starting a small business - online language teaching

[Alberto]

My wife is considering registering herself as a small business - teaching Japanese language online. We expect her income (or is it called turnover? whatever...) will average ca 500-600 eur/month. Costumers/students will be mostly from Germany, UK, China, Hong Kong, Taiwan, Japan, mostly individuals but also schools, and will be invoiced in eur (most of them, few will pay in their currency). She would be working from home.

What is the process of registering oneself as a small business?
What taxes etc will one has to pay?
If her income stays under the minijob threshold of 538eur/month, does she still need to formally register? And pay taxes etc etc? We file taxes together, so I expect this 538eur/month will count together in our married income, so I presume yes she/we will have to pay taxes calculated on our overall German income.
BTW, is the 538eur/month before or after expenses? Or maybe expenses do not count?

Thank you,

[PandaMunich]

My wife is considering registering herself as a small business - teaching Japanese language online. We expect her income (or is it called turnover? whatever...) will average ca 500-600 eur/month. Costumers/students will be mostly from Germany, UK, China, Hong Kong, Taiwan, Japan, mostly individuals but also schools, and will be invoiced in eur (most of them, few will pay in their currency). She would be working from home.

What is the process of registering oneself as a small business?

She has to fill in the "Fragebogen zur steuerlichen Erfassung" in ELSTER (you can use your own ELSTER certificate, she doesn't need one): https://allaboutberlin.com/guides/frage ... -erfassung

She should choose to be a Kleinunternehmerin, to not have to pay VAT.
In the Fragebogen, she also needs to apply to a VAT ID number (Umsatzsteuer-Identifikationsnummer), which she has to mention in all her invoices.
Before you ask, yes, a Kleinunternehmerin who invoices non-German businesses needs a VAT ID number, it's the international proof that she is a business, this does not mean that she has to charge VAT.

What taxes etc will one has to pay?

Her freelance profit gets added to your employee income and you will be taxed as a family: https://expertise.tax/en/faq-german-tax ... income_tax

If her income stays under the minijob threshold of 538eur/month, does she still need to formally register? And pay taxes etc etc? We file taxes together, so I expect this 538eur/month will count together in our married income, so I presume yes she/we will have to pay taxes calculated on our overall German income.
BTW, is the 538eur/month before or after expenses? Or maybe expenses do not count?

A mini job means being an employee.
She will be self-employed.
--> this does not apply to her.
She has to pay tax even if her yearly profit is only 1€.

The important thing is that she can still get free public health insurance through you under Familienversicherung, because otherwise she will have to pay around 220€ per month for public health insurance: https://www.tk.de/service/app/2004108/b ... echner.app
To stay in Familienversicherung, the sum of her monthly income from all sources (freelance profit + capital income + ...) has to stay below:

• 1/7 * Bezugsgröße_in_2025 = 1/7 * 3.745€ = 535€

Bezugsgröße: https://de.wikipedia.org/wiki/Bezugsgr%C3%B6%C3%9Fe

profit
= turnover - business_expenses
= what_you_take_in - what_you_have_to_spend_for_your_business

[Alberto]

Alles klar, thanks a lot, Panda.

Beyond taxes as such, will she have to pay pension contributions? How to calculate this?

She will be working from home and there will be some obvious simple costs, internet connection (which we have anyway), computer, teaching materials, bla bla. Do I understand correctly these costs, can be (partly) offset against the income....?
Will she needs bookkeeping? And having to keep them for ...xyz... years in case they ask?

Thanks a lot

[Alberto]

More questions.
Right now I am tax class 3. What class should she/we opt?
Do I understand correctly that it will remain better to file tax together?

[Alberto]

Right now I am tax class 3. What class should she/we opt?

OK I found the answer on your website, we will be 3 and 5.

[Alberto]

She will be working from home and there will be some obvious simple costs, internet connection (which we have anyway), computer, teaching materials, bla bla. Do I understand correctly these costs, can be (partly) offset against the income....?

When she travels to Japan, can this count towards her business expenses, like visiting her customers who happen to be there? I know this sounds crazy, but I remember reading it in our old forum.