Discipline from day one
Once you opted for a certain form of business, the challenge now is to stay on top of all important tax payment deadlines and to comply to the numerous tax rules. Not only in Germany there are a lot of complex tax rules such as the value added tax.
Be prepared to make advance payments on taxes each quarter. This is very important, as young companies may not be profitable within the first years but still need to pay income taxes, for many different reasons. One reason, for example, can be if you set up provisions that are allowed within the trade balance but have to be released for tax return purposes.
Also focus on managing your cash flow to build up reserves for unexpected tax payments. Even if you do the bookkeeping by yourself to keep expenses low, there is always the risk of accounting errors. As tax audits often cover several years, such audits can lead to serious tax back payments, including penalties and interest if you have not complied to the tax regulations from the very beginning. Thus the sooner new business owners deal with tax topics and take professional advice, the sooner they can use potential benefits and avoid mistakes.