Starting a Business in Berlin

60 61 Starting a Business in Berlin A Beginner’s Guide The determined net profit reflects the foreseeable profitabi- lity of your business; however, since the liquidity of the com- pany (i.e. the amount of actual financial resources obtained in a given period) is just as important as profitability, the imputed depreciation (amortisation), which is to be recorded as costs despite not creating any immediate expenditure, is to be added to the net profit. Net profit € + Depreciation € = Cash flow € It is from this cash flow, which banks in particular consider a crucial assessment criterion when it comes to extending cre- dit, that you have to cover your cost of living, expenditure for investments and loan repayments. In a GmbH, however, the cost of living is already covered by your managing director’s salary and so does not have to be financed from the cash flow. At the same time, you can use cash flow to determine your individual threshold for interest payments as the maximum economically sustainable burden of interest and amortisation, and therefore also the maximum limit for debt financing: Net profit € + Depreciation € + Interest on external loans € = Extended cash flow € + Miscellaneous income € - Personal expenditure € - Income, trade and church tax € = Threshold for interest payments € Profitability forecast (Annual calculation: net, i.e. less VAT and input tax) Revenue from services € + from trading activities € + from licences, commission, etc € = Total revenue € Costs - Materials used € - Cost of merchandise € = Gross profit I € - Gross wages and salaries € - GmbH managing director’s salary € - Ancillary personnel costs (national insurance deductions) € = Gross profit II € Other costs - Rent/lease € - Heating/fuel € - Vehicle costs € - Postal costs € - Insurance, fees, contributions € - Tax and legal advice € - Advertising € - Interest on external loans € - Miscellaneous costs € - Low-value commodities, repairs and maintenance € - Depreciation on vehicles, machinery, equipment, buildings € = Net profit € CHAPTER 5