The biggest mistakes when starting a company in Austria – and how to avoid them

1. Why careful planning is crucial

Starting your own business is an exciting opportunity — whether as a sole trader or with your own company in Austria. However, starting a business comes with risks as well as opportunities. Many founders make mistakes that can become costly later on. Unclear business structures, missed registrations, or poor financial planning can all lead to problems. Anyone planning to start a business in Austria should be aware of these common errors and know how to avoid them.

2. Mistake #1: Choosing the wrong legal form

One of the first and most important decisions is selecting the right legal form. Many founders choose a form out of convenience or lack of knowledge — often with financial or liability consequences.

Key points:

• Sole proprietorship vs. GmbH: Sole proprietorships are easy to set up, but owners are personally liable with their private assets. A GmbH offers liability protection but requires more capital and bureaucracy.
  
  Tip: If you want to limit personal risk, consider a GmbH or another limited liability structure.


• Minimum capital for a GmbH: A classic GmbH requires €35,000 share capital, of which at least €17,500 must be paid in.


• Alternatively, a flexible company ("FlexCo") is available, requiring only €10,000, with at least €5,000 paid in cash.
  
  Tip: The FlexCo offers a modern, flexible alternative and is particularly attractive for innovative businesses and start-ups.

3. Mistake #2: Missing registrations and permits

Setting up a business in Austria requires several registrations and permits, depending on your industry and business model. Missing or delaying these can lead to penalties or delays.

Key points:

• Business registration: Most companies must register their business with the district authority or magistrate.
  
  Tip:Some trades are regulated (e.g., crafts, construction) and require special permits. Check early to avoid delays.


• Tax registration: After business registration, companies must register with the tax office.
  
  Tip: If you expect VAT obligations, apply for your VAT ID early to avoid future complications.

4. Mistake #3: Underestimating financial planning

Many businesses fail not because of the business idea but due to poor liquidity and financial planning. Unexpected costs in the start-up phase are often underestimated.

Key points:

• Realistically calculate initial investments: In addition to your business idea, plan for costs like office space, equipment, software, staff, and marketing.
  
  Tip: A detailed business plan helps assess capital needs and secure grants or loans early.


• Plan for taxes and contributions: VAT, income tax, and social contributions are often overlooked.
  
  Tip: Involve a tax advisor from the beginning to avoid surprises.

5. Mistake #4: Neglecting tax obligations

Many new entrepreneurs underestimate the tax obligations that come with starting a business in Austria. Errors in bookkeeping or tax filings can lead to back payments or penalties.

Key points:

• Businesses with annual turnover below €35,000 (from 2025: €55,000 gross) can opt out of VAT — but this also means no input tax deduction.
  
  Tip: If you plan major investments, you may benefit from voluntarily registering for VAT.


• Accounting obligations: While small businesses can use simplified cash accounting, GmbHs require double-entry bookkeeping.
  
  Tip: Partnering with a tax advisor can help you avoid mistakes.

6. Mistake #5: Overlooking social security requirements

In Austria, self-employed persons are required to register with the social security scheme for the self-employed (SVS). If this is overlooked or delayed, you risk back payments and losing insurance cover.

Key points:

• Mandatory insurance for the self-employed: Even part-time entrepreneurs may be subject to mandatory insurance.
  
  Tip: If you’re unsure, check with the SVS early on.


• Start-up incentives for new businesses: Reduced social contributions are often available in the first few years.
  
  Tip: These incentives help keep fixed costs low in the start-up phase — it’s worth taking advantage of them.

Conclusion: Avoid mistakes with the right preparation

Starting a company in Austria offers many opportunities, but also challenges. Thorough preparation, professional advice, and realistic financial planning can help you avoid common mistakes. Understanding the key legal, tax, and financial aspects upfront will save you time and money later — and let you focus fully on growing your business.

(This article is for general information only and does not replace professional legal or tax advice. For specific questions and personal support, please feel free to contact us.)