Obligations of the entrepreneur
Permission or notification
In Finland it is possible to be engaged in a lawful trade that is in accordance with good practice without a permit granted by authorities. In some cases, however, a permit is required to start a business or a declaration of starting one has to be made to authorities.
For example, if you have a beauty salon or a business that sells food products, the premises must be inspected. Apply for a permit from the municipal health authority before starting to use the premises.
Before starting business activities, check whether a permit is required or whether authorities need to notified of the new business. You can find out whether a permit is required for your business by contacting a Regional State Administrative Agency or by visiting the Enterprise Finland website.
A notification of starting a business has to be made to the Trade Register of the National Board of Patents and Registration in Finland (Patentti- ja rekisterihallitus). The same form can be used to notify both the National Board of Patents and Registration in Finland and the Tax Administration of starting a business.
National Board of Patents and Registration of FinlandBusiness start-up notificationLink redirects to another website
Self-employed persons’ pension insurance (YEL-vakuutus) is mandatory, if the self-employed person is between the age of 18 and 68 and receives at least8 575,45 euros (situation in 2023) of income per year from his or her business. A retirement pension insurance secures an entrepreneur’s livelihood when business activities end due to incapacity for work or old age and provides the entrepreneur’s family with a survivors' pension after the death of the entrepreneur. Retirement pension insurance policies can be obtained either from an insurance company or pension fund (eläkekassa). Take out a retirement pension insurance policy at the latest when six months have passed from starting the business. A new beginning entrepreneur receives a 22% reduction in price for the pension payments of the first four years.
The cost of insurance premiums and the amount of future pension payments depend on how much earned income (työtulo) the entrepreneur achieves. The amount of earned income also affects the amount of various earnings-related benefits (ansiosidonnainen etuus), such as sickness allowance.
If your company has employees, you must also take care of their pension and unemployment benefit contributions (eläke- ja työttömyysturvamaksu) and social security contributions (sosiaaliturvamaksu). Employees must be provided with a retirement pension insurance (TyEL insurance) (eläkevakuutus, TyEL-vakuutus) and accident insurance, which includes group life insurance and unemployment insurance. An employer pays an employee’s social security contribution to the tax authorities at the same time as the employer withholds taxes from the employee’s wages.
In some lines of business, employers are obliged also to take out other compulsory insurance policies besides the ones described here. You should also consider taking out other voluntary insurance policies, such as the accident insurance for an entrepreneur.
Finnish Centre for PensionsInformation about insuring employeesLink redirects to another website
In Finland, every entrepreneur has a legal obligation to keep books. If you don’t want to take care of bookkeeping yourself, you can hire an accounting firm to handle your company’s bookkeeping for you. Many companies in Finland use the services of accounting firms.
Company form has an effect on how a company is taxed. It is worth taking this into account when choosing a company form.
A new entrepreneur can register with the Tax Administration’s prepayment register of taxpayers. Registering is done by using the same notification form that is provided for founding a business (a business start-up notification) (yrityksen perustamisilmoitus). If your company belongs in the prepayment register of taxpayers, you can invoice a customer without a withholding of tax.
Tax is levied for the income the entrepreneur or company has left, when all the expenses of business activities have been subtracted from it. A company’s taxes are paid in advance on the basis of its estimated taxable income. This estimation is based on the taxed income of the previous year. With a new business, the entrepreneur must estimate the amount of taxable income and declare it to the tax authorities.
Value added tax
Value added tax (arvonlisävero) is a consumption tax which is collected for almost all goods and services in Finland. Entrepreneurs who sell goods and services in Finland are obliged to pay value added tax. If the income obtained from selling goods and services is less than 15,000 euros per year, value added tax does not need to be paid. Company form has no bearing on the amount of value added tax. However, the amount of value added tax of different products varies.
The Incomes Register is a database in which employers report the salaries paid for their employees. The information must be reported no later than five days after salary payment. The information must be submitted to the Incomes Register electronically:
- directly through the payment system if it has a built-in technical connection to the Incomes Register, or
- through the Incomes Register online service, which you can access using your online banking credentials or other means of electronic authentication.
Salary information can be reported on a paper form only in special cases. Read more about the Incomes Register and how to submit a report on the Incomes Register website.
Responsibility for the orientation of employees and for their safety
As an entrepreneur you are responsible for familiarising your employees with their tasks. An employer must familiarise the employees with the conditions of the workplace and the correct working methods. An employer is also obliged to take care of employees’ safety and health at work. An employer must prepare a strategy for the protection of workers (työsuojelun toimintaohjelma) which defines the risks to health and safety involved in the job and workplace, and describes how these risks can be avoided.
Read more about acting as an employer on the InfoFinland page Employer’s rights and obligations.