trying to register a small business - help!?

[annalil]

Hi there,

This is driving me nuts. I've been earning a little money with customer services for a few weeks, sharing facilities with the owner. Then it turned out that that owner's idea is that I get self-employed. Now that's what I've always been dreaming of, but unfortunately all those rules and laws and bureaucracy is totally not my kind of thing...

So I have this Y3 form. I have a business name. But when should I start my first accounting period? When trying to read up on all that, I found that you have to have your registration filed before starting your operations - ok great, what now? I was told that I should have my accounting period until 31 Dec, but I will stay below all the income limits (under 8000 EUR) until then anyway (after some time I expect to make roughly 1500 a month). How do I do this? And which of those registers should I get entered in for now? Can anyone give me some advice?

[EP]

Get yourself an accountant. I am hopeless with all things legal/economical/bureucracy. I just went with a company name to an accountant, and she did everything for me.

[onkko]

My advice is that if that "job" isnt some part time thing supporting other job then forget it.
1500e/month isnt enough for full time job when you have to pay all taxes yourself and thats a lot out of that 1500.
Sounds like common "scam" where that nice owner wants half free "employee" who takes all risks. Not worth of it with that amount of money.

Local TE keskus will help on your questions.

[annalil]

The income will be enough for me (am co-habiting and part-time studying) and I really want to do that job, don't worry.
But I forgot another very relevant problem: I'll have to register my right of residence as a EU citizen very soon... I wanted to base it on the self-employment, but now they want my Finnish ID and bank account in the form? Oh crap, will this work out at all or will I have to leave the country?
And how much would an accountant cost?

[Pursuivant]

you can get registered as a temporary resident - I mean working and getting paid means you need to be registered. the EU thing gets you registered as a permanent.

[karel]

The income will be enough for me (am co-habiting and part-time studying) and I really want to do that job, don't worry.

That still doesn't exempt you from all the costs you're going to have.
The company costs that I can quickly come up with are monthly VAT on the invoices that you send out, you will have to pay ennakkovero. You will have to pay pension, you will have to pay insurances. If you want to be eligible for unemployment benefits as an entrepeneur, you will have to pay an extra insurance/union fee.
AND if you're receiving any kind of study support, you can assume that your study support will certainly not benefit from your entrepeneur-ship.

So count your 1500 euros estimated income, minus the posts mentioned above, minus your phonebill, housing costs, costs of living...

Are you still sure we/you shouldn't worry?


The "owner" is screwing you over. Tell him that if he wants you to get self-employed, you are going to charge him at least 3x as much as you are getting now to cover all the costs of being self-employed.

[annalil]

you can get registered as a temporary resident - I mean working and getting paid means you need to be registered. the EU thing gets you registered as a permanent.

I don't understand. Are you saying I can be registered temporarily without a proof of employment/income/whatever? On what grounds then?

So count your 1500 euros estimated income, minus the posts mentioned above, minus your phonebill, housing costs, costs of living...

You see, I'm a poor working class kid and not used to spending money:
1500 - X - close to 0 - 300 - 200 - some stuff I can deduct from the income tax...
So how much would X be? Oh and "roughly 1500" is more like the minimum, and besides I won't pay much income tax in this range, right?

[Mattlill2000]

Heres some rough figures I came out with when I started my toiminimi. I started with a sort of minimum base and built on it. Minimum pension/insurance was 165 euros a month, and pre tax for 12200 a year was 265 euros quarterly. Then take 22% alv away from 1500 and you don't end up with much. 1500 minus alv is 1170 minus pre tax 88 is 1082 minus pension/insurance 165= 917 a month. If make 1500 and add alv to that to 1880 then your up to about 1247 a month. Of course this doesn't include expense deductions etc...... I don't know what a "normal" rate for self-employed people is for your line of work but in construction it starts at 30 euros and hour plus alv. I can't see anybody surviving on less that 20-25 euros an hour plus alv. and still it would be tough.

[annalil]

Heres some rough figures I came out with when I started my toiminimi. I started with a sort of minimum base and built on it. Minimum pension/insurance was 165 euros a month, and pre tax for 12200 a year was 265 euros quarterly. Then take 22% alv away from 1500 and you don't end up with much. 1500 minus alv is 1170 minus pre tax 88 is 1082 minus pension/insurance 165= 917 a month. If make 1500 and add alv to that to 1880 then your up to about 1247 a month. Of course this doesn't include expense deductions etc...... I don't know what a "normal" rate for self-employed people is for your line of work but in construction it starts at 30 euros and hour plus alv. I can't see anybody surviving on less that 20-25 euros an hour plus alv. and still it would be tough.

Thanks a lot!
917 a month would be more than I am used to, and that's calculated with the minimum I'll make (though of course higher income means higher income tax rate). Oh, and from that estimation you can't draw conclusions concerning my hourly income, I'm not working all the time.

So, open questions:
1) What's first, registering right of residence (then telling them what?) or registering business (then I don't need a Finnish ID and bank account yet?) ?
2) When should my first accounting period start? Does it really have to be after filing the registration? Could it even start in January, since there won't be much to account before the end of this year anyway?
3) If I'll have a first accounting period before January, with less than 8000e, should I already register for VAT and prepayment?

[karel]

Matlil paints it very positive and I don't think he added even half of the costs you're going to have. I did a similar calculation for you and ended up way down. You don't want to be living on 150-200 euros a month after you paid all your constant costs and still have to pay some other things.
Do wat Cory said. Go to the TE Keskus and GET SOME ADVISE!
You have no clue what costs you're running into. You might be able to figure out some, but there are some that you just can't think of by yourself if you haven't done it before.

If you're a TMI, the typical booking period is always from 1.1 until 31.12. If you start in the second half of the year, it might go from say September or October of this year until December of the next year. But eventually you'll end up with booking period = calendar year.

If you don't have a reliable relationship or a registered partnership go for registering the business first.
You don't necessarily need a Finnish ID, but you do need a bank account.
If you don't already have a bank account, but you do have a Finnish partner, go to the bank where he/she has his/her account and let him/her stand bail for you.

If you're married, for example, it's easier to get your residence permit on those grounds and register the company after you get the permit and ID.

[Pursuivant]

I don't understand. Are you saying I can be registered temporarily without a proof of employment/income/whatever? On what grounds then?

you are studying here and at work. you cannot get paid as in earning money so if you are doing those things you must be in the computer.

[Pursuivant]

The "owner" is screwing you over. Tell him that if he wants you to get self-employed, you are going to charge him at least 3x as much as you are getting now to cover all the costs of being self-employed.

and the tax-office as well as insurance is non-negotiable. and you need to do a tax return *monthly*; otherwise they rip you a new orifice and you'll be owing the government monies you never know existed. starting your own business is a good idea only to those who know what its all about. and it means know and not "think".

[annalil]

Ok, it was a stupid idea to give you that number. Can you just assume it'd be 2500/month (which is much more likely) and answer my questions? But ok, I'll go to TE keskus. Besides, I'm not living with a Finn and I'm not studying in Finland (distance studies in another country). So why on Earth do you want to live in Finland then?? Because I'm a total freak: I like it here.

[karel]

Ok, it was a stupid idea to give you that number. Can you just assume it'd be 2500/month (which is much more likely) and answer my questions? But ok, I'll go to TE keskus. Besides, I'm not living with a Finn and I'm not studying in Finland (distance studies in another country). So why on Earth do you want to live in Finland then?? Because I'm a total freak: I like it here.

The number is irrelevant. It doesn't make a difference if it's 1500 or 2500. Your costs will grow proportionally.
You earn more, you pay more VAT, you pay more ennakkovero, you pay more pension, you pay more insurance. It's all linked to your income.
The answers will be the same.
Go to TE Keskus and have someone advise you.

[EP]

you pay more pension

Well, no. But I wish it would have been so. You state the amount of your pension yourself. And as people often are short-sighted (even at 40 it feels that retirement is something that happens to other people, not you), their (my) pension time will be very poor.