Moving from unemployment into your own business is one of the most common ways to start a company in Germany. The Bundesagentur für Arbeit (Federal Employment Agency) regulates this transition in considerable detail and also offers support instruments. This article explains how ALG1 works, which limits apply to side jobs or testing a business while you receive it, and how the Gründungszuschuss works as a bridge to full self-employment. A general overview of self-employment: Self-employment in Germany: opportunities, costs and the route to your own company.
This article explains the general principles and terms relating to ALG1 and starting a business in Germany. It does not replace individual advice from the Agentur für Arbeit or a specialist – your specific situation always depends on your personal circumstances.
Requirements, application and documents
Amount and duration: phase 1 and phase 2
Starting a business from ALG 1 step by step
What Arbeitslosengeld 1 is
ALG1 (Arbeitslosengeld 1, unemployment benefit) is an insurance benefit under German unemployment insurance (Arbeitslosenversicherung), paid by the Bundesagentur für Arbeit. Unlike Bürgergeld (basic income support), entitlement to ALG1 does not depend on need but on previous employment with insurance contributions. The amount depends on your last net income, and the duration on your age and insurance record.
ALG1 is based on contributions paid in Germany – your nationality does not matter. If you have worked in Germany long enough in employment subject to social insurance and then lost your job, the rules in this article apply to you. If you receive Bürgergeld from the Jobcenter instead, the counterpart to the Gründungszuschuss is the Einstiegsgeld – we cover it in a separate article on our blog.
Who is generally entitled to ALG1
As a rule, entitlement arises when several conditions are met at the same time. The main ones are listed below; the Agentur für Arbeit assesses each case individually.
- You have registered as unemployed with the Agentur für Arbeit (in person or online)
- You are legally unemployed: you have no employment, or work fewer than 15 hours per week
- You have met the qualifying period (Anwartschaftszeit) – usually at least 12 months of employment subject to insurance contributions within the 30 months before registering
- You are available for work and actively looking for a job
- With frequent short-term contracts, a shorter qualifying period of 6 months may be enough in some cases
If you know your employment is ending, the law requires you to register as a job seeker in advance – usually no later than three months before your employment ends, or within three days of finding out if the notice period is shorter. This obligation is not the same as applying for ALG1 itself. Missing the deadline can affect your benefit – check the exact consequences directly with the Agentur für Arbeit.
How much ALG1 is paid and for how long
ALG1 is calculated on the basis of your average gross income over the last 12 months before you became unemployed. After deducting flat-rate taxes, the solidarity surcharge and a fixed share for social insurance, you get the so-called Leistungsentgelt, of which 60 or 67 percent is paid as a daily benefit.
| Age when entitlement arises | Required insurance period | Possible benefit period |
|---|---|---|
| under 50 | 12 months | up to 6 months |
| under 50 | 24 months | up to 12 months |
| 50–54 | 30 months | up to 15 months |
| 55–57 | 36 months | up to 18 months |
| 58 and over | 48 months | up to 24 months |
The table shows the general logic of the calculation. The final amount and duration also depend on your tax class, the assessment period and any gaps in employment. For 2026, the contribution ceiling for unemployment insurance has been set uniformly across Germany at €8,450 gross per month; income above this amount is not taken into account. The final calculation is made exclusively by the Agentur für Arbeit.
Side jobs and testing a business on ALG1: the 15-hour rule
While you receive ALG1, you are legally considered unemployed only as long as you do not work 15 hours or more per week – and this also applies to self-employment. So you can first test your business idea as a side activity while staying below this threshold: your entitlement to benefit is generally preserved. As soon as the activity reaches 15 hours per week, it counts as your main occupation – and you lose your unemployed status for the purposes of unemployment insurance.
In this context, a side activity means fewer than 15 hours per week, which you must report to the Agentur für Arbeit before you start. A main activity means 15 hours per week or more; this status gives access to support instruments such as the Gründungszuschuss, but also means the end of regular ALG1 payments.
Side income from self-employment: allowance and how income is counted
Even with permitted part-time self-employment, the income you earn is generally offset against your ALG1 if it exceeds a certain allowance. For self-employment, a flat-rate share for business expenses is often deducted from turnover as well – unless higher actual expenses are proven.
| Item | General rule |
|---|---|
| Monthly allowance | Up to €165 of side income generally does not affect your ALG1 |
| Business expenses | A flat 30% of turnover, or proven actual expenses if higher |
| Duty to report | The activity must be reported to the Agentur für Arbeit before it starts; income is documented regularly |
Part-time self-employment generally has to be reported to the responsible Agentur für Arbeit office before it begins. If you fail to do so, you may face repayment claims and other consequences. Check the exact procedure and the documents required directly with your adviser at the agency.
The route to full self-employment: the Gründungszuschuss
If you plan to make self-employment your main occupation, the Gründungszuschuss (start-up grant) from the Agentur für Arbeit may be available under certain conditions. It is intended to cushion the period when a new business usually does not yet generate a stable income. An important point: it is not an unconditional entitlement but a so-called Ermessensleistung – a discretionary benefit decided by the agency on a case-by-case basis. More on the conditions, amount and application: Gründungszuschuss 2026.
The Gründungszuschuss does not replace careful financial planning – it can only supplement it for a limited time. In the end, the business model itself determines whether the business is sustainable.
Requirements for the Gründungszuschuss in brief
- When you start self-employment, you generally need at least 150 days of remaining ALG1 entitlement (Restanspruch)
- The self-employment is your main occupation – 15 hours per week or more
- A qualified body – for example the IHK (Chamber of Commerce and Industry), the HWK (Chamber of Crafts), a start-up centre or a tax adviser – confirms the viability of your business plan in writing
- You must convincingly show that you have the knowledge and skills for the planned activity
- For people with disabilities, different conditions may apply under § 19 SGB III, for example without the full remaining ALG1 entitlement
Preparing the documents and meeting the deadlines can be easier with the support of start-up coaching.
The two funding phases of the Gründungszuschuss
| Phase | Duration | Amount of support |
|---|---|---|
| Phase 1 | 6 months | An amount equal to your last ALG1 plus €300 per month for social insurance |
| Phase 2 (separate application) | a further 9 months | €300 per month on proof that the self-employment continues as your main occupation |
Phase 2 does not follow automatically – you have to submit a separate application. The Agentur für Arbeit checks the requirements again, including whether the business is actually continuing.
Common mistakes when moving from ALG1 into self-employment
In practice, problems arise less often from the business idea itself than from formal oversights in dealings with the Agentur für Arbeit. These include:
- Starting self-employment without reporting it to the agency in advance
- Actually exceeding the 15-hour weekly limit without reporting it
- Applying for the Gründungszuschuss when the remaining ALG1 entitlement has already fallen below 150 days
- An incomplete set of documents for the viability statement on the business plan
- Assuming the Gründungszuschuss is an automatic entitlement rather than a discretionary benefit
Frequently asked questions (FAQ)
Do I lose my ALG1 immediately if I start part-time self-employment?
Is the Gründungszuschuss a guaranteed payment?
Can I switch from part-time to full-time self-employment later?
Who can act as the qualified body for the viability statement?
The rules on ALG1, side income and the Gründungszuschuss depend heavily on your specific situation – age, insurance record and the nature of the planned activity. If you are seriously considering starting a business while receiving ALG1 or straight afterwards, it helps to work through your own situation in a structured way. In Vitavia Akademie’s education programmes, future business owners learn to prepare their venture strategically and practically – as a complement to individual advice from the Agentur für Arbeit or a specialist.
Request a consultationLegal notice: This article is for general information and educational purposes only. It does not constitute legal, tax or financial advice and does not replace individual advice from the Agentur für Arbeit, a qualified body, a lawyer or a tax adviser. Laws and their application may change; every personal situation is different and needs to be assessed individually. Before making important decisions, obtain up-to-date information from your Agentur für Arbeit and, if necessary, consult a qualified professional. See also: Impressum and Datenschutz.
