Do you think the tax office is your only hurdle when starting a business? Then you don't know the final boss yet: the German pension insurance. It determines your insurance status — and your financial future.

You've founded, your product is epic and the first customers are already on board — it's running for you! As a founder, you now have a thousand things on your mind: from optimizing your marketing strategy to building the best team to financing rounds.

But have you ever wondered what it's actually like your social security status stands? 🤔 If not, it's high time! Because this status determines whether and which social security contributions you have to pay. If you're not careful here, you're giving away cash.

Social security: Where pain and gain shake hands

Social security doesn't just sound like a lot of paperwork — it's also a real form and Authordendeutsch-Pain. However, health, long-term care, accident, pension and unemployment insurance is about something super important: your safety.

In Germany, insurance is generally compulsory. Employees are automatically insured, but anyone who sets up or works independently may be exempt from social security obligations.

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💡 What does social security free mean?

People without social security obligations can voluntarily pay into the pension fund and choose between private and statutory health insurance.

The problem? The rules are opaque and their interpretation may change at any time:

• You are Sole shareholder of a limited liability company? Then you are usually free of social security contributions.
• You get others Shareholders with equal distribution of votes into the boat? As soon as you no longer make decisions alone, you could be considered an addict — and that means social security obligations.

Depending on how your company is structured, you can suddenly become subject to insurance and then, in the worst case, have to pay back contributions — namely for up to four years!

That is why the status assessment process is so important for founders.

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The status assessment process: definition and meaning

Many founders assume that their status is automatically clear. However, it is only this that brings clarity Status-assessment procedure for Germans

pension insurance (DRV).

The DRV has its own specifically for this Clearing house established, which is intended to legally classify employment relationships and clarify who is considered an employee and who is self-employed and is therefore exempt from social security obligations.

The status assessment procedure is particularly relevant for shareholder-managing directors of a GmbH. In this case, the status can change quickly if, for example, you new investors Convince yourself (🥳) or the Change shareholdings for other reasons.

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💡 Mandatory and voluntary status assessment procedure: What applies to whom?

Self-employed people can initiate the process voluntarily and have them checked whether the DRV has them as self-employed or bogus self-employed ranks. In addition to the volunteer, there is also the obligatory Proceedings that must be initiated at the clearing house, for example, if

• You work as an employee managing director or partner
• Your company employs relatives, spouses or partners

To be on the safe side and not risk unplanned back payments, you should initiate the process asap when you set up or join the management team.

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3 reasons why the status assessment process is a must

Clearing house, pension fund, compulsory insurance — does it all sound terribly dry and bureaucratic to you? It is too! But there are three good reasons why “get Shit done” is the better motto on this topic than “Will fit”.

1. Your insurance status isn't always obvious

Many founders think they are automatically considered self-employed and do not have to pay social security contributions. That is a dangerous mistake. In theory, you are considered self-employed if you own 50% of the company. However, this does not mean that pension insurance automatically classifies you as such. Even with significantly less than 50%, you can still be considered self-employed.

2. Your status can change at any time

Your insurance status is not set in stone — if the DRV determines retroactively that you are actually subject to insurance after all, in the worst case scenario, you will be damned threatened high back contributions.After the Federal Social Court reassessed the status of collaborating shareholders and managing directors in 2015, in some cases five to six-digit back payments due.

3. A process gives you clarity and certainty

Nobody is in the mood for high back payments or insurance gaps. The status assessment process gives you a legally secure assessment and saves you unplanned expenses. So it's worth it, even if the process involves paperwork.

Step by step: How to complete the status assessment process as managing director

If you think “My tax advisor will tell me if I need to consider anything,” you're unfortunately wrong. ⚠️ Social security is not the main focus of tax advice.

It is therefore up to you to take action — or to look for someone who really has the topic on their mind. So that you're not groping in the dark during the status assessment process, here are your step-by-step instructions:

1. Submit an application online: You find that Status assessment process form at DRV and can even fill it out digitally there. It takes about 30 minutes. You'll find out what you need in the next section.‍
2. Submit an application, wait and drink tea — lots and lots of tea 🍵: The DRV is looking into your case. That doesn't cost anything. However, you must wait up to three months for a result. In the meantime, the clearing house may have questions about your application. You should therefore definitely open mail from the DRV and react. Not sure what the DRV wants from you? Unser Authority-German Translator continues to help.
3. Check the result: The DRV will issue a notice for your status assessment process. If the result is not as expected, you can request clarifications or file an objection.

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What documents and information do you need for the application?

To help you get through the form faster, we'll show you what you should have ready. For DRV applications, you need your insurance number. Have you ever been employed before? Then you have received DRV letters by post in the past and can find the number there. Otherwise, the DRV will provide you with information.

If you are going through the process for the first time, the DRV would also like you to

• Information about your position in the company
• a managing director services contract, a shareholder agreement and an extract from the commercial register
• Data relating to the company, such as the incorporation
• Information on the latest change in shares
• Information about the majority when passing a resolution — this point is particularly important when it comes to the question of whether you are considered self-employed or not

Important: If something changes in your business, such as your ownership, you should go through the process again. It's best to set yourself one annual reminderto keep the topic on the radar.

Conclusion: Check status and save

Your insurance status has more to do with your finances than you might think. Our appeal to you: Clarify your social security status early and proactively with a status assessment process to avoid surprises — several times when your business's ownership changes.

If you are unsure or simply want to manage the issue, Mika It's there for you. As entrepreneurs, we know how complex accounting, taxes and insurance are.

That's why we not only support your business with the minimum compliance requirements, but also use AI, automation and our experience to ensure that you Financially well positioned are.

Do you have a GmbH and the bureaucracy is giving you a headache?

Let's talk:

Book a 15-minute consultation

Tip: Are you active on social networks to keep your business knowledge up to date? Then follow mika's channels for more start-up tips. We regularly share valuable insights and practical advice on taxes and accounting so that you don't miss out on important things like the status assessment process.

Note: The information in this blog article does not constitute tax advice within the meaning of § 2 StBerG. Your tax advisor will answer individual tax questions - or you can contact Mika directly.

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