Cost of Self-Employment 2026: What Founders Really Need to Budget For

The leap into self-employment is exciting – but anyone who underestimates the running costs quickly faces financial problems. Many founders budget only for the obvious expenses such as rent or software, but forget the hidden fixed costs that add up to thousands of euros a month. In this guide we show you all the cost items that self-employed people and freelancers in Germany need to know in 2026.

The biggest cost blocks at a glance

Before we go into detail, here is an overview of the minimum monthly costs that self-employed people in Germany have to expect:

Cost item	Monthly (approx.)	Annual (approx.)
Health and long-term care insurance	approx. 280–1,260 €	approx. 3,400–15,100 €
Retirement provision	200–600 €	2,400–7,200 €
Income tax (reserve)	25–42% of profit	variable
Bookkeeping/tax adviser	80–300 €	960–3,600 €
Trade tax (from ~25,000 €)	variable	from approx. 400 €
Professional liability insurance	15–80 €	180–960 €
Software and tools	50–200 €	600–2,400 €
Office/coworking	0–500 €	0–6,000 €
Total (minimum)	approx. 800–2,500 €	approx. 10,000–30,000 €

Important: these costs arise before you have earned a single cent. They should therefore be included as fixed expenses in your hourly-rate calculation. To work out your realistic hourly rate, we recommend the detailed guide (in German): Calculating the costs of self-employment correctly.

1. Health insurance: the biggest single item

As a self-employed person you are no longer insured through an employer. You bear the full contributions yourself – with no employer share.

Statutory health insurance (GKV)

Minimum contribution (2026): 230.71 €/month health insurance with entitlement to sickness benefit (222.80 € without), calculated on the minimum assessment basis of 1,318.33 €/month – plus long-term care insurance, around 280 € together
Maximum contribution (2026): 1,017.19 €/month health insurance with sickness benefit (982.31 € without) at incomes from the contribution assessment ceiling of 5,812.50 €/month or 69,750 €/year – plus long-term care insurance, around 1,230–1,260 € together
Calculation: 14.6% (without sickness benefit 14.0%) + insurer-specific supplementary contribution (2026 average: 2.9%) + long-term care insurance (3.6%, childless 4.2%) ≈ 21–22% of profit
Source: Federal Ministry of Health, “Beiträge” (as of 2026); the amounts shown use the average supplementary contribution
Advantage: family insurance is possible for spouses and children without income

Private health insurance (PKV)

Entry level: from approx. 300–400 €/month (young, healthy, basic tariff)
Realistic: 500–800 €/month (comprehensive cover, mid-30s)
Beware: contributions rise with age, and there is no easy way back to the GKV

Tip: for founders under 30, private insurance can be cheaper in the short term. In the long term, statutory insurance is often the safer choice, especially if you plan to have children.

2. Taxes: what the state takes from the profit

Taxes are the second-biggest cost block and are the one founders most often underestimate.

Income tax

Basic allowance (2026): 12,348 € (§ 32a EStG; in 2025 it was 12,096 €)
Tax rates: 14–45% (progressive)
Rule of thumb: set aside 30–40% of your profit for taxes
Prepayments: after the first year the tax office demands quarterly prepayments

Trade tax

Allowance: 24,500 € profit/year (only for traders, not freelancers!)
Municipal multiplier (Hebesatz): varies by municipality (e.g. Munich: 490%, Berlin: 410%, rural municipality: 300%)
Calculation: (profit – 24,500 € allowance) × 3.5% × multiplier – partly credited against income tax

VAT

Standard case: 19% on all invoices – but it is “only” passed through
Small business scheme (§ 19 UStG, since 2025): no VAT if turnover in the previous year was at most 25,000 € and does not exceed 100,000 € in the current year – if the 100,000 € limit is exceeded in the current year, the scheme ceases immediately from that turnover. Sounds simple, but costs you input VAT deduction
Tip: anyone with high initial investments should check whether giving up the small business scheme is worthwhile
E-invoicing: since 1 January 2025, every business – including small businesses – must be able to receive and read e-invoices from other businesses. The obligation to issue e-invoices yourself comes into effect in stages only in 2027 and 2028; small businesses are exempt

3. Retirement provision: what many suppress

Unlike employees, self-employed people (apart from certain groups such as craftspeople or artists) do not automatically pay into the statutory pension insurance. That means: without private provision, poverty in old age looms.

Recommended reserve: 15–20% of net income
Options: private pension insurance, ETF savings plan, Rürup pension (tax-deductible), voluntary statutory pension insurance
Minimum contribution to the statutory pension (voluntary, 2026): around 112 €/month (18.6% of the marginal-employment threshold of 603 €)
Realistically sensible: 300–600 €/month

4. Bookkeeping and tax adviser

Depending on the type of self-employment, different obligations apply to you:

Freelancers (simple income–expenditure accounting, EÜR)

Bookkeeping software: 10–30 €/month (e.g. Lexware Office, sevDesk, FastBill)
Tax adviser: 100–200 €/month for ongoing support
Tax return: 500–1,500 € (once a year)

Traders (possibly obliged to keep full accounts)

From 80,000 € profit or 800,000 € turnover: obligation to keep full accounts
Tax adviser: 200–500 €/month
Annual accounts: 1,500–3,000 €

Money-saving tip: use cloud bookkeeping software and prepare your receipts neatly. It saves the tax adviser time – and you money.

5. Insurance for the self-employed

Besides health insurance there are other important protections:

Insurance	Cost/month	Importance
Professional liability	15–80 €	⭐⭐⭐ Compulsory for many professions
Business liability	10–50 €	⭐⭐⭐ With customer contact
Occupational disability	50–150 €	⭐⭐⭐ Protection of your livelihood
Legal expenses (business)	30–60 €	⭐⭐ For contract disputes
Contents insurance	10–30 €	⭐ With your own office/stock

6. Software, tools and infrastructure

The digital basics quickly cost 100–300 €/month:

Bookkeeping: 10–30 €/month (Lexware Office, sevDesk)
Office suite: 7–20 €/month (Microsoft 365, Google Workspace)
Project management: 0–15 €/month (Notion, Trello, Asana)
Communication: 0–10 €/month (Zoom, Slack)
Cloud storage: 2–10 €/month
Website/hosting: 5–30 €/month
Industry-specific: 20–200 €/month (Adobe Creative Cloud, Figma, CAD software, etc.)

7. Office and workplace

Option	Cost/month	Suitable for
Home office	0 € (deductible pro rata)	Freelancers, consultants
Coworking space	150–400 €	Creatives, networkers
Own office	300–1,500 €	Teams, customer visits
Virtual office	30–100 €	Business address without an office

Worked example: what a freelancer really has to earn

Take a web designer who wants to earn 3,000 € net a month:

Item	Amount/month
Desired net income	3,000 €
+ Health and long-term care insurance (GKV, maximum contribution)	1,225 €
+ Retirement provision	400 €
+ Taxes (~25% of profit)	1,640 €
+ Bookkeeping/tax adviser	150 €
+ Insurance	80 €
+ Software and tools	120 €
+ Reserves (illness, holiday)	300 €
= Turnover needed (net, excl. VAT)	6,915 €

With 18 billable days a month (after holiday, illness, acquisition, training), this gives a day rate of approx. 384 € or an hourly rate of approx. 48 € (at 8 hours). Because the profit in this example is above the contribution assessment ceiling, the maximum GKV contribution applies – health insurance is therefore the biggest item after taxes.

Anyone who works for well under 50 €/hour will make long-term losses as a freelancer. To determine your individual hourly rate precisely, the calculator from Sofort-Rechner.de (in German) helps: Calculating the costs of self-employment correctly.

Frequently asked questions (FAQ)

What is the minimum cost of self-employment per month?

Even in the cheapest variant (home office, minimum GKV contribution, no employees) you should expect at least 800–1,200 € of monthly fixed costs – before taxes and retirement provision.

Which costs can I deduct for tax purposes?

In principle all expenses that are business-related: office costs, software, insurance, travel costs, training, work equipment, telephone and internet (pro rata). The home office can also be deducted with a flat rate or via the actual costs.

Do I need a tax adviser straight away?

Not necessarily, but it is advisable. In the start-up phase in particular there are many tax planning options (e.g. investment deduction, depreciation) that you may miss without professional advice.

How much reserve should I have as a founder?

The recommendation is: at least 6 months of living costs + fixed costs as a cushion. That is usually 15,000–30,000 €, depending on your personal situation.

Freelancer or trade – which is cheaper?

Freelancers pay no trade tax and do not have to register in the commercial register. That saves several hundred euros a year. Whether you count as a freelancer depends on your activity (§ 18 EStG).

Conclusion: well calculated into self-employment

The costs of self-employment are higher than most people think. But anyone who calculates realistically from the start builds their business on solid foundations. The most important rules:

Set aside 30–40% of profit for taxes
Health insurance is the biggest single item – compare GKV and PKV
Do not forget retirement provision – otherwise you pay twice later
Always calculate hourly/day rates on the basis of full costs
Build up 6 months of reserves before you start

Only those who know their costs can set the right price for their services.