So you moved to Germany and started your new expat life, made the leap into self-employment and started freelancing. Now you’re seeing – or maybe just foreseeing – transactions piling up in your Privatkonto (private account).
A quick online search confirms the legal requirements. As a freelancer or trader, you don’t need to open a separate Geschäftskonto (business account)*. But… should you open a separate business account?
Absolutely. Here’s why.
- Easy, accurate bookkeeping
- Track cash flow – income and expenses
- Effortless invoicing – know when you’re paid
- Your bank might require it
- For work life balance
Also included in this guide:
*When it comes to self-employment, you are required by German law to open a separate business account if you operate as a corporation (GmbH or UG).
Read our no BS Business Starter Guide:
1. Easy, accurate bookkeeping
Keep the Finanzamt happy and make life easier on yourself. Opening a business account helps you keep track of transactions, so that when tax season rolls around everything is clear and orderly.
‘€22.40 to Bichou on 24 September… was that a business lunch or a personal one?’
Ah yes, the Berlin soup-expense quandary. With a separate business account, you’ll never have to ask this question again.
Tip – Start your freelancing journey on the right foot
Opening a business account now can save you lots of trouble. Switching later on requires contacting clients and service providers to switch payments and subscriptions to your new account.
Lots of non-traditional banks offer features aimed at simplifying bookkeeping for self-employed people. Features like:
- Receipt capture – to remind you via notification to snap a photo of your receipt, add notes and attach it to your transaction on the go – then save for easy bookkeeping
- Categorisation – to filter expenses into relevant categories, helping you keep track of what money goes where
- VAT calculator – to calculate in real time how much VAT you owe – or what you can claim back!
For tax reasons, you’ll need to keep a record of every expense you claim, along with any info needed to complete tax returns – such as your Einkommensteuererklärung, or annual income tax return.
After it’s all done, you'll need to hold on to your receipts for 10 years in Germany. In 2020, the GoBD (Germany’s principles for proper bookkeeping) were revised. Authorities now accept digital copies (GoBD, RZ 20) – so storing your expense receipts digitally is the best solution. If you need more motivation, just read our post on one small business owner who finally said farewell to the shoebox!
Tip – Tax audits are not to be sneezed at
Ah- AH- AHH- Oops, never mind! Opening a business account reduces the chances the Finanzamt will audit your books. Also, when business transactions are clearly separate from your private funds, the Finanzamt can only audit your business account. To view your private account, they’d need additional permission from the court. Not that you have anything to hide – it’s just a nuisance.
2. Track cash flow – income and expenses
Keep an accurate view of your cash flow. Opening a separate business account guarantees a clearer overview of your business finances – and by extension your personal balance.
You’ll know what money is really yours to spend and what funds are needed to run your business. No one wants to weed through Lidl transactions, Spotify subscriptions and Amazon purchases just to find that pesky software transaction from two months back.
Seeing your business’ cash flow in a separate account also helps you avoid overspending – especially in the early stages when you’re just setting up.
Tip – Check your balance forecast
Our balance forecast shows your estimated cash flow (in a friendly line chart) based on scheduled payments, like invoices due and payments out – so you can always stay one step ahead of the curve.
3. Effortless invoicing – know when you’re paid
Tired of compulsively checking your phone to see if that invoice has finally been paid?
Now you can now find business accounts with built-in online invoicing tools designed to take the stress out of invoicing. Because while we all love getting paid, let’s face it, no one likes asking for money – even if we’ve earned it.
Tip – Look the part with Holvi
When you send an invoice from your Holvi business account, it also sends an official message to your clients. Here’s what they read between the lines and figures:
'Okay, this person is a professional.'
Show your business in its best light and boost your brand with professional invoices. Customise invoices with your logo for a personal touch.
4. Your bank might require you to open a separate business account
Check your bank’s T&Cs – sorry, you might need to pull out the magnifying glass. Some banks prohibit using your personal account for business purposes. Generally speaking, traditional German banks permit a certain number of business transactions each month. If your monthly business transactions exceed your personal account’s limit, your bank might try to switch you over to a business account, typically with a temporary free trial period.
You should avoid automatically doing your business banking with your personal bank. Instead, invest some research and consider your options. Finding a service that best suits your needs can save you time and money.
5. Find work-life balance
Sometimes it’s easy to get carried away in the dream of your new freelancer lifestyle in Germany. You might momentarily lose track of reality – invoices to send, bills to pay, VAT to calculate. Opening a business account sends a signal to your brain that freelancing is a real business venture.
You have your personal and your professional life – and these should, for your sanity and your business’ success, be kept separate. Yes, there will be days when urgent deadlines mean you work late, infringing briefly into your personal life. But you’ll want to consciously move away from this as your small business grows into a stable and long term affair. Eventually, you'll want to find a balance – one that works for you.
What options do I have for choosing a business account?
There are two basic options for choosing a business accounts in Germany:
- Free (no monthly fee)
- Paid (with monthly fee)
Free business account
A ‘free business account’ may not have monthly fees, but it could still cost you to run. Instead of a flat fee, you might be charged a slightly higher amount for card transactions or other services. But that doesn’t necessarily mean that your bank is trying to rip you off. A free business account can still be the cheaper option for you, if it fits your needs.
Tip – Start with Holvi
Holvi Starter has everything you need to get your business up and running – for the price of two oat milk cappuccinos a month. Trust us, your business is worth it.. For your peace of mind, here’s our 100% transparent breakdown for Starter costs in Germany, in English. Or you can find it summarised in an attractive pricing table here.
Paid business account
The other option is a paid business account. When paying a monthly fee you can typically expect lower transaction costs (for example, lower cash withdrawal). Some extras might also be included, to help you run your business. Look out for the features mentioned above – invoicing and expense management, as well as a business payment card.
A paid business account can turn out to be the cheaper option, especially if used extensively.
Tip – Go Pro with Holvi
Send unlimited invoices & e-invoices and gain powerful insights into your business’ inner workings – financially speaking – with Holvi Pro.
If your needs change you can always adjust your plan.
What do I need to open a business account?
Here’s some good news! All you need to open a Holvi business account in Germany is:
Guides to verification with Holvi
You can find all the technical details on opening a Holvi account here.
Think about the time and energy that separating your finances will save you – both now and down the line when it’s tax time. Then think back to these 5 factors and ask yourself the question: ‘Would I benefit from opening a separate business account?’
If the answer is yes, consider Holvi.
Want to learn more about freelancing as an expat in Germany?
We hope this article helps you know what to look for when choosing a business account in Germany. If you want to explore more expat questions, check out: