Registering a sole proprietorship costs almost nothing as a procedure. That does not mean the first year is free. For the steps of registration see our guide. Here we talk about the real cost.
The fixed costs that start immediately
Social security contributions
This is the largest fixed cost for a self-employed professional. They are paid monthly, whether or not you had any income, and depend on the insurance class you choose. Reduced contributions are provided for new professionals during certain first years, under conditions worth checking before you register.
The trade levy
This applies to businesses and professionals, with exemptions for certain categories and for the first years of operation. The rules have changed in recent years, so confirm what applies to your own profession.
Accounting fees
A monthly fee for bookkeeping and filings, depending on the category of books, the volume of documents and whether you employ staff.
Income tax and the advance payment
This is where the biggest surprise of the first year hides. Income tax is calculated on your profit, but an advance payment of tax for the following year is assessed along with it. In other words, your first assessment can ask for more than you expected. Put it in your plan from the start.
Running costs people forget
- invoicing software and e-invoicing
- a business bank account and its charges
- a card terminal and transaction fees
- professional liability insurance, depending on the profession
- chamber or association membership, where required
- advertising, a website and a professional email address
What you can deduct
Expenses that genuinely relate to the activity, are documented to your tax number and are paid in the way the law requires can reduce your profit. Take care with mixed expenses such as a mobile phone or a car, which have their own rules.
A practical tip
From day one, put aside a percentage of every payment you receive into a separate account for tax and contributions. It is the simplest way to avoid facing an assessment next summer that you cannot pay.
Would you like us to calculate the cost for your own case before you register? Contact us.
If you would like our office to handle it for you, see TAXGROUP services.
Frequently asked questions
How much does the registration itself cost?
Registering a sole proprietorship costs little or nothing. The real costs are contributions, tax and the fixed running costs.
Do I pay contributions even with no income?
Yes. Contributions for the self-employed are fixed and do not depend on your turnover for the month.
What is the advance tax payment?
It is an amount assessed against next year’s tax and paid together with your assessment. That is why the first assessment surprises many people.
Can I register my home as the business address?
For many activities yes, under conditions. Check the building regulations and your lease, if you rent.