Starting a business in Finland

[Vehementi]

Hey guys, well after looking about for jobs, i have decided i cannot find one, even with my CCNA qualification.

Therefore i have decided to start a business, i was wondering if it was possible to start an "alternative/gothic" clothing shop, wether this be online or in a shop i am yet to decide.

If i were to do it online, what rules and regulations apply for this kind of trade?

If it were a shop, which rules and regulations would apply?

Also been looking at the links you have already posted and to be perfectly frank, even in english, i am still confused.

Accountants i understand, but the rest such as VAT, Tax and all confuse me, if someone could clear it up for me, it would be greatly appreciated.

Thank you for your time.

[interleukin]

Try http://vero.fi/default.asp?language=ENG&domain=VERO_ENGLISH

for info about the taxes

[filecore]

Taxes is easy: if you run a toiminimi, you can earn up to a maximum of 8,500 per year, tax-free. Anything beyond 8,500 requires paying VAT at 22%, with the exception of lower tax in certain industries (check the Vero site for that). You also have to make a self-employed person's YEL (social insurance) contribution of 20.6% of your estimated annual income, although new businesses get a 25% discount for the first 4 years, meaning it's only 15.4% that you have to pay. Go to a firm like Pohjola, If, Ilmarinen, Tapiola, or Fennia to get a form. The Ilmarinen website has some useful info in English, as well as a downloadable PDF of the form.

If you make your business a proper OY (Osake Yhtiö, or limited company) things get a little more complicated, but not overly so. However, I've never done that, so I can't help you further. Look for a document published in PDF by Uusyrityskeskus called "Establishing A Business" (I have a 2006 copy), it is about 80 pages of useful information in English about all aspects of business. Sadly I can't seem to find a direct link right now; if necessary, I can stick it online for you myself.

[Vehementi]

Taxes is easy: if you run a toiminimi, you can earn up to a maximum of 8,500 per year, tax-free. Anything beyond 8,500 requires paying VAT at 22%, with the exception of lower tax in certain industries (check the Vero site for that). You also have to make a self-employed person's YEL (social insurance) contribution of 20.6% of your estimated annual income, although new businesses get a 25% discount for the first 4 years, meaning it's only 15.4% that you have to pay. Go to a firm like Pohjola, If, Ilmarinen, Tapiola, or Fennia to get a form. The Ilmarinen website has some useful info in English, as well as a downloadable PDF of the form.

If you make your business a proper OY (Osake Yhtiö, or limited company) things get a little more complicated, but not overly so. However, I've never done that, so I can't help you further. Look for a document published in PDF by Uusyrityskeskus called "Establishing A Business" (I have a 2006 copy), it is about 80 pages of useful information in English about all aspects of business. Sadly I can't seem to find a direct link right now; if necessary, I can stick it online for you myself.

If you can that would be appreciated.

Sounds a silly question but what is a Toiminimi and OY?

[filecore]

Sounds a silly question but what is a Toiminimi and OY?

Like I said, OY is Osakeyhtiö, a limited company - all sorts of legal nonsense about that, but you can get a general idea of it here. A toiminimi is literally a toimi nimi = a business name. In other languages it'll be a small business or a lone entrepreneur; basically, it's a sole trader without the legal responsibilities of a limited company and probably your best bet for first starting out. It costs 65 euros to register a toiminimi.

You can download the 2006 copy of the Establishing A Business guide from this location (PDF), but bear in mind that some of the figures and percentages have changed in 2007/8 (eg YEL payments are now at 20.6% instead of 20.8%, and it fails to mention the young businesses' discount) - but there's good info. I'd recommend looking at pages 12-14, 16, 18, and 22-28 (a nice set of form to fill in about what you intend to do - helps get your ideas down on paper in an organised way).

[Hank W.]

Accountants i understand, but the rest such as VAT, Tax and all confuse me, if someone could clear it up for me, it would be greatly appreciated.

Theres enterpreneur courses the MOL organizes. I'd recommend going to school for a couple years, but I guess the course is better than nothing. But most of those demand you can understand the Finnish. There are some in English gearing up towards that but do get some training. I hardly think you will find things any easier you get whacked with a serious tax bill just because had a "hard time understanding". Having your own business is far more demanding than finding a job. Besides which after having a business you are no longer unemployed, so you need to kiss any handouts goodbye. Theres also "business incubators" that do help fledgling companies, but you need to show a proper market analysis before => again take a course first.

[Vehementi]

Thank you very much, that has certainly helped me out alot. Kiitos!

[Rosamunda]

Taxes is easy: if you run a toiminimi, you can earn up to a maximum of 8,500 per year, tax-free. Anything beyond 8,500 requires paying VAT at 22%,

Actually this is wrong.... if you go over the 8500 euro ceiling then you are liable for VAT on the whole of your business in that period so it is better to register and pay VAT right from the start.

I recommend the book already mentioned (BTW I have already posted links to it several times on here before):

https://www.akateeminenkirjakauppa.fi/w ... &langId=-1

It gives all the relevant information on the different kinds of legal entities (Ky, Oy, Toiminimi) it explains how to register your company at the patents office and how to register for VAT. Everything is explained in BOTH English and Finnish which is really useful (as you get to know the local terminology).

There are classes, seminars etc run in many municipalities. I went to one in Lahti last year (there was nothing in Espoo) -it outlined all the basics in one day (but didn't go into details with bookkeeping etc)

We can't answer all your questions on here, you really need to do the work yourself. Try the stickies and follow up all the links .... and buy the book.

[filecore]

Taxes is easy: if you run a toiminimi, you can earn up to a maximum of 8,500 per year, tax-free. Anything beyond 8,500 requires paying VAT at 22%,

Actually this is wrong.... if you go over the 8500 euro ceiling then you are liable for VAT on the whole of your business in that period so it is better to register and pay VAT right from the start.

You're right, I phrased that badly. I should have said "Anything beyond 8,500 requires paying VAT at 22%, retroactively for the whole year" - if you start your toiminimi late in the year, for example, or you know for a fact that you won't generate more than 8,000 euros in a year (can you really be sure of that?) then it's good not to get involved in VAT. But if you have bigger plans, then yes, it's good to start with VAT registration right away. The best thing is to hire an accountant, depending on how much bookkeeping you have to do and how much you earn, it can cost a surprisingly small amount (a few hundred euros per year, in some cases) and additionally is tax-deductible. While I agree with comments here that it can be hard and there's a lot of extra work to do and things to learn, don't let these people scare you off - a low-income toiminimi is a piece of cake to keep track of if you're dedicated to doing the paperwork and asking for help when needed, and even moving past the 8500-euro barrier isn't an insurmountable problem (speaking from my own experience here, and that of others who have done the same). Contact an agency like Veronmaksajat (who have a low annual fee) for advice, too, or stop by the business taxation arm of the Verotoimisto and try to find somebody who speaks English.

[Rosamunda]

Yes, I guessed it was just a "phrasing" thing but I thought I'd put things straight anyway since I have read posts on here before about people getting caught out on that. I had problems with one of my customers who insisted that I shouldn't charge VAT on my travel costs.... I believed them and guess what... when my SO checked with the tax office they said that VAT was invoiceable on the total amount (time plus expenses) so I had to eat that, at least for last year (grrrr!!!) .
Totally agree with you about asking the right questions at the right time. Vero and the Veronmaksajat association are both great and giving advice (in my experience). And yes, a toiminimi is pretty easy to run from an admin point of view, and even an Oy is not that difficult if you keep it small. My husband does most of the official paperwork for me and I do the books... but he's a bean-counter anyway so he knows his stuff.

I think starting with a TMI is the best idea and you can always switch to an Oy later if necessary. The TMI requires no start-up capital. It means your profits are taxed like a normal salary though there are some deductions you can make.

[exupery]

There is also a vat relief if your turnover is below 22500 per accounting year.
See:
http://www.vero.fi/nc/doc/download.asp?id=3082;27551
and
http://www.vero.fi/nc/doc/download.asp?id=3756;27094

[lusalonen]

Hi everybody, is there somebody know how much it cost of rent a small shop in Turku downtown or Mylly? and how to pay it, i mean will i pay it once per month or per 6 months or per year.

Thanks a lot

[econsul]

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[asim]

Hei guys,

I come in finland 5 months ago, I have experience in garments sector and i want to start my own garments business, so anyone can advise that how i can start this business, where i should go to take the orders, where i contact to present the samples and adjust the meetings.
Can anyone of you already doing import of garments then please guide me.

thanks for your time in advance.

Asim

[ochaya]

Hi everyone!
I am specialized in teas and I intend to start a business by myself in Finland.
I am non-EU citizen and currently reside outside the EEA.
I have thoroughly read the info provided on those pages, more particularly on the Enterprise Finland website, but I still have some questions, so if you can help me even with basic information, or where to inquiry, that will be appreciated!

1) As a non-EU citizen, I must ask for a residence permit.
Among the documents to provide with the application is a "certificate of the professional competence of the sole trader or self-employed person" (Establishing a business >Foreign entrepreneurs in Finland >Right to engage in business)
Is this some kind of finnish licence? Do I have to take a degree or something like that?

2) Regarding responsibility, if I choose a toiminimi,
(Establishing a business >Different forms of business, Section 3)
this page states "A private entrepreneur is responsible for any liabilities of the business with his/her personal property."
Meaning that I'd better not be in the red because my personal belongings, even my bed or my car can be seized, right?
So unless I am mistaken, a limited liability company may be the good choice for me, all the more since the capital required has been lowered to EUR 2500.

3) So I may choose a limited liability company, as it seems to be possible as Enterprise Finland states "A limited liability company may also be a single-member company" (Establishing a business >Different forms of business, Section 1)
However, (Establishing a business >Different forms of business >Limited liability company >Administration and organs)
a) This page states:
"If there are fewer than three members on the Board, it must have at least one deputy member"
Does it mean that I need a deputy member, and if so, may I be this deputy member?
If I can not be the deputy member, then does it mean it is not possible to create a single-member limited liability company?

b) This same page states:
"At least one of the Board members and deputy members must be resident in the European Economic Area, unless the National Board of Patents and Registration grants the company an exemption."
Although I intend to have my permanent residence in Finland, it may take some time before I definitely move to Finland. During this time, do I have to ask for an exemption if my permanent residence is outside the EEA? If so, I assume this request will be added to the request I have to do to get a permit from the NBPR as I reside outside the EEA...

4) Licenced trade
I did not find anything about tea or tea leaves on that page, so I guess I can start without the need for any licence?
(Establishing a business >Business licences >Licenced trades)

5) May I NOT register to the VAT register as long as my turnover does not exceed EUR 8500?
(while of course keeping in mind that I will have to pay the whole of it, should my turnover exceed it)
i.e. registering = paying VAT regardless of the turnover.

6) Enterprise Finland states "entrepreneurs are obligated to take out pension insurance." (Establishing a business >Social security cover for entrepreneurs)
However, the following page states "ownership does not require insurance to be taken out" (Establishing a business >Social security cover for entrepreneurs >Self-Employed Person's Pension Insurance (YEL))
So do I have to take YEL?
It also mentions this requirement to be fulfilled: "annual work income" must be "at least 6186,65 euro" (in 2008), so may I not take it if my income does not exceed it?

7) In the residence permit application (for non-EU citizen), Chapter XIII asks "Has the applicant been convicted of a crime in any country?"
Let's say I had to go to jail for something like 2 months because I was responsible of a small traffic accident (on the road), and I could not pay someone who was wounded because of me.
Do you think that would rule me out?

Thank you very much for your attention and help!