable without limitation and jointly and severally – i.e. with their business assets plus private assets. If, on the other hand, the general partner of a KG appears in the form of a limited liability company (GmbH), he is liable as a legal entity only to the extent of the GmbH’s capital contribution. Limited partners are liable – as in the case of a conventional KG – only to the extent of the mandatory sum that they paid in as a limited partner’s contribution when the GmbH & Co KG was founded.

Like all other legal forms of companies, the Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft is generally liable to pay taxes. First and foremost, they are subject to trade tax and – in the case of taxable turnover – turnover tax. A GmbH & Co KG is generally exempt from income tax and corporation tax… However, profit income is still subject to taxation: corporation tax is applied to the profit share of the general partner GmbH, whereas limited partners must pay income tax on their profit.

• Trade tax (GewSt)
• Value added tax (VAT)
• Income tax (ESt)
• Corporate income tax (KSt)

Tip. All taxes for companies in one list:

• Taxes in Germany

GmbH & Co KG – For whom is it worthwhile?

A significant advantage of a GmbH & Co KG is undoubtedly the limitation of liability to the business assets of the general partner GmbH. This means that founders do not directly risk the existence of their company if an investment turns out to be disadvantageous, and they can quickly increase their equity capital through the flexible and simple admission of new limited partners. They can confidently outsource the organisational effort and the management to an outside body or make deviating succession arrangements in order to maintain the GmbH & Co KG.

So who is the GmbH & Co KG suitable for? This legal form is worthwhile for start-ups who would like to set up their business as a partnership without having to forego the special liability restrictions of a GmbH. A GmbH & Co KG is also conceivable as an asset-managing company and for family businesses.

Alternatives to the GmbH & Co KG: Legal forms in Germany

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

Mallorca: Investment in a foreign property by the sea

Sun, wind and sea. That’s what most people think of when they hear the name Mallorca. Mallorca is the absolute favorite travel destination of the Germans. No wonder, because Mallorca has not only the famous Ballermann to offer, but also quiet, beautiful places where you can let your soul dangle. No matter in which part of Mallorca you prefer to live, with our help you will find your dream property. Not only do we recommend the best real estate portals for Mallorca, but we also show you some beautiful examples of how different life and living on Mallorca can be.

Luxury property in Mallorca

Welcome to the Germans’ favourite island. Lots of sun, relaxed people, the sea and only 1-2 hours flight from cities like Berlin, Paris and Madrid. This makes Mallorca one of the most popular regions for many from business and industry, but also for celebrities who are attracted to the island. Especially on the mainland, a little off the coast, you will find villas, fincas and condominiums of the extra class. But beware. If properties are tied up, you will quickly pay too much. Therefore, we strongly recommend working with a local real estate agent. Because in Mallorca there are also Spanish laws, from the residence obligation (subject inhabited houses) to tax issues. Therefore, before we take a look at available apartments and houses, we briefly highlight the property prices in Mallorca.

• Luxury Real Estate Mallorca

Pollensa (Pollença): Living inland

The town of Pollensa is located in the north of the beautiful island of Mallorca. When tourists spend their holidays in Mallorca and want to do more than just party, they also like to come to Pollensa to visit some sights. But which sightseeings are there in Pollensa? There is for example the Roman bridge also called “Pont Roma” and some more sights. The place itself is worth to be explored, as it is an old town and there are many winding streets. Pollensa is home to a mixture of locals and newcomers, which has created a particularly pleasant and warm atmosphere.

Pollença: Beach

Map & location: Pollença

Palma de Mallorca: Life between hustle and bustle and fun

Palma de Mallorca is the capital of the island. Even in this very popular city there is no shortage of sights. However, Palma de Mallorca is famous for long party nights. Palma de Mallorca offers the perfect mix for most holidaymakers, because there are varied beautiful places, such as an old town, a port district or a city beach. But how sensible is it to invest in a property in this popular and much visited city? From Palma, you can quickly get to all the places that could be important, such as the airport or the doctor. This will benefit you as a property owner in this city. You will also never get bored here, as there are countless varied places to visit. However, if you would rather have a bit of peace and quiet and live far away from the stress of everyday life, you should not necessarily choose Palma de Mallorca as a place to live.

Palma de Mallorca: Video Tour

https://www.youtube.com/watch?v=IjkTvUjf0jA

Map & Location: Palma de Mallorca

Son Vida: For the rich & beautiful

Son Vida is one of the most popular residential areas on Mallorca. This town is surrounded by mountains and is located west of Palma de Mallorca. As a residential area it is particularly popular here, because on the one hand the way to the center of Palma de Mallorca, so the hustle and bustle and fun is not far and on the other hand you have the opportunity to retire here in peace and enjoy the silence. This place is also a paradise for golfers and you are quickly at the airport, in the shopping mile or on the beach.

Son Vida: Video

Map & Location: Son Vida

Calvia: Rural living (Santa Ponsa Calvià)

Those who would like to live in Mallorca, but prefer a quieter place to live, could be well served with the town of Calvia. The surroundings here are rather rural and ideal for hiking. If you are particularly fond of nature, you might be well served with the town of Calvia as a place to live. With a property in Calvia you have the possibility to retreat from the tourist hustle and bustle and enjoy the peace and quiet. However, if you feel like having a good time with lots of people, you have the possibility to go to the nearby Palma de Mallorca. Calvia offers a perfect balance and is worth considering when looking for a suitable property.

Calvià from above (video)

Map & Location: Calvià

Port d’Andratx: Life at the harbour

Port d’Andratx is a very popular place for potential property buyers. It is a beautiful harbour that has a yacht club. Visitors to the port love the direct waterfront location and the nature that surrounds the port. No matter who visits this place – All are enchanted. There are also two small beaches and the town of Andratx town is only 5 km away. Port d’Andratx is particularly popular as a place to live as there is the ideal mix of restaurants, cafes, clubs and quiet places to relax. Those looking to buy a property in this area should bear in mind that the cost of living in this location is slightly higher.

Port d’Andratx Video

Map & location: Port d’Andratx

360° view from the harbour

Investing in real estate: Mallorca

Living and working abroad is a very memorable experience, professionally, personally, culturally and of course financially. In this free guide, you’ll get investment tips for all the major cities in Europe, America and Asia, from New York to London to Paris.

• Investing abroad: Real estate (external)

House & Apartment for sale in Mallorca

From the valuation to the speculation tax. In this guide you will find all the important factors simply explained. Learn step by step the procedure in the apartment sale to be able to answer the question: Selling with or without an estate agent? The private sale of real estate involves many risks and sources of error, starting with the apartment valuation to the offer price to the individual marketing, from “advertising” to internal customer network and off market real estate sales.

• Sell apartment
• Sell house
• Sell land
• Sell property

Buying: Portals for cheap real estate

There are now so many real estate portals that broker real estate abroad, that you often do not even know which would be best suited to your own interests and requirements. These real estate portals could be interesting for you.

Immobilienscout24: The all-rounder for all aspects of real estate

Everyone has actually used Immobilienscout24 to search for a property to rent or sell. Immobilienscout24 is also suitable for the search for a property abroad. If you are looking for a property abroad in Mallorca via Immobilienscout24, then you will benefit from a large selection of filter functions and a wide range of different properties.

Porta-Mallorquina: The Mallorca Specialist

The real estate portal Porta-Mallorquina offers many different properties. From luxurious villas to smaller apartments, there is a lot on offer here. If you are not particularly familiar with Mallorca, it is helpful on this website that you can read not only a description of the property, but also a description of the location and the surroundings. So that you do not feel overwhelmed due to the abundance of offers, you can also limit your property search. You can limit the locations, the types of property, the prices and the regions according to your interests. Porta-Mallorquina is for you if you are already sure that you want to invest in a property on Mallorca. Moreover, not only do you have the option of finding a property for sale, but you can just as easily find a property to rent long term or for holidays.

Immowelt: Find a property abroad

The famous portal Immowelt offers not only properties on Mallorca, but as the name suggests, all over the world. Immowelt offers a nice overview of the most important facts about an apartment or a house. Since many properties are sold privately here, you can possibly make one or the other bargain on Immowelt. If you are not under pressure, but on the side looking for a suitable property in Mallorca, you have the opportunity to be informed by e-mail about new offers that match your interests.

Firstmallorca.com: The fast track to property in Mallorca

On the real estate portal Firstmallorca the chance is high that you will find your dream property. Here you can not only specify the type of property, the location and the price, but also activate other filters so that you get faster to the result that fits your ideas. The real estate portal values loyalty, honesty, transparency, respect and team spirit.

5 housing options in Mallorca – What suits you?

Here we have compiled the most popular residential locations on Mallorca for you. We briefly present the residences so that you can get an overview and find out in which place the purchase of a property would be the most sensible for you.

Buying property abroad: Tips

• New York, LA, London & Co: Luxury Real Estate
• Real estate agent
• Buy a holiday home
• Foreign property France
• Foreign property Italy
• Foreign property Spain
• Luxury Real Estate Mallorca
• Off market – especially in hot real estate markets