A (sole) proprietorship is a business entity that is owned and run by one individual only. Legaly speaking there is no distinction between the owner and the business.

In Germany, there are various forms of proprietorships:

• ‘Freiberufler’ for engineers, doctors, layers, tax advisors, artists, authors etc. These proprietorships do no pay ‘Gewerbesteuer’, a local tax paid to the city council.
• ‘Kleingewerbetreibende’ or ‘Einzelkaufman’ for everybody else e.g. retailers. Both pay ‘Gewerbesteuer’, and in addition ‘Einzelkaufmann’ are registered in the trade register and can do business under a company name; they also have to prepare a balance sheet and P&L once a year. ‘Kleingewerbetreibende’ become ‘Einzelkaufmann’ when their business grow above a certain size.