Why the first tax return is easier than it sounds…
The first tax return often seems like a huge challenge – a mountain of forms, technical terms, and numbers. But the truth is, it primarily gives you an overview of what you did, earned, and spent last year.
The tax return isn't a test you have to pass, but also a tool that helps you better understand your finances, plan reserves, and take advantage of possible tax benefits. In the process, you learn to manage your money more consciously – in the truest sense of the word.
Our tip: Take your time with your first tax return, but don't be afraid of it. It's a learning process – you'll quickly realize: much of it repeats every year and gets easier over time.
Which taxes affect you as a self-employed person?
If you work as a self-employed person, you may need to deal with several types of taxes, but don't worry: there are only a few, and they follow clear rules. The most important is income tax, in addition sales tax and trade tax may apply, depending on the type of your activity.
Income Tax
It affects all self-employed persons and freelancers. In your tax return, you state how much you earned during the year and what expenses you had. This results in your profit, and you pay income tax on that.
Example: You earn €40,000 per year and have €10,000 in business expenses → your taxable profit is €30,000.
Sales Tax (also VAT)
If you regularly write invoices, you usually also have to calculate sales tax and remit it to the tax office.
There is one exception, the small business regulation (§ 19 UStG): If your revenue last year was under €25,001 and you don't expect more than €100,000 revenue in the current year, you qualify as a small business owner under §19 UStG and the sales tax obligation doesn't apply. You issue invoices without sales tax, don't have to submit monthly or quarterly advance notifications, and consequently don't have to file a sales tax return. Source
Trade Tax
This tax only affects you if you operate a registered trade – meaning you don't practice a liberal profession. It's paid to the city or municipality where your business is registered. For sole proprietorships, there's an exemption amount of €24,500. Many small self-employed persons fall below this threshold and don't pay trade tax.
Our tip: When registering your self-employment, you'll find out whether you're working as a freelancer or in trade – this influences which taxes you have to pay and which forms are relevant.
Sources: Tax types for self-employed (FYRST) | Taxes for self-employed (Gründerplattform)
Preparation: What you need!
Before you start your tax return, a brief overview of your documents is worthwhile. If you have everything collected, the rest goes much easier. The rule of thumb is: Income, expenses, receipts.
Income
Here you enter everything you earned during the year, for example through:
- Fee payments as compensation for contracts/services
- Sales of products
- Licensing income
- Rental or sublease income
It's best to keep a simple overview from the start, e.g., in a spreadsheet or accounting app.
Expenses
Deductible business expenses reduce your profit and thus your tax burden. These include, among others:
- Office supplies, software, work equipment
- Telephone, internet, rent for workspaces
- Insurance (e.g., professional liability) and much more
Important: Keep receipts! Receipts usually don't all have to be submitted, but must be available upon request from the tax office. Digital is usually sufficient.
Before you start: These documents you need
- Receipts
- Income-expenditure statement (EÜR)
- Tax number and ELSTER access
- Bank statements from business account
- Insurance documentation (e.g., health insurance)
- If applicable: Documentation of private pension contributions or donations
Our tip: Create a fixed folder or digital storage location for all tax-relevant documents. This saves time (and nerves) when you fill out the return.
Step by step: How to do the first tax return
When you have your documents together, you can start right away. The easiest way is digitally via ELSTER, the online portal of the German tax administration. There you can fill out, check, and submit all forms electronically.
1. Registration with ELSTER
Register at elster.de. You'll receive a certificate file and an activation code by mail – this usually takes several days.
After that, you can log in to the ELSTER portal and begin your return.
Our tip: Register with ELSTER early and dive right into the tax return – the activation code sometimes takes a while to reach you.
2. Select the right forms
Which forms you need depends on your activity:
- EÜR (Annex EÜR) – for profit determination
- Annex S – for freelancers
- Annex G – for trade businesses
- Sales tax return – if you're subject to sales tax
You'll find all of them directly in the portal under Forms & Services.
Source: Startup portal – Taxes
3. Enter income and expenses
In the EÜR annex you enter all your income (e.g., from fees, product sales, licenses) and business expenses (e.g., software, work equipment, travel costs). The difference results in your profit.
ELSTER guides you step by step through the fields – many are self-explanatory.
Our tip: If you maintain your bookkeeping regularly, you can transfer the values directly. This saves a lot of time.
4. Check and submit
At the end, you can check your data directly in the portal. ELSTER shows you whether any information is still missing or forms are incomplete. After that, you can send everything electronically to the tax office.
You'll receive a transmission confirmation and can view your return again at any time later.
Tip: After the first return, much runs automatically – next time, many things are already pre-filled.
Tools & Support
No one has to do the tax return completely alone. Today there are many digital tools and support services that guide you step by step.
Which solution fits best depends on how complex your situation is and how much you want to handle yourself.
Option 1: ELSTER (free & official)
ELSTER is the official online portal of the tax administration. You can fill out, save, and submit all forms electronically there.
This is perfect if you have a good basic understanding and manage your bookkeeping yourself.
Advantage: free, directly with the tax office. Disadvantage: sometimes confusing, relatively few explanations.
Option 2: Tax apps & online platforms
Services like steuererklärung.de, Kontist, WISO Steuer, Taxfix, or lexware guide you intuitively through the process. They explain technical terms, automatically recognize possible deductions, and transfer your data to the tax office via ELSTER interface.
Ideal if you:
- Want to save time
- Need clear explanations
- Or want to feel confident with your first tax return
Advantage: simple, visual, little technical language. Disadvantage: annual costs (usually €30–80).
Option 3: Tax advisor
When your finances become more complex, e.g., through multiple income sources, employees, or high investments, professional support can be worthwhile.
Tax advisors handle the complete return, review depreciation and deadlines, and give you planning security.
Advantage: maximum relief, legally secure advice. Disadvantage: more expensive (depending on effort).
Whether you prefer to do the tax return yourself or use support – both are right. What's important is that you find a solution that gives you security and fits your work style.
With each year your knowledge grows – and eventually you'll become the tax expert of your own business.
Deadlines & Tips for Problems
The tax return has fixed submission deadlines – keep them in mind. This helps you avoid late fees and clarify questions from the tax office calmly.
Submission deadlines
- Without tax advisor: Submission by July 31 of the following year (Example: tax return 2024 → deadline July 31, 2025)
- With tax advisor: Extended deadline until February 28 of the year after next (Example: tax return 2024 → deadline February 28, 2026)
Source: § 149 Tax Code (AO)
What happens in case of delay or errors?
If you submit late, the tax office may charge a late fee. It's usually at least €25 per month started.
For missing information, you'll first be asked to submit it – often a simple correction via ELSTER is sufficient.
Our tip: If you can foresee that you won't make it on time, apply for a deadline extension early. This can be done informally via message to the tax office through your ELSTER mailbox.
Source: § 152 Tax Code (AO) – Late fee
Your roadmap for the first tax return
Your tax return is no mystery – it's a process you can master with calm and system. Once understood, it gets easier every year. And with each step, you gain more security and clarity about your finances.
Checklist: Your first tax return
Preparation
- Income and expenses collected
- Receipts and invoices organized (digital or paper)
- Tax number and ELSTER access available
- Insurance documentation ready (e.g., health insurance, pension)
- EÜR prepared
Implementation
- Registered and logged in to ELSTER
- Right forms selected (EÜR, Annex S/G, possibly sales tax)
- Income and expenses completely entered
- Data checked and submitted electronically
Follow-up
- Transmission confirmation saved
- Tax assessment checked (objection possible within 1 month)
- Insights noted – what can you simplify for next year?
Our tip: After the first tax return, establish a small routine – e.g., check bookkeeping and sort receipts once a month. This keeps your next tax return easy and stress-free.