Finland is an entrepreneur-friendly country. It is easy to integrate into the Finnish business landscape, thanks to the social welfare system in place.
The culture of gender-based equality and flat workplace hierarchy are more reasons opening a business in Finland is a positive decision. Finland ranks 20 among 190 countries on the list of Ease of Doing Business globally. As per the Global Innovation Index 2018–2021, Finland offers the best environment for business. Additionally, per the Fund for Peace, Fragile States Index 2021, Finland is the most stable country in the world for doing business and has been so for the last 15 years. The workforce in Finland comes with a highly competitive edge, is well-educated and super-skilled, and has the highest digital talent in the whole of Europe.
Setting up a sole proprietorship in Finland is a good choice when you choose to expand your business globally. Here is how you register a sole proprietorship in Finland and the other considerations.
Who can be a Sole Proprietor in Finland
A sole proprietorship is an individually headed/owned company that might or might not choose to hire any more employees. Its structure is simple, with an individual being the sole owner holding all business rights and decision-making power.
Anyone can go ahead to set up a sole proprietorship in Finland without consideration of their nationality. Foreign citizens in Finland can establish a sole proprietorship here. Most entrepreneurs choose to work under this type of business setup.
This is a simplified form of company in Finland and has no add-on hassles that are involved in more advanced company forms. Despite this, setting up any sole proprietorship in Finland needs you to register the business correctly.
If you are residing in the EEA or European Economic Area, the proprietorship will not require registration except for the following conditions-
- The business has hired anyone other than family members as employees
- Trading for your category of work requires a license
- The business operates from a facility that is outside your residence
If you do not reside within EEA, you must get permission from the PRH or Finnish Patent and Registration Office to operate as a private sector trader.
Benefits of Sole Proprietorship in Finland
Setting up sole proprietorships in Finland has several benefits for the proprietor or the owner. Here are a few-
- Individual owners who are sole proprietors have unlimited liability having the same business and personal incomes.
- Sole proprietors do need to worry about double taxation.
- Sole proprietorships in Finland don’t need any specific investment.
- The owner enjoys all profits because there is no separation of a proprietor from the related business.
- Allowance to apply for specific business loans
- The company name remains protected
Documents Required for Registering Your Business in Finland
The documents you need to register a sole proprietorship in Finland are as mentioned below-
- Application for a sole proprietorship with signature
- Corporate account opening application at the bank in Finland
- Finnish Trade Registry notification and fee receipt
- Identity and address documentation
- Documents of incorporation (this includes articles of association, etc.)
Other Criteria for Establishing a Sole Proprietorship in Finland
To establish a sole proprietorship in Finland, you must consider the following important points. The format of the company is less complicated to register.
- A sole proprietor should be 18 years old or above.
- No specific mandates around capital, subscription, or fees apply to such a business.
- The proprietorship can begin any related business activity immediately post-registration.
- There are no specific accounting requisites.
- There is no need for annual report filing.
- There is no rule specified about the company seal.
Post-registration compliances
- Registration with the Trade Registry gives you an ID number.
- Register for an ID number and open a local bank account for sole proprietorship in Finland.
- If the proprietorship operates as a sole owner company, choose a name that does not violate any Intellectual Property rights or rules.
- As a sole proprietor, you must have a business ID, called Y-tunnus. This helps you obtain a residential permit.
- However, if you are not a Finland resident and are applying for a residence permit for the first time, you can do so without a business ID.
- The application for a residence permit happens in two stages. The first stage occurs at the Centre for Economic Development, Transport and the Environment, wherein the proprietorship is assessed in terms of the business plan and financing if any. Once the Immigration Service decides on the residence permit issuance, you can get the personal identity code.
Taxation
- Sole traders don’t pay separate corporate taxes.
- The company owner has to make income tax payments as per individual profits.
- You need to enroll for VAT when the yearly turnover of the proprietorship goes over 15,000 Euros.
How to Register a Sole Proprietorship Company in Finland?
Here is the process of setting up a sole proprietorship in Finland:
Step 1- Company name
- Pick the company name at the outset and verify it in the Trade Register to see if there are any conflicts with using the same.
- Get approval first and only print documentation or signage if the name is approved.
Step 2-Define the business category
- It is essential to design what operations the proprietorship will be engaged in.
- Check if a separate business license is needed per the category of operations the proprietorship is involved in.
Step 3- Registration
- Keep the Finnish ID code handy.
- Visit the Business Information System (YTJ) to make the registration along with your HST or electronic ID card, a mobile cert, and an internet banking-linked code.
- Initiate a startup notification with Trade Register for a €60 fee.
- If you want to register the proprietorship offline via mail, fill in the form Y3 and attach the fee of 115 Euros before mailing the same to Verohallinto, Yritystietojärjestelmä, PL 2000, 00231 HELSINKI.
Conclusion
Sole proprietorships in Finland come with the least of requirements. When you set up such a company and hire in any country, payroll management poses a challenge. Here, Multiplier provides the right assistance for sole proprietors.
Multiplier is a global employment solution for companies planning to expand their business. It offers reliable EOR solutions for helping with all the management processes for international employees. You can easily use our services to set up a new entity without hassle.