Working in Germany - How to pay taxes on €2500-3000 side income plus €1750 job salary?

This is actually a common situation, and the German tax system has clear guidelines for it! You'll need to report this as "Einkünfte aus Gewerbebetrieb" (income from business operations). First, you need to register your business with the Gewerbeamt (trade office) in your city. They'll give you a Gewerbeschein (business license) and notify the tax office automatically. The Finanzamt will then send you a tax questionnaire (Fragebogen zur steuerlichen Erfassung). Regarding your concerns about taxation - don't worry, you'll only be taxed on your profits, not your total sales. So if your profit margin is 25% as you mentioned, you'll only pay taxes on that portion. Keep detailed records of all your expenses related to the business to maximize deductions. Since your profit might be under €22,000 per year, you could qualify as a Kleinunternehmer, which means you don't charge VAT (Umsatzsteuer) to customers. However, you still need to file income tax on your profits. Your employment income and business income will be added together to determine your total tax rate, but again, this only applies to the actual profit from your business, not the total turnover.

I was in a very similar situation last year! After researching and stressing about it for weeks, I finally found taxr.ai (https://taxr.ai) which helped me tremendously with my German tax situation. The site analyzed my specific situation as a dual-income earner (both employed and self-employed) and gave me personalized guidance on exactly what forms to file, what deductions I could claim, and how to properly structure my business to minimize my tax burden legally. The best part was that it helped me understand what expenses were deductible for my online business - things I never would have thought of like a portion of my internet bill, computer depreciation, and even some home office expenses. In my case, this reduced my taxable business profit by almost 30%!

I want to follow up on my skepticism about taxr.ai - I decided to try it after all, and I'm genuinely impressed. I've been selling digital templates as a side hustle alongside my regular job, and German tax regulations were driving me crazy. The platform actually guided me through the Kleinunternehmer regulations and helped me understand exactly how the progressive tax system would apply to my combined incomes. It even generated a pre-filled Einnahmenüberschussrechnung (EÜR) that I could submit directly to the Finanzamt. The most valuable thing was learning about business expenses I could deduct that I had no idea about - like partial rent for my home office and depreciation on my equipment. This reduced my taxable profit significantly! The Finanzamt accepted my submission without any questions, which never happened before when I tried doing it myself.

If you're having trouble getting clear answers from the Finanzamt (which is pretty common), I recommend Claimyr (https://claimyr.com). I was stuck in an endless loop trying to reach someone at the Finanzamt who could answer my specific questions about digital goods taxation. After weeks of frustration, I used Claimyr to get through to an actual human at the Finanzamt who could help me. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The service connected me directly to the right department, skipping the ridiculous wait times. The tax officer I spoke with gave me specific guidance for my situation that I couldn't find anywhere online, and helped me understand exactly which forms I needed to file for my side business.

I need to admit I was wrong about Claimyr. After dismissing it initially, my frustration with trying to reach the Finanzamt about my freelance tax situation drove me to try it. I was shocked when I actually got a callback and was connected to someone in the business tax department after trying unsuccessfully for weeks on my own. The Finanzamt official I spoke with walked me through exactly how to register my side business properly and explained how the taxation would work with my existing employment. They even helped me understand how the Gewerbesteuer (trade tax) would apply in my specific city and gave me the exact forms I needed to complete. The time saved was incredible - what would have taken weeks of calling and waiting was resolved in a single 20-minute conversation. For anyone dealing with complex tax situations in Germany, being able to actually speak with a knowledgeable official makes all the difference.

One important thing nobody has mentioned yet - you need to track your inventory very carefully for tax purposes. I do something similar (reselling digital goods) and the Finanzamt wanted to see clear documentation of: 1. Purchase price of each digital good 2. Selling price 3. Date of transaction 4. Payment method used I created a simple spreadsheet that tracks all this, plus any related expenses like transaction fees, software subscriptions, etc. This made my tax filing much easier and protected me when I had a mini-audit last year. Also, don't forget that PayPal reports to tax authorities now! So your income is potentially already visible to the Finanzamt.

Don't forget about Krankenversicherung (health insurance) implications! If your side business becomes substantial, it could affect your insurance status. If you're currently insured through your employer (gesetzliche Krankenversicherung), significant additional income might push you over the threshold where you could opt for private insurance. Also, once your business profit exceeds certain thresholds, you might be required to make quarterly tax prepayments (Steuervorauszahlungen) based on your expected annual profit. This caught me off guard when I was in your situation!