Starting a Business in Berlin

58 59 Starting a Business in Berlin A Beginner’s Guide How to determine your annual personal expenditure: General living costs (food, clothing, leisure) € + Private rent, other commitments € + related to accommodation (incl. ancillary costs) € + Car, bus and rail € + Phone, radio, TV € + Holidays € + Pension € + Health insurance € + Life insurance € + Expenditure on private loans € + or other commitments + Anticipated deductions for income tax, church tax € + and solidarity surcharge € + Miscellaneous (e.g. maintenance payments) € = Annual personal expenditure € Your personal expenditure represents the absolute minimum profit you have to achieve. As a sole trader, your profit – i.e. the bottom line – is what you have to live off. If you are setting up a limited liability company such as a GmbH, bear in mind that, as an employed managing partner, you will receive a salary and possibly a share of the GmbH’s profit or turnover. You don’t then cover your personal expenditure with the company profit, but rather with the salary paid to you by the GmbH, which should be enough to cover it. The starting point for preparing the profitability forecast is an estimation of the expected annual turnover. Long-term capital requirement € + Short-term capital requirement € = Overall capital requirement € Once you have identified your overall capital requirement, you have to think about how to finance this in the best pos- sible way. The following section provides further information on how to go about this. If you decide to opt for loan-capital financing through a bank or promotional loan, for example, you must ensure that the interest and repayment charges do not exceed the economic viability of your business. It is for this reason that you need to establish the threshold for interest payments. THE PROFITABILITY FORECAST This is a profit and loss calculation based on a forecast, which serves to clarify whether the expected annual turnover yields an adequate profit after deducting all operating costs or vice versa: how high does the annual turnover have to be for the business to be profitable and for you to be able to live off the profits? Consider the fact that, with the same standard of living, the profit equating to the income of a self-employed person has to be significantly higher than the income of an employee: all of the costs of your national insurance payments, such as pension schemes, health insurance and accident insuran- ce, are borne solely by you if you are self-employed. In the case of setting up a business after being unemployed, check whether it is possible to obtain any funding from your emplo- yment agency or job centre. CHAPTER 5