Income tax for small businesses

In short: The profit from the business becomes income and is subject to income tax, but only above the basic allowance. The tax is assessed with the annual income tax return.

In more detail: Profit is income minus business expenses (not revenue). It is added to other income (such as apprenticeship pay). The tax rate rises with taxable income (progressive scale). With profits below the basic allowance and no other income no income tax is due.

In detail

• Income from trade: § 15 EStG. Profit is determined by cash-basis accounting (Cash-basis profit statement (EÜR)).
• Several incomes: apprenticeship pay is taxed as wages. Both incomes are combined in the return.
• Prepayments: the tax office can demand quarterly prepayments if tax is due permanently.
• Solidarity surcharge, church tax: the surcharge no longer applies for most people, church tax applies to church members.
• Reserve: put aside part of the profit so there is no shock at the tax return (Tax reserve and private withdrawals).

See also: Basic tax allowance, Trade tax and allowance