German for the self-employed: 50 important terms simply explained
Anyone who becomes self-employed in Germany will quickly come across many technical terms: tax office, tax number, business registration, VAT, e-invoice, deadline, reminder or input VAT. Many of these words appear in letters, forms, invoices, tax documents or conversations with authorities.
This guide explains 50 important German terms for self-employed people, founders and small businesses in simple language. It is particularly aimed at people who work, start or run a small business in Germany and want to better understand German bureaucracy.
The article does not replace tax or legal advice. It is intended to help you classify terms better, avoid typical misunderstandings and communicate more securely with authorities, customers, tax advisors and business partners.
Terms A–M
Abschreibung – depreciation
Briefly explained:
Depreciation means that larger purchases are not always fully recognized as costs immediately, but can or must be spread over several years. This applies, for example, to vehicles, machines, computers or larger devices that are used in the company for a longer period of time.
Example:
A self-employed person buys a laptop for his company. Depending on the value and tax regulations, the purchase price can be taken into account immediately or spread over a certain period of use.
Typical for:
Investments in work equipment, vehicles, machines, technical equipment or office equipment.
AGB – General Terms and Conditions
Briefly explained:
General Terms and Conditions means General Terms and Conditions. These are pre-formulated contractual conditions that a company uses for many customers or orders. This can regulate, for example, payment conditions, scope of services, liability, termination or usage rights.
Example:
A designer writes in her terms and conditions when an invoice is due, how many correction loops are included and what happens if payment is late.
Typical for:
Services, online shops, agencies, software, consulting and recurring customer orders.
Angebot – Quote or offer
Briefly explained:
An offer describes which service or product a self-employed person offers and at what price. It usually contains the scope of services, the price, possible additional costs, payment conditions and the validity of the offer.
Example:
A craftsman creates an offer for a renovation. This includes material costs, working hours, total price and an indication of how long the offer is valid.
Typical for:
Orders, services, projects, craft services and sales discussions.
Beleg – Receipt or supporting document
Briefly explained:
A receipt is proof of a business transaction. This can be an invoice, receipt, receipt, bank statement or proof of payment. Receipts are important for accounting, tax returns and evidence to the tax office.
Example:
A self-employed person buys printer paper for his office and keeps the receipt as a receipt.
Typical for:
Operating expenses, travel costs, purchasing materials, entertainment, software subscriptions and incoming payments.
Betriebsausgaben – Operating expenses
Briefly explained:
Operating expenses are costs that arise from self-employment. As a rule, they reduce profits if they are operational and sufficiently documented.
Example:
Rent for an office, tools, software, telephone costs, specialist literature or travel costs can be business expenses if they are used for the company.
Typical for:
All self-employed people who have expenses for their work.
BIC
Briefly explained:
BIC stands for Bank Identifier Code. The BIC is an international bank identifier. Within Germany and the SEPA area, the IBAN is usually sufficient for many payments, but the BIC can still be relevant for certain international payments.
Example:
A customer from abroad wants to pay an invoice and asks for IBAN and BIC.
Typical for:
International payments, bank details and invoices to foreign customers.
Buchführung – Accounting
Briefly explained:
Bookkeeping means recording income, expenses, receipts and business transactions in an orderly manner. It helps to keep track of money, open invoices, costs and profit. Different obligations apply depending on the type of company and size.
Example:
A freelancer records all customer payments and business expenses every month so that the tax return can be prepared.
Typical for:
Invoices, receipts, tax returns, annual financial statements, income surplus accounting and tax advice.
Datenschutz – Data protection
Briefly explained:
Data protection means protecting personal data. This includes, for example, name, address, telephone number, email address, customer details, employee details or bank details. Self-employed people must be careful not to pass on such data without authorization and to process it securely.
Example:
A service provider stores customer data only for the order, protects it with secure passwords and does not pass it on without a legal basis.
Typical for:
Websites, contact forms, customer databases, invoices, emails, employee management and order data processing.
DATEV – DATEV
Briefly explained:
DATEV is a software and IT service provider that is particularly well-known in the areas of tax advice, accounting, payroll and company data. Many tax consultants work with DATEV systems or DATEV-compatible data.
Example:
A self-employed person exports his receipts and booking data so that the tax advisor can process them further.
Typical for:
Collaboration with tax advice, accounting, receipt transfer, payroll and annual financial statements.
E-Rechnung – E-invoice
Briefly explained:
An e-invoice is not just a normal PDF invoice. In the German B2B context, e-invoice means an invoice in a structured electronic format, for example XRechnung or ZUGFeRD. This allows invoice data to be processed automatically.
Example:
A company sends its business customer an invoice in XRechnung or ZUGFeRD format so that the data can be automatically processed in accounting.
Typical for:
Invoices between companies, public clients, digital accounting and modern invoicing software.
Einkommensteuer – Income tax
Briefly explained:
Income tax is a tax on the income of natural persons. For self-employed people, it is generally calculated on the profit from the self-employed or commercial activity, not simply on the entire turnover.
Example:
A self-employed person has a turnover of 80,000 euros and 35,000 euros in operating expenses. The profit is relevant for income tax, i.e., to put it simply, the difference.
Typical for:
Tax returns, profit determination, advance payments and discussions with the tax office or tax advice.
Einzelunternehmen – Sole proprietorship
Briefly explained:
A sole proprietorship is a simple business form for a single person. Setting up a company is comparatively uncomplicated. The owner acts in his or her own name and is generally also personally liable.
Example:
A photographer starts out as a sole proprietor and writes invoices under his own name or under a business name.
Typical for:
Freelancers, small service providers, craftsmen, traders and founders at the beginning.
ELSTER – German online tax portal
Briefly explained:
ELSTER stands for “Electronic TAX Declaration”. It is the online portal of the German tax administration. Self-employed people use ELSTER, for example, to send tax forms electronically to the tax office.
Example:
A founder registers with ELSTER and sends the questionnaire to the tax office for tax registration.
Typical for:
Tax return, preliminary VAT return, questionnaire for tax registration and electronic communication with the tax office.
Finanzamt – Local tax office
Briefly explained:
The tax office is the responsible tax authority. Among other things, it issues tax numbers, processes tax returns and checks tax information. For self-employed people, the tax office is one of the most important contacts with authorities.
Example:
After being founded, a self-employed person receives mail from the tax office and must provide tax information about their activity.
Typical for:
Tax number, income tax, VAT, trade tax, advance payments and tax returns.
Formular – Form
Briefly explained:
A form is a prepared document with fields that need to be filled out. Authorities, banks, insurance companies and tax portals use forms to query certain information in a structured manner.
Example:
In the tax registration questionnaire, founders must provide information about their activity, address, bank details, expected sales and tax classification.
Typical for:
Authorities, tax office, business registration, tax returns, insurance and applications.
Fragebogen zur steuerlichen Erfassung – Tax registration questionnaire
Briefly explained:
The tax registration questionnaire is a form with which new self-employed people or companies are registered for tax purposes with the tax office. After checking, the tax office can issue a tax number. The questionnaire is usually sent electronically via ELSTER.
Example:
After registering a business, a founder fills out the tax registration questionnaire so that he can write invoices with a tax number.
Typical for:
Founding, starting a freelance or commercial activity, tax number and VAT.
Freiberufler – Liberal professional or freelancer
Briefly explained:
Freelancers are self-employed people who carry out freelance work. Depending on the activity, this can include, for example, certain scientific, artistic, writing, teaching, consulting or medical activities. Not every self-employed activity is automatically freelance.
Example:
A self-employed doctor, journalist or designer can work as a freelancer depending on their specific activity.
Typical for:
Consulting, creative professions, teaching, medicine, law, journalism, design and certain specialist professions.
Frist – deadline
Briefly explained:
A deadline is a period of time or a deadline by which something must be completed. Anyone who misses a deadline can suffer disadvantages, for example reminders, late payment penalties or problems with authorities.
Example:
An invoice has a payment term of 14 days. This means: The customer should pay within this period.
Typical for:
Tax returns, preliminary VAT returns, payment deadlines, letters from the authorities, contracts and reminders.
Gewerbeamt – Business registration office
Briefly explained:
The trade office is the office where a business is registered, re-registered or de-registered. It usually belongs to the city or municipal administration. Anyone who starts a commercial activity usually has to register it.
Example:
A founder registers his caretaker service with the responsible trade office.
Typical for:
Business registration, business re-registration, business de-registration and starting a commercial activity.
Gewerbeanmeldung – Business registration
Briefly explained:
The business registration is the official registration of a commercial activity with the responsible authority. It is generally required when someone starts a business. Freelance work, on the other hand, is usually reported directly to the tax office.
Example:
A founder opens an online shop and registers a business for it.
Typical for:
Trade, crafts, restaurants, cleaning companies, caretaker services, agency services and many commercial services.
Gewerbesteuer – Trade tax
Briefly explained:
The trade tax is a tax for commercial businesses. It is not simply based on sales, but fundamentally based on commercial income. The actual amount depends, among other things, on the municipal assessment rate. Sole proprietorships and partnerships have an allowance; Corporations do not.
Example:
A commercial business makes a profit. The commercial income is determined from this. The municipality applies its assessment rate, which creates the specific trade tax.
Typical for:
Commercial businesses, sole proprietorships with businesses, corporations, municipal taxes and annual tax returns.
Gewinn – Profit
Briefly explained:
In simple terms, profit is what is left over when operating expenses are deducted from operating income. For many tax issues, profit is more important than sales.
Example:
A service provider makes 60,000 euros in sales and has 20,000 euros in operating expenses. The winnings are simply 40,000 euros.
Typical for:
Income tax, trade tax, operational evaluation, financial planning and tax advice.
GmbH
Briefly explained:
GmbH stands for limited liability company. It is a corporation with its own legal personality. Liability is generally limited to the company's assets if the work is carried out in a legally and economically clean manner.
Example:
Two founders establish a GmbH, pay in share capital and conclude contracts in the name of the GmbH.
Typical for:
Growth, limitation of liability, larger projects, multiple shareholders and a professional corporate structure.
Haftung – Liability
Briefly explained:
Liability means who is responsible for damages, debts or errors. In the case of sole proprietorships, owners are generally personally liable. For corporations such as GmbHs, liability is generally limited, but only under certain conditions.
Example:
If a sole proprietor is unable to pay an outstanding invoice, his private assets may also be affected.
Typical for:
Contracts, corporate form, insurance, general terms and conditions, damages, claims and legal disputes.
Handelsregister – Commercial register
Briefly explained:
The commercial register is a public register for certain companies and merchants. Important information is entered there, for example company, registered office, management, legal form or powers of representation.
Example:
A GmbH is only fully founded when it is entered in the commercial register.
Typical for:
GmbH, UG, merchants, trading companies, company records and business partner audits.
Handwerkskammer – Chamber of Crafts
Briefly explained:
The Chamber of Crafts is the responsible chamber organization for crafts. For example, it plays a role in craft businesses, training, master craftsmanship, craft roles and certain licensing requirements.
Example:
A self-employed craftsman must check whether his activity needs to be entered in the craft register.
Typical for:
Craft businesses, trades requiring authorization, training, master craftsmanship and self-employment.
IBAN
Briefly explained:
IBAN stands for International Bank Account Number. It is the international account number of a bank account. The IBAN is often stated on invoices so that customers can make transfers.
Example:
A freelancer states his IBAN on his invoice so that the customer can transfer the fee.
Typical for:
Invoices, transfers, bank accounts, incoming payments and business accounts.
IHK – Chamber of Industry and Commerce
Briefly explained:
IHK stands for Chamber of Industry and Commerce. The IHK is responsible for many commercial companies, for example from trade, industry and services. Craft businesses, on the other hand, often belong to the Chamber of Crafts.
Example:
After registering a business, a founder receives mail from the responsible IHK.
Typical for:
Traders, IHK contributions, training, further training, starting a business and economic information.
Impressum – Legal notice
Briefly explained:
An imprint is a provider identification on a website. Many business websites in Germany must have an imprint. It contains information about who is responsible for the website.
Example:
A self-employed web designer publishes an imprint with name, address and contact information on his website.
Typical for:
Websites, online shops, landing pages, blogs, business social media profiles and digital offers.
Jahresabschluss – Annual financial statements
Briefly explained:
The annual financial statements summarize the economic situation of a company at the end of a financial year. Depending on the type of company, this may include, for example, a balance sheet and a profit and loss statement. Many smaller self-employed people prepare an income surplus statement instead.
Example:
After the end of the financial year, a GmbH prepares annual financial statements with a balance sheet and profit and loss statement.
Typical for:
Corporations, larger companies, tax advice, banks, investors and accounting obligations.
Kleinunternehmerregelung – Small-business VAT scheme
Briefly explained:
The small business regulation is a special VAT regulation for companies with low sales. Those who use them usually do not show any VAT on their invoices and cannot deduct any input VAT in return. New sales limits have been in effect since 2025.
Example:
A founder with low sales uses the small business regulation and writes invoices without VAT, with appropriate reference to the tax exemption.
Typical for:
Founders, small side businesses, solo self-employed people and companies with low sales.
Kontoauszug – Bank statement
Briefly explained:
A bank statement shows movements in a bank account. This includes incoming payments, debits, transfers, fees and the account balance. For self-employed people, bank statements are important accounting evidence.
Example:
An incoming payment from a customer is visible on the account statement and can be assigned to an open invoice.
Typical for:
Bank reconciliation, accounting, payment control, tax audit and outstanding invoices.
Krankenversicherung – health insurance
Briefly explained:
Health insurance is compulsory in Germany. Self-employed people have to take care of their own health insurance. Depending on the situation, statutory or private health insurance may be an option.
Example:
A self-employed person pays her own health insurance contributions and plans them as a fixed monthly cost block.
Typical for:
Start-up, self-employment, family insurance, statutory or private health insurance and ongoing financial planning.
Lohnabrechnung – Payroll
Briefly explained:
A payslip shows what an employee's salary or wages are made up of. It contains, for example, gross wages, deductions, taxes, social security contributions and the net amount to be paid out.
Example:
A small company employs a temporary worker and creates a payroll every month.
Typical for:
Employees, mini-jobs, payroll tax, social security, employer obligations and human resources administration.
Mahnung – Payment reminder
Briefly explained:
A reminder is a request to make an outstanding payment. Self-employed people can receive reminders, but can also send them to customers themselves if invoices are not paid.
Example:
A customer does not pay an invoice despite the payment deadline. The self-employed person sends a friendly payment reminder or reminder.
Typical for:
Open invoices, late payments, liquidity planning and receivables management.
Minijob – Mini job
Briefly explained:
A mini-job is a small-time job with a statutory earnings limit. Since January 1, 2026, the monthly earnings limit has been 603 euros. Employers are still subject to reporting and filing obligations.
Example:
A small company employs a temporary worker for a few hours a week and registers her as a mini-jobber.
Typical for:
Temporary jobs, small businesses, catering, cleaning, office help, seasonal work and part-time jobs.
Terms N–Z
Rechnung – Invoice
Briefly explained:
An invoice is a document used to invoice a delivery or service. It asks the customer to pay and must contain certain mandatory information if it is to be tax-accurate.
Example:
After completing an order, a freelancer writes an invoice with the invoice number, service description, date, amount and payment term.
Typical for:
Services, sales of goods, accounting, VAT, incoming payments and tax documents.
Rentenversicherung – pension insurance
Briefly explained:
Pension insurance is part of social security in old age. The situation is different for the self-employed: certain groups are subject to pension insurance, others can take out voluntary insurance or have it compulsorily insured upon request.
Example:
A self-employed teacher must check whether she is subject to pension insurance.
Typical for:
Self-employed people in certain professional groups, retirement provision, pseudo-self-employment, artists' social security fund and long-term financial planning.
Selbstständig – Self-employed
Briefly explained:
Self-employed is someone who works for their own account and is not employed as an employee. Self-employed people bear entrepreneurial risk, organize their work themselves and take care of taxes, bills and insurance.
Example:
An IT consultant works for several customers, writes his own invoices and decides on his own orders.
Typical for:
Freelancers, sole proprietors, traders, freelancers and small businesses.
Selbstständige – Self-employed people
Briefly explained:
Self-employed people are people who carry out an independent activity. You can work freelance or commercially. The exact classification is important for taxes, registration and chamber obligations.
Example:
A self-employed translator works for various clients and bills for her services herself.
Typical for:
Incorporation, invoices, tax returns, insurance, customer acquisition and office organization.
Sozialversicherung – social security
Briefly explained:
Social insurance in Germany includes, among other things, health insurance, nursing care insurance, pension insurance, unemployment insurance and accident insurance. Different rules apply to the self-employed than to employees. Some coverage is mandatory, others depend on the activity and situation.
Example:
A self-employed person must pay for their own health insurance and check whether there are additional insurance obligations for their work.
Typical for:
Health insurance, pension insurance, nursing care insurance, professional association, employees and employer obligations.
Steuererklärung – Tax return
Briefly explained:
The tax return is the annual declaration to the tax office. Self-employed people enter their income, expenses and other tax-relevant information. This determines whether taxes have to be paid or whether refunds are possible.
Example:
A sole proprietor submits his income tax return with information about profits, business expenses and insurance.
Typical for:
Income tax, profit determination, income surplus accounting, VAT and tax advice.
Steuer-ID – German tax identification number
Briefly explained:
The tax ID is a person's personal tax identification number. As a rule, it remains the same permanently and is required for many tax transactions. It is not the same as the company tax number.
Example:
A founder provides her tax ID on certain tax information or forms.
Typical for:
Private individuals, tax returns, tax office, employer data and personal tax matters.
Steuernummer – Tax number
Briefly explained:
The tax number is assigned by the tax office and is important for tax transactions. Self-employed people often need them for invoices, tax returns and communication with the tax office. It is not identical to the tax ID.
Example:
After the tax registration questionnaire, a founder receives a tax number from the tax office for his self-employed activity.
Typical for:
Invoices, VAT, income tax, tax office and company formation.
Umsatzsteuer – Value-added tax (VAT)
Briefly explained:
VAT is a tax on deliveries and services. Many companies have to show VAT on invoices, collect it from customers and pay it to the tax office. VAT is also often spoken of colloquially.
Example:
An invoice for 1,000 euros net also includes 19 percent VAT. The customer pays 1,190 euros gross.
Typical for:
Invoices, preliminary VAT returns, small business regulations, input VAT and accounting.
Umsatzsteuervoranmeldung – Preliminary VAT return
Briefly explained:
The preliminary VAT return is a regular report to the tax office. This explains how much VAT was collected and how much input VAT can be deducted. This determines whether VAT must be paid or whether a claim for reimbursement arises.
Example:
A company collected VAT from customer invoices and paid input VAT from incoming invoices. The difference is reported in the preliminary VAT return.
Typical for:
Companies with VAT liability, monthly or quarterly reports, accounting and tax office.
Überweisung – Bank transfer
Briefly explained:
A transfer is a payment from one bank account to another. Self-employed people use transfers to pay bills or receive payments from customers.
Example:
A customer transfers the invoice amount to a service provider's business account.
Typical for:
Invoices, incoming payments, supplier invoices, bank reconciliation and business account.
Vertrag – Contract
Briefly explained:
A contract is an agreement between at least two parties. This regulates rights and obligations. A contract can be written, oral or through conduct, but written agreements are often easier to prove.
Example:
An agency enters into a contract with a client to create a website.
Typical for:
Services, projects, rental agreements, employment relationships, collaborations and recurring orders.
Vorsteuer – Input VAT
Briefly explained:
Input VAT is the VAT that a company pays on incoming invoices. If the company is entitled to deduct input VAT, it can offset these amounts against its own VAT. Advance tax is not the same as income tax advance payment.
Example:
A self-employed person buys office supplies for 119 euros gross. This includes 19 euros in VAT. These 19 euros can be deductible as input VAT under certain conditions.
Typical for:
Companies subject to VAT, incoming invoices, accounting and advance VAT returns.
Zahlungsziel – Payment deadline
Briefly explained:
The payment deadline indicates by when an invoice should be paid. For example, it can be 7, 14 or 30 days. A clear payment deadline helps to better plan incoming payments.
Example:
An invoice states: “Payable within 14 days of the invoice date.”
Typical for:
Invoices, offers, contracts, reminders and liquidity planning.
Frequently asked questions
What is the most important difference between sales and profit?
Revenue is the money earned through sales or services. Profit is what remains after deducting operating expenses. When it comes to taxes, profit is often the deciding factor, not pure sales. Therefore, self-employed people should carefully document their expenses and receipts.
What is the difference between tax ID and tax number?
Tax ID is a personal identification number for an individual. The tax number is assigned by the tax office for tax transactions and can change depending on the responsibility or activity. Self-employed people often need both numbers, but for different purposes. In many cases, the tax number or VAT ID is stated on invoices.
Is a PDF invoice automatically an e-invoice?
No. A normal PDF invoice is not automatically an e-invoice in the current legal sense. An e-invoice must be in a structured electronic format so that the invoice data can be processed automatically. Typical formats are XRechnung or ZUGFeRD.
Does every self-employed person have to register a business?
No. Commercial activities usually have to be registered with the trade office. Freelance work, on the other hand, is usually reported directly to the tax office. The distinction between business and freelance work is important and should be examined if there is uncertainty.
Do all self-employed people have to pay into statutory pension insurance?
No, not all self-employed people are automatically subject to pension insurance. However, certain groups may be compulsorily insured, for example some self-employed teachers, carers, craftsmen, artists, journalists or self-employed people with only one client. If you are unsure, you should have your own activity checked.
Why is evidence so important?
Evidence shows that an income or expenditure actually occurred. Without receipts, it can be more difficult to prove business expenses. Clearly stored documents are therefore very important for accounting, tax returns and possible queries from the tax office.
What is the difference between the IHK and the Chamber of Crafts?
The IHK is responsible for many commercial companies from industry, trade and services. The Chamber of Crafts is responsible for craft businesses. Which chamber is relevant depends on the specific activity. After registering a business, founders often automatically receive mail from the relevant chamber.
What happens after you register your business?
After registering your business, other bodies may become relevant, for example the tax office, IHK, Chamber of Crafts, professional association or other authorities. For tax registration, a questionnaire often has to be sent to the tax office via ELSTER. Only then can the tax office issue a tax number.
Conclusion
Anyone who works independently in Germany does not have to know every law in detail. But the most important terms should be understandable. Words such as tax office, tax number, VAT, receipt, invoice, e-invoice, deadline or reminder appear again and again in everyday life and can have direct consequences for money, taxes and organization.
A good overview helps to avoid mistakes and to communicate more securely with customers, authorities and tax advisors. Motorica helps self-employed people better organize invoices, offers, receipts, payments and office tasks digitally.
Sources and status
As of June 23, 2026
For the technical examination of this article, official and reliable sources were used in particular, including:
- Federal Ministry of Finance: Information on e-invoicing
- ELSTER / Financial administration: Information about the online tax office and tax registration
- Minijob headquarters: Earnings limit for minijobs
- Chambers of Commerce and Industry / DIHK: Information on IHK and commercial companies
- German pension insurance: Information on pension insurance for the self-employed
- Federal portal and business start-up portal: Information on registering a business
- VAT law and VAT application instructions: Mandatory information in invoices
- DATEV: Information on software, accounting and cooperation with tax advice