Choosing an Accounting System When Establishing a Company in Germany

1) Define the accounting system correctly in Germany: HGB, GoBD, and reporting axis

HGB and GoBD: clarify the backbone of the business

The backbone of accounting in Germany is formed by HGB (Handelsgesetzbuch). HGB clearly defines how to keep commercial books, which tables to prepare, and what to publish. The principles of GoBD come into play for digital records; you must keep every document in a timely, complete, and immutable manner.

• Prepare the singular (legal) financial statement set with HGB.
• Implement e-document regulation, audit trails, and access policies with GoBD.
• Link the processes of purchases, sales, banking, payroll, and inventory to the document flow.

EÜR or double-entry? Quick decision framework

EÜR (income-expense basis) offers a practical start for sole proprietorships and small-scale activities. When establishing a capital company (GmbH/UG/AG), double-entry bookkeeping (doppelte Buchführung) is mandatory. If you have growth targets, you can reduce future transformation costs by establishing a double-entry structure from day one.

• GmbH/UG/AG: Use double-entry bookkeeping.
• Freelancer/sole proprietor: Start with EÜR; switch to double-entry once you exceed the threshold.
• Fast-scaling models like e-commerce and SaaS: Set up a direct double-entry structure.

IFRS or HGB? Measure investor and consolidation requirements

You prepare legal financial statements according to HGB in Germany. If your goal is to go public, attract international investors, or consolidate across multiple countries, you enhance comparability in management reporting by using IFRS. Choosing IFRS for consolidation accelerates investment processes.

• HGB: Establish the legal table and tax base.
• IFRS: Increase transparency in investor relations and group reporting.
• Dual reporting: Run HGB singular and IFRS management/consolidated structures in parallel.

2) Clarify your choice according to company type, scale, and management

Apply minimum requirements when establishing GmbH/UG

GmbH and UG maintain double-entry bookkeeping from the outset and prepare a balance sheet and income statement at the end of the year. You will add additional notes and management reports according to size class. You will follow timely publication obligations.

• GmbH/UG: Set up the opening balance sheet, chart of accounts, and VAT processes in the first month.
• Prepare financial statements at the end of the year; publish according to your class.
• For medium/large scale, create an independent audit plan and schedule.

Leverage flexibility in sole proprietorship and freelance models

If you are a freelancer or a small-scale sole proprietor, you manage cash flow simply with EÜR. Once you exceed revenue and profit thresholds, you switch to double-entry bookkeeping. By restructuring bank reconciliation and e-invoice flow from the start, you facilitate the transition.

• EÜR: Quick start, low operational burden.
• Transition triggers: Revenue/profit threshold, external audit request, investment round.
• If you have a scaling plan, establish a double-entry structure from the outset to reduce risks.

Link small-medium-large classification to your processes

Germany classifies companies based on financial and employee count thresholds. The class affects the scope of notes, management report, audit, and publication time. Simulate and prepare for the risk of class jumping in annual planning.

• Small: Simple table set, longer publication time.
• Medium: Expanded disclosures and audit requirements.
• Large: Short closing calendar, comprehensive audit, and public disclosure.

3) Operational design: chart of accounts, VAT, e-invoice, and payroll

Design the chart of accounts (Kontenrahmen) according to the business model

The chart of accounts is like the language of accounting. Choose a framework suitable for your business model (e.g., SKR03/SKR04); code cost centers and revenue streams from the start. Integrate bank, collection, and payment tools directly.

• Track sales channels (marketplace, subscription, project) in separate accounts.
• Code software, R&D, marketing, and logistics costs in separate centers.
• If you use multiple currencies, automate currency difference accounts.

Digitize VAT, e-invoice, and GoBD compliance

The standard VAT rate is 19%, reduced rates apply to certain products/services. Correctly apply reverse tax liability, export exemptions, and intra-EU deliveries. Prepare for a gradual transition to e-invoicing from 2025; keep the archive audit-ready in accordance with GoBD.

• Link monthly/quarterly VAT declarations to the calendar and execute in agreement with bank flow.
• Select the e-invoice format, approval flow, and storage solution.
• Automate reverse charge and customer VAT number checks.

Establish smart processes for payroll, posted workers, and remote teams

In Germany, payroll runs alongside social security and tax deductions. You apply posted worker rules for temporary assignments within the EU; ensure compliance with A1 certificates, minimum wage, and working hours.

• Synchronize the payroll calendar with tax and social security notifications.
• Define clear contracts and expense policies for remote workers and contracted personnel.
• Keep posted worker files (notification, contract, wage proof) complete.

Corpenza sets up end-to-end international accounting, payroll, and personnel leasing (posted worker) processes. Companies manage payments for remote and contracted personnel through Corpenza; they handle multi-country payroll from a single panel.

4) International expansion: IFRS, transfer pricing, and group structure

Standardize the accounting architecture in multi-country operations

When selling in multiple countries, establish a single consolidation backbone. Report locally with HGB, consolidate within the group using IFRS. Centralize the master data (customer, product, VAT codes) dictionary to reduce errors.

• Conduct local legal reporting on a country basis, manage consolidation centrally.
• Clarify the policy for multi-currency closings (spot/average/closing).
• Authorize internal audit and access roles based on country/function.

Proactively manage transfer pricing files

Apply arm’s length pricing for intra-group services, software licenses, and goods movements. Keep master file and local file documents up to date; issue intercompany invoices regularly throughout the year.

• Document the scope of services, benefit test, and pricing method.
• Track year-end adjustments month by month to reduce surprise risks.
• Keep a data room ready for immediate responses to tax authority requests.

Accelerate investor reporting and consolidation

If you are planning an investment round, reduce monthly closing to 5 business days and standardize the KPI set. Structure revenue recognition, deferred income, and equity-based payments correctly according to IFRS.

• Create a closing checklist; clarify tasks, ownership, and delivery dates.
• Speed up disclosures with predefined note templates.
• Translate the management report (cash runway, gross margin, net revenue retention) into a clear language for investors.

Corpenza establishes the IFRS/HGB dual reporting, consolidation, and investor KPI architecture; plans tax optimization at the group level.

5) Compliance calendar, internal controls, and error-free closing

Implement monthly-quarterly-annual closing calendars

Close bank, POS, and revenue reconciliations every month; approve VAT, payroll, and expense flows. Review inventory and receivable aging quarterly. At year-end, conduct stock counts, depreciation, and provisions.

• Monthly: Bank reconciliation, VAT, payroll notification.
• Quarterly: Inventory, receivable/payable aging, budget revision.
• Annual: Physical count, tax reconciliations, financial statements, and publication.

Strengthen document retention, audit trails, and data security

Retain commercial documents for 10 years; manage access based on roles. Do not close the audit trail; version instead of deleting. Set up multi-regional backups; regularly check access logs.

• e-archive compliant with GoBD: Invoice, contract, bank statement, payroll.
• Use encryption and multi-factor authentication.
• Apply sampling and re-performance tests for internal audits.

Prevent common errors: minimize penalty and reputation risks

Late publication, incorrect VAT, missing payroll, and delays in intercompany invoicing are the most common errors. You can prevent these errors through processes and automation.

• Set up a dashboard for publication dates and define reminders.
• Make VAT numbers, country rules, and exchange rate selections mandatory with systemic constraints.
• Incorporate intercompany SLA and invoicing as part of the month-end closing.

Corpenza sets up the closing checklist, RACI matrix, and automations; consolidates payroll and accounting integrations into a single flow.

6) 2025 updates, market opportunities, and Corpenza’s roadmap

Keep 2025 regulatory topics on your radar

The gradual requirement for e-invoicing, the expansion of scope in sustainability reporting, and the minimum tax regime for multinational groups will come to the forefront in 2025 and beyond. Preparation for these topics will affect your system choices and process designs.

• E-invoice: Establish acceptance and format compliance; plan supplier training.
• Sustainability reporting: Connect non-financial metrics (energy, supply chain) to ERP.
• Minimum tax and global reporting: Centralize group data.

New market opportunities: remote workforce and scaling within the EU

Germany offers a scalable ground with qualified labor and R&D incentives. You can quickly enter the market with remote work and temporary assignment models; design cost and tax optimization alongside the process.

• Remote team: Establish flexible capacity with payroll and contract management.
• Services within the EU: Quickly establish field presence with posted workers.
• Financing: Accelerate your investment round with robust reporting.

Implementable roadmap with Corpenza

Corpenza offers mobility, corporate structuring, and workforce solutions under one roof in Europe and globally. You will set up and operate the entire flow from company establishment to accounting architecture, multi-country payroll to posted worker management in Germany.

• Company establishment and tax registration: We set up the opening balance sheet, chart of accounts, and VAT processes from day one.
• International accounting and payroll: We manage DATEV/ERP integrations, IFRS/HGB dual reporting, and payroll operations.
• Personnel leasing (temporary employment) and posted workers: We execute compliance, A1, and notification processes end-to-end within the EU.
• Residence/work permits, investment-based residency, and citizenship: We align mobility strategy with hiring plans.
• Tax optimization: We optimize your group structure, transfer pricing, and cash flow from a tax perspective.

If your goal is clear, align your accounting system with your strategy; secure processes with automation and focus on growth. Corpenza enables you to make a solid start with the right accounting system in Germany; you will manage compliance and agility together in your global growth.