Published on 18 May 2026 · 13 min read

How to register as a small craft business in 2026: UK, Germany, France, US compared

You've decided to sell your handmade goods. Great. But before the first sale, you need a legal status. It's mandatory — not to please tax authorities, but because without it you're working illegally and the tax office can audit you up to 4-6 years back depending on jurisdiction.

The problem: between sole trader, Kleinunternehmer, LLC, micro-entrepreneur and freelance artist registers, many makers either pick the wrong fit or stall their project for 6 months "researching." This article cuts through, in plain English, based on real-world choices by hundreds of European and US makers who got past this step.

Table of contents

• The basic rule: register from the first regular sale
• The 4 main maker statuses by country
• Quick comparison table
• UK: Sole Trader (default for most)
• Germany: Kleinunternehmer
• France: Micro-entrepreneur
• US: Sole Proprietorship + LLC
• When to upgrade to a limited company
• How to register concretely (3 steps)
• The 5 costliest beginner mistakes
• FAQ

The basic rule: register from the first regular sale

Before arbitrating between statuses, ask the right question: do I even need a status?

Short answer: yes, as soon as you sell to strangers regularly. The law across most jurisdictions doesn't give a hard minimum in revenue: it's the regularity and profit motive that characterize a professional activity.

The concrete risk of not declaring and being audited: retroactive tax + penalty assessment (typically the unpaid taxes + 25-100% surcharge + interest), plus possible fines for unregistered commercial activity. It's uncommon, but it happens — and tax authorities increasingly cross-reference data with platforms (Etsy, Hey Dom, Vinted) which since 2023 (DAC7 in the EU, similar in the US/UK) automatically transmit seller revenue above €2,000-€5,000/year or 30 transactions/year.

The 4 main maker statuses by country

For each, this is the simplest, cheapest, fastest status to start. You can upgrade later.

Quick comparison table

Verified 2026 data:

UK: Sole Trader (default for most)

If you make handmade goods in the UK, your default starter status is sole trader.

What it is concretely

• Free registration at gov.uk/register-for-self-assessment
• You file a Self Assessment tax return each January (covering the prior tax year ending April 5)
• You pay Class 2 NI (~£3.45/week) above the small profits threshold + Class 4 NI (9% on profits between £12,570 and £50,270, 2% above)
• Income tax at standard rates (20% / 40% / 45%)
• VAT exemption up to £90,000/year revenue — above, you must register for VAT
• £1,000 trading allowance: your first £1,000 of self-employment income is tax-free (HMRC default). Above £1,000, you must register.

Why it's right for the start

1. No risk: no fixed cost, no commitment, you can stop anytime
2. Quasi-zero cost when you're not selling: 0 monthly subscription
3. Simple bookkeeping: a spreadsheet of income and expenses
4. Compatible with employment (most UK makers start sole trader alongside a day job)

When sole trader becomes a trap

• Personal liability: if your business gets sued, your personal assets are at stake. With a Ltd company, the company's assets are at stake, not yours.
• Tax above ~£50k profit: at higher profits, Ltd + dividends becomes more tax-efficient than sole trader.

💡 Most UK makers stay sole trader for years and only switch to Ltd when they cross £50-60k profit reliably.

Germany: Kleinunternehmer

If you make handmade goods in Germany, your default starter status is the Kleinunternehmer scheme (small business rule §19 UStG).

What it is concretely

• Register with two offices: your local Finanzamt (tax office, online via ELSTER) and your local Gewerbeamt (trade office, cost €15-65 depending on city)
• VAT-exempt up to €22,000/year revenue (no VAT collected, no VAT reclaimable)
• File the Anlage EÜR (simplified income/expense statement) annually
• Income tax based on standard German rates (~14-42% depending on bracket)
• Trade tax (Gewerbesteuer): only above €24,500 profit in most municipalities

Strengths

1. Very low admin overhead at the start
2. VAT-exempt status simplifies invoicing dramatically
3. Compatible with employment, students, retirees

Weaknesses

• Above €22,000 revenue, you fall out of Kleinunternehmer and must collect/remit VAT
• Mandatory statutory health insurance if Kleinunternehmer becomes your main activity (€200-400/month minimum) — a cost most German starting makers underestimate
• Personal liability (unlike GmbH or UG)

💡 If you're combining Kleinunternehmer with a salaried job, you stay on your employer's health coverage — much simpler. If it becomes your full-time, factor in health insurance from day 1.

France: Micro-entrepreneur

The simplest starter status in France, used by 80% of French makers in their first years.

What it is concretely

• Free registration at autoentrepreneur.urssaf.fr in 15 minutes
• Get a SIRET number within 1-2 weeks
• Declare revenue monthly or quarterly (online)
• URSSAF auto-debits social contributions (~12.3% of revenue for goods, ~21.2% for services)
• VAT-exempt below thresholds (~€85k goods / €37.5k services)
• Income tax via versement libératoire (1% of revenue for goods) or integration into household income

Strengths

1. Cheapest and fastest registration in Europe
2. Zero overhead when not selling
3. Simplified bookkeeping (just a recipe log)

Weaknesses

• Contributions calculated on revenue, not profit — not optimal if your charges exceed 30-40% of revenue
• Revenue cap at €188,700 (goods) or €77,700 (services); above that you must switch to a different regime

US: Sole Proprietorship + LLC

In the US, the default for makers is sole proprietorship — sometimes paired with an LLC for asset protection.

Sole Proprietorship

• No formal registration required in most states (you're a sole prop by default once you start selling)
• Optional DBA filing ("Doing Business As") at county clerk or secretary of state, $10-100 depending on state
• Federal income tax via Schedule C on your personal 1040
• Self-employment tax: 15.3% on net earnings (covers Social Security + Medicare)
• State income tax varies wildly (0% in TX/FL/WA, up to 13% in CA)
• Sales tax registration required if you have nexus in a state (typically your home state)
• Personal liability: your personal assets are exposed

LLC (Limited Liability Company)

• Formation cost $50-500 depending on state ($50 NM, $150 PA, $300 MA, $800/year CA)
• Provides personal asset protection (your house and savings are separated from business risk)
• By default taxed as sole prop (single-member LLC) — same Schedule C
• Optional S-Corp election for tax savings above ~$80k profit
• Annual maintenance: annual report fee ($0-300 depending on state) + state franchise tax in some states

Which to pick at the start?

• Selling under $20k/year: stay sole prop, save the LLC fees
• Selling $20k-80k/year and want asset protection: form an LLC
• Selling $80k+/year: form an LLC, consider S-Corp election with a CPA

When to upgrade to a limited company

Across all countries, upgrade triggers are roughly:

The general rule: don't upgrade prematurely. The admin overhead of a limited company (annual filings, accountant fees, separate tax returns) costs £1,500-5,000/year depending on country. That cost only makes sense once your business benefits clearly outweigh it.

How to register concretely (3 steps)

Step 1: Pick the right activity code

Each country has a national activity classification:

• UK: SIC code (e.g., 32.99 "Other manufacturing n.e.c." for general crafts, 32.12 for jewelry)
• Germany: WZ 2008 codes
• France: APE/NAF codes (32.99Z, 32.12Z, 23.41Z, 15.12Z, etc.)
• US: NAICS codes (e.g., 339911 for jewelry, 327120 for ceramics)

Pick the closest match. The exact code rarely matters — you can adjust it later via the same online portal.

Step 2: Register online

• UK: gov.uk/register-for-self-assessment, immediate
• Germany: ELSTER (Finanzamt) + Gewerbeamt online if your city supports it (most do in 2026)
• France: autoentrepreneur.urssaf.fr, 15 minutes
• US: optional DBA at county clerk; LLC at Secretary of State website

Step 3: Open a separate bank account

• Mandatory in some countries above a revenue threshold (France: €10k for 2 consecutive years)
• Recommended everywhere, regardless of legal obligation
• Best fintechs for makers: Wise, Tide, Revolut Business, Qonto, Holvi (£0-12/month)

The 5 costliest beginner mistakes

1. Waiting "until ready" to register

If you're selling to strangers regularly without a status, you're working illegally. Registration takes 15-30 minutes and costs £0-€30. Do it before the first public sale.

2. Forming a Ltd / LLC / GmbH "to look pro" while starting

A limited company has overhead the simple status doesn't: annual filings, accountant fees (£1.5-5k/year), separate tax returns. If you're starting, that's £1.5-5k of cost for benefits you don't yet need. Start simple, upgrade when it makes financial sense.

3. Mixing personal and business bank flows

Tracking pro income/expenses through a mixed personal account becomes a nightmare at tax time and during audits. Separate account from day 1, even when not legally required.

4. Underestimating health insurance (DE/FR)

In Germany and France, becoming a full-time independent maker means you're responsible for your own statutory health coverage. Budget €200-400/month from day 1. UK NHS and US (via marketplace or spouse coverage) are cheaper or free.

5. Not anticipating VAT registration

Many growing makers wake up one month crossing the VAT threshold and discover they must add 20% VAT to their prices overnight — cutting their margin or hiking customer prices by 20%. Best practice: anticipate the VAT crossover at 75% of the threshold and gradually raise prices 5-10% per quarter.

In summary

• For 80% of starting makers: the simple national status (sole trader, Kleinunternehmer, micro-entrepreneur, sole prop), no hesitation.
• Heavy charges or fast growth: upgrade to LLC / Ltd / GmbH / SAS only when the financial benefit clearly outweighs the £1.5-5k/year overhead.
• Do it now. Registration takes 15-30 minutes and costs £0-€30. The risk of waiting is much higher than the risk of "registering too early."

FAQ

Do I really need to register to sell a few crafts? Yes, as soon as the activity becomes regular. Not for occasional sales among friends.

Simplest status to start? Sole trader (UK), Kleinunternehmer (DE), Micro-entrepreneur (FR), Sole Prop (US).

Real revenue thresholds in 2026? UK VAT: £90k. Germany Klein: €22k. France VAT exemption: ~€85k goods / €37.5k services.

Contributions / taxes? UK: ~9% NI Class 2 + 9% Class 4 + income tax. Germany: ~14-19% income tax + voluntary health. France: 12-21% on revenue. US: 15.3% SE tax + federal/state income tax.

Combine selling crafts with a day job? Yes everywhere. UK has £1,000 trading allowance, France allows full cumul, Germany allows below the income threshold.

Sole Trader = Sole Proprietorship? Functionally similar, legally distinct. Both pass-through tax, both with personal liability.

Need a separate bank account? Required by law in some countries (FR), recommended everywhere.

Auto-entrepreneur vs micro-entrepreneur in France? Same status, the name changed in 2016.

Read next

• How to sell handmade products online in 2026: the complete guide
• Etsy alternatives for makers in 2026: why creators are switching to Hey Dom
• Best card reader for craft fairs in 2026: SumUp, Zettle, Hey Dom compared