Meanings of Secondary Business
When registering a business, a general distinction is made between main business and secondary business. The only ones excluded from this distinction are freelancers. These are not subject to the business regulations and therefore do not have to register with the business office . The line between main and secondary business is drawn by the law and the social insurance agency of the GKV (statutory health insurance funds). For secondary business, synonyms such as secondary employment, small businesses are often used.
What is a secondary business?
According to DEFINITIONEXPLORER.COM, a secondary business is a registered business that is not, however, carried out full-time or full-time. Especially the social insurance agency (the GKV) draws, like the legislator, the limit of 20 working hours per week between the business and the main occupation. It should be mentioned that the term “secondary business” does not provide any information about the legal form of the company. In principle, every business can be carried out by a small business owner as a secondary business, regardless of the type of company. There are also no differences when registering with the business office; the registration of the secondary business is identical to that of a main business.
However, employers must be informed about the future or existing business or small business. As a rule, employers have nothing against registering a secondary occupation if the work performance of the employee does not suffer from the additional work. Of course, competition with the secondary business to the employer must also be avoided, because both then usually lead to disputes, which often have to be resolved in court.
Secondary business and health insurance
The start-up of a business is not obliged to take out additional health insurance by opening up an secondary business (even as a small business owner) . As a rule, the founders must continue to be insured through the free family insurance of the statutory health insurance with their secondary businesses. If he receives unemployment benefits or even Hartz 4, he can continue to be insured through the responsible Federal Employment Agency. Whether the small business owner can continue to be insured in the statutory health insurance, the family insurance or through the public carrier, however, decides the respective insurance. This is usually based on the scope of the secondary occupation for the decision.
Does the secondary business have to be registered with the business office?
In general, the secondary business must also be registered with the competent business office. This situation arises from Paragraph 14 of the Industrial Code (GewO), which states that a commercial activity must be registered as soon as it is started. The business registration should not be deliberately delayed and should be done promptly to avoid trouble. The local business office also provides information on deadlines, because it usually has a little leeway. You can find more information on registering a business in Baden-Württemberg on the service page of the Ministry of the Interior, Digitization and Migration.
What is a commercial activity?
This question becomes more difficult because there is no clear definition here. The question that arises is: Is the eBay seller , who only processes a few transactions per month, already a commercial dealer? Does the carpenter who occasionally does small jobs for friends and acquaintances for a fee have to register a business? This is a broad gray area. However, a commercial activity exists in the following cases:
- If it is a self-employed activity – i.e. not as an employee
- The activity is allowed
- There is an intention to make a profit
- The activity is designed to last
Thus, both the eBay seller and the carpenter are commercially active, because a) their activity is not prohibited, b) they work independently, c) they work permanently and d) they earn money with it.
How large the scope of the activity is is not relevant. Even if only a few hours are invested in self-employment every month, it is a commercial activity. You are considered a trader if you want to make a profit.
Tax: secondary business, tax office and tax return
Once the business registration is done, the secondary trader should get in touch with the tax office – because sooner or later they will want to take part of the cake – in other words: taxes. The tax return for small business owners will of course also change.
1. The tax registration form
After the business has been registered by the small business owner, the tax office is automatically informed that a business has been registered. As a rule, it immediately sends the founder a so-called “tax registration sheet”. In this, the key data of the company in formation are recorded and the expected income for the current and next year is estimated.
2. Collect and organize receipts throughout the year
All relevant documents and receipts for the tax as well as for the business must always be kept together and organized. For this, the trader should create folders in which he can properly store the incoming and outgoing invoices. This is of course also permitted in digital form. In this way, a late or incorrect tax return can be avoided because you first have to rummage through the chaos or even no longer find important documents for taxes. You should find out exactly what can be deducted as operating expenses in advance. As a small business owner, you can sort out and only keep the documents relevant to your tax return. Incidentally, the tax office has an obligation to provide information to the taxpayer on all questions relating to tax. Of course, this also applies to small businesses and founders. So if you have any questions about your own tax return, you can contact your tax advisor or the responsible tax office.
3. The determination of the income-surplus-account
The profit of the secondary business – and thus the tax to be paid – can easily be determined using an income-surplus calculation . This is a greatly simplified form of profit determination, in which the income and the expenditure are compared according to the principle of actual taxation . A full accounting is usually not required for the tax return in the context of an secondary business. The result of the income statement can then be transferred to the income tax return, which contains the income of the various types of income and reports it to “tax”.
4. The income tax return
It depends on whether the trader is commercially or freelance, which of the following annexes are relevant for the income tax return:
- Annex S: For income from self-employed work
- Appendix G: Income from business
In one of the two systems, the profit or loss, which was determined by the income-surplus calculation, is entered. This annex is added to the cover sheet that forms the framework of the tax return. An online tax calculator can be used to calculate how high the individual tax burden will be. Of course, secondary businesses or small businesses can also submit their tax returns online and use the ELSTER procedure.
The secondary business and unemployment
A secondary business can also be registered in times of unemployment. However, this can lead to problems when applying for the start-up grant. Therefore, everyone should first talk to a start-up coach so that the funding from the start-up grant is not endangered.
If a secondary business is registered in unemployment, then some regulations on the scope of work and additional income must also be observed. The weekly working time must not exceed 15 hours. Because: Those who work more no longer count as unemployed and no longer receive any benefits. The additional income as a small business owner may not exceed 165 euros per month. Any income above this limit must be deducted from unemployment benefit.