Solo Trader
Einzelkaufmann Einzelkauffrau (e.K.) (Sole trader (e.K.))
If an enterprise has reached a commercial operational size (from about 250,000 Euro annual turnover), not only a trade registration, but also an application for entry in the Register of Commerce has to be made.
If this operational scope is not achieved, a company can be entered in the Register of Commerce voluntarily. As a result of the entry, the enterprise is deemed a merchant within the meaning of the German Commercial Code (HGB). The German Commercial Code is then also applicable to the sole trader’s business.
If this operational scope is not achieved, a company can be entered in the Register of Commerce voluntarily. As a result of the entry, the enterprise is deemed a merchant within the meaning of the German Commercial Code (HGB). The German Commercial Code is then also applicable to the sole trader’s business.
A sole trader is liable with his/her entire assets.
The directives of the HGB deserve special attention, as the law contained there is the “special law of merchants”.
The directives of the HGB deserve special attention, as the law contained there is the “special law of merchants”.
For example, amongst other things, the HGB regulates that only a merchant is entitled to bear a corporate name as the name under which he runs his business, may sue and may also be sued. The proprietor’s name need not be contained in the corporate designation. With the merchant’s approval, this corporate name can be continued by people acquiring or inheriting the enterprise.
The right to grant limited commercial powers of attorney has been reserved for merchants.
Alongside the fiscal law directives, merchants must also comply with the commercial law accountancy and balance sheet directives (§§ 238-263 German Commercial Code). But this does not automatically mean that a balance sheet has to be drawn up. A sole trader who does not manifest more than 600,000 Euros of annual turnover and 60,000 Euros of annual surplus on the decisive dates of two successive fiscal years does not need to apply §§ 238-241 German Commercial Code, the less extensive cash accounting method is then sufficient.
Merchants have to pay attention in agreements of contract penalties, sureties, acknowledgements of debt, debt promises and agreements of places of jurisdiction. Formal directives existing in favour of non-merchants do not apply to merchants.
On the other hand, this facilitates his everyday work. In addition, merchants can be appointed as commercial judges (honorary judges at the Chamber for Commercial Matters at a Regional Court) after they have turned 30.