Congratulations on starting a business in Germany. It has taken real effort, commitment, and patience for you to pull that off. Getting used to the way life and business operate in Western Europe, especially Germany, can sometimes take a lot of time. That’s why you need to know the right tricks as early as possible so that your beginnings can achieve sustainable growth.
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Germany is a country with an incredible quality of life. It offers diversity in its people and culture, making it truly one-of-a-kind! You will be able to find international business partners here as well because the coexistence of various cultures makes this place very welcoming for all types of outsiders.
If you’re starting a new business in Germany, there are some things you should keep in mind while you’re navigating your business journey. Here are a few things you need to know when doing business in Germany and some practical tips for attracting employees.
1. Familiarize Yourself with the Law
Labor laws vary from one European country to another. It’s imperative to do your research on various labor laws available in Germany. Alternatively, you can hire a professional in the subject to help you understand those laws, especially those touching on taxes, payroll, and social security.
One of the best ways to do business in Germany is by capitalizing on their freedom of movement laws. For example, a company can recruit people from all other EU countries and hire any foreign workers they so choose with relatively little hassle thanks to easy visa rules.
2. General Requirements
There are several legal requirements needed to be met when you want to start your business in Germany. First, you have to be at least 18 years old. Second, it is a must that you have never been banned before from practicing the profession you want to set your business about in Germany.
Another list of requirements that you have to deal with:
- Obtain a business visa
- Register your address in Germany
- Open a bank account
- Secure a trade license
- Complete your business registration
- Get health insurance
- Find a tax advisor
When registering your business in the tax office, they will decide if you are a freelancer (Freiberufler) or a tradesman (Gewerbetreibender). The difference is quite important, tradesmen have to obtain a trade license and pay a trade tax. And there are different rules to follow when you register your business as a Tradesman.
3. Update your website
Make sure to localize your website for the German audience. Further, ensure that everything on the website complies with the many German and European regulations. There are many cases of website owners that violated the rules and were punished because of it!
Social media has been and continues to be a major communication channel in Western European countries like Germany. It’s also one of the best places to set up your business. Facebook is one of the most popular platforms in the country. LinkedIn is less popular there, so go for Xing instead. If you start seeking employees, job agencies are other great places to source talent in Germany. Also, be sure to check out employment review platforms and other social platforms like Instagram, Whatsapp Live, Pinterest, and Snapchat.
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4. Quality Talent is Scarce
After you have set up your business, seeking the right employees is the next big step. German employees differ from those of your home country in terms of legislation, finances, culture, and language. Because of the aging population coupled with a low rate of unemployment, skilled talent attracts extremely high demand in Germany.
Many skilled job seekers know that they can reject your job and still secure another one easily. So be sure to create a detailed job description that describes your business, the role, the salary, and other attractive perks to lure them to your company. The objective here is to offer them something that shows them you value and respect them as human beings as well as make them feel they are a crucial part of your company’s mission.
5. Use Relevant Recruiting Technologies
Applicant tracking systems (ATSs) and applicant management systems are the most widely used recruiting technologies in Germany. Businesses are also taking advantage of software like Xing Talent Manager and LinkedIn Recruiter to look for and identify the right talent. The top 4 platforms being used to post vacancies are: XING, LinkedIn, Employment review platforms and Facebook. So be sure to use these technologies to increase your odds of finding the right people to add to your workforce.
6. Partner with a Well-established Professional Employer Organization (PEO)
A PEO is an outsourcing company that offers services to businesses (small and medium-sized) planning to expand internationally. It can handle your abroad human resource requirements via a co-employment model. It can also help you hire the right talent in a foreign country, especially if you haven’t established a physical footprint there yet.
A PEO Germany partner takes over the responsibility of hiring in Germany and paying your overseas workforce. It complies with all the employment regulations and taxes, allowing you to concentrate on the core functions of your businesses. So partnering with a reputable PEO may be undoubtedly the most effective way to hire the right people for your business.
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Setting up a business in Germany has different requirements compared to those in your home country or any other European country. After you set up the business, the challenge will be how to attract Germans to your business and convince them to be part of your workforce. You must have a great recruitment strategy in place. Study and understand the market. That way, you’ll gain a clear idea of the preferences and motivation of your target candidates and you can incorporate that into your recruitment strategy.