Hiring Employees as a Freelancer in Germany 2026: Full Guide

Your order book is full, the requests keep coming — and you simply cannot do it all alone anymore. The logical next step: hire someone. But the moment you go from freelancer to employer in Germany, obligations land on your desk that you never had as a solo operator.

The good news: hiring employees is not a privilege reserved for GmbHs. As a sole proprietor or freelancer you may employ staff too — without changing your legal form. All you need is a Betriebsnummer (employer number), the right registrations, and clean payroll records.

In this guide we walk through it step by step: which registrations you need, what an employee really costs you in 2026, how wage tax and social security work — and when a minijob or a contract with another self-employed person is the smarter choice.

From solo operator to employer: what changes

As a freelancer you have so far been accountable only to yourself. With your first employee you become an employer — and that means reporting, payment, and documentation duties toward several bodies at once: the Federal Employment Agency (Bundesagentur für Arbeit), your employee's health insurer, the trade accident insurer (Berufsgenossenschaft), and the tax office.

Crucially, your legal form stays the same. A freelancer remains a freelancer; a trader remains a trader. You don't have to form a GmbH just because you take on staff. The only thing that changes is payroll — a new, recurring monthly process.

Step 1: Apply for a Betriebsnummer

Without a Betriebsnummer (employer number) you cannot register an employee. This eight-digit number identifies your business to the social security system. You apply for it free of charge from the Betriebsnummern-Service of the Federal Employment Agency — online or by phone — and usually receive it within a few days.

You need the Betriebsnummer for every single social security report. So apply for it before your employee's first working day.

Step 2: Register your employee

Once the Betriebsnummer is in place, you register your employee with three bodies:

• Social security: Through the DEÜV reporting procedure you register the employee with their health insurer (the health insurer is the collection point for all social contributions). This must happen with the first payroll run, at the latest six weeks after the employment begins.
• Berufsgenossenschaft: Statutory accident insurance is mandatory. Register your business with the relevant Berufsgenossenschaft within one week of hiring your first employee.
• Tax office: No separate employee registration is needed for wage tax — but you must now file wage tax returns (see below).

What does an employee really cost you?

Gross salary is only half the story. On top you pay the employer's share of social security — as a rule of thumb, around 21 % of the gross salary:

• Pension insurance: 9.3 %
• Health insurance: approx. 7.3 % plus half the supplementary rate
• Long-term care insurance: approx. 1.8 %
• Unemployment insurance: 1.3 %

On top of that come accident insurance contributions (Berufsgenossenschaft) and the U1, U2 and U3 levies. Example: at a gross salary of €3,000, your actual employer cost is roughly €3,630 per month. Build this "employer gross" into your pricing from day one.

Also mind the statutory minimum wage: in 2026 it is €13.90 per hour, rising to €14.60 from 2027. You may not employ anyone below that.

Wage tax and the monthly payroll run

You deduct wage tax from your employee's gross pay and forward it to the tax office — so it is not an extra cost for you, but a pass-through item. To do so you file a regular wage tax return (Lohnsteuer-Anmeldung). The rhythm depends on the amount: monthly, quarterly, or annually.

Each month you also produce a payslip per employee, transfer the net salary, pay social contributions and wage tax, and submit the social security reports. Done by hand, this is error-prone and time-consuming. An AI-powered bookkeeping tool helps you bring receipts, salaries, and tax filings together cleanly — much as companies handle it in GmbH payroll.

Minijob or contract? Choosing the right alternative

Not every need justifies a full-time, contribution-liable position. Three alternatives are often worth it:

• Minijob: Up to €603 per month (the 2026 threshold) counts as marginal employment. You pay flat-rate contributions to the Minijob-Zentrale, and the admin burden is lower. Our guide on registering a minijobber shows exactly how it works.
• Work contract or freelancer assignment: You commission another self-employed person. Here you pay no social contributions — but beware false self-employment: anyone integrated like an employee is legally treated as one, and that gets expensive.
• Part-time: A part-time role gives you planning certainty without full-time fixed costs.

Conclusion

Hiring your first employee is a big step — but not a bureaucratic monster. You need a Betriebsnummer, you register the employee with the health insurer and the Berufsgenossenschaft, you budget around 21 % employer contributions on top, and you file monthly payroll and wage tax returns. Before that, ask honestly whether a minijob or a contract with a self-employed person is the better entry point.

Anyone who works with clean bookkeeping for the self-employed from the start keeps salaries, receipts, and tax filings together automatically — and avoids fines from missed deadlines.