Small business and the commercial register (merchant under HGB)

In short: A small business is a trade that by its nature and size does not require a commercially organised operation. It is not a merchant under the HGB and need not be entered in the commercial register.

In more detail: The HGB (§ 1) applies to merchants who run a commercial business, meaning one that requires a commercially organised operation. Small businesses are excluded. This means fewer duties (no obligation to prepare a balance sheet, no company name with legal-form suffix) but also simpler rights.

In detail

• Features of a small business: low revenue, few customers, no employees, simple bookkeeping.
• Company name: you act under your own name, can use a trade name, but without “e.K.”.
• Optional registration: anyone who wants can be entered in the commercial register and then becomes a merchant. This brings higher duties.
• Limits: if the business grows strongly it can become a commercial business. Then HGB duties apply.
• Bookkeeping: small businesses usually only make an Cash-basis profit statement (EÜR).

See also: Legal forms for founders: sole proprietorship, GbR, UG, GmbH, Business name and name rights