How To Build A Business In Austria

A quick guide for a flying business start

You have the idea of the century? You want to start up your own business? Great! We help you to get started, avoid common mistakes and make your business successful.

Just do it!

Many motivated people do not even start their career as young entrepreneur, because they are too concerned about the many legal and tax issues and potential problems that may arise. They end up losing sight of the main objective and drop their project before it has started. Our advice: Yes to proper preparation but within reason and the awareness of your main goal!

The first stage of your planning is already done. You have your business idea, analyzed customer segments and competitors and thoughts have been given to arising expenses for resources and employees. A rough business plan exists. Now it is time to put theory into practice!

Less is more!

Too many cooks spoil the broth, as the old saying goes. This is especially true for business partners. The more people are involved, the more difficult it is to come to a decision. Ask yourself if your buddies Frank and Joe should really join your company! Consider that Joe could also be a self employed consultant who works for your company. Frank might be a better employee anyway. Additionally you can avoid trouble when it comes to discussions about compensations and company value in case one of your friends wants to leave the company. Always keep in mind: One who commits themselves should examine!

Ready for takeoff?

The easiest way to start your own company in Austria is by founding an individual enterprise (“Einzelunternehmen = EPU”). As a one-man-business you can start operating once you finished reading this article. Is this possible? Yes, it is! How? Read on!

If you decide to put your business ideas into practice using an “EPU”, better start sooner than later! In a first step you are well advised to arrange an appointment for a counseling interview (“Neugründungs-Beratunsgespräch”) at your local chamber of commerce (“Wirtschaftskammer = WKO”). The WKO assists you with completing some standard forms that help you save taxes! Note: If you start your business with a limited (“GmbH”) give the completed forms to your solicitor in order to save the capital transaction tax (“Gesellschaftsteuer”).

Secondly: Most likely you already have an Austrian tax number (ask your local tax office if you are not sure). If not, you can easily apply for it at your responsible Tax office. To get your codes for “Finanz-Online” (online platform of the Austrian Tax Authority) just take your passport and go to the next Tax office to apply for them. Normally you don’t need to wait (depending on your Tax office) and you get the login details immediately. Alternatively, you can ask your tax advisor to order your login details for Finanz-Online.

Now go to www.finanzonline.at, login and inform your Tax Authority about your new business (“Eingaben à Anträge à Erklärungswechsel”). Enter your tax number and click on “Wechsel zur Einkommensteuererklärung bzw Änderung deiner Tätigkeit”). Now enter all relevant business data. Be careful with announcing too high profits in the first and second year of your business. The profits you indicate in the form are the basis for calculating your advance income tax payments.

Consult your business plan in order to decide how to handle VAT. What turnover do you expect? If your turnover won’t reach EUR 30.000 (without VAT) you don’t need to pay value added tax to the Tax Authority. On the other hand you don’t have the possibility to get the input VAT from your investments (e.g. your notebook). If your turnover is over EUR 30.000 you normally have to pay VAT, but you can deduct input tax from your payment charge. It’s always possible to opt for VAT in case your turnover is below EUR 30.000.

If you charge VAT, you can apply for an individual VAT-number, which you need for transactions within the European Union. Our advice: Put your VAT-number on every invoice. Go to www.stb-ressl.at/downloads and get a free checklist in respect of the mandatory elements of an invoice according to Austrian VAT-law!

Social Security?

Being self-employed normally indicates that you are subject to payments for social insurance for entrepreneurs (“gewerbliche Sozialversicherung  = SVA”) Register at www.svagw.at. After registration you will be charged advance payments calculated on preliminary income values. Our advice: Talk to your tax advisor before you register. You can make serious mistakes by registering for the wrong insurance.

Please note: You are obliged to inform Tax Authorities and the “SVA” about your new business within four weeks after you started operations.

Why do you need a tax advisor?

Not many steps are necessary to start your business – but it should be the right steps. You can easily make serious and expensive mistakes at the beginning.

Your tax advisor

1. helps you completing and refining your business plan,

2. helps you finding the appropriate legal form for your business,

3. supports you dealing with the relevant authorities,

4. helps you organizing and executing your ongoing duties and

5. consults you how you can safe time, money and taxes.

We definitely recommend you to talk to your tax advisor before you consult a bank or another investor.

Now figure out whether you want to do bookkeeping by yourself or if you prefer outsourcing. The simpler you set up your business (EPU) the easier it is to handle accountancy on your own. But please keep in mind that you should have an appropriate Know-How of accountancy and taxes (especially VAT) to manage things correctly. It may become very expensive if a professional needs to repair mistakes retrospectively.

Check this: Grab your EUR 200 voucher for your first financial statement on www.niemals-ohne.at

Financing

Ideally you can start your business without large capital requirements. But if you need money you will have to ask yourself (and your business plan) how to capitalize your business. Is it better for you to take out a loan or should you start with a co-owner? What about a loan that has a profit-based remuneration? All these questions lead to many fiscal issues that you definitely should discuss with your tax advisor. He will help you finding investors and assist you in fiscal and economic matters.

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Any Questions?
Don’t hesitate to contact us – we will provide the support necessary to make your business a success!
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