Hairstylist / self-employed
Setting up a business
Recently graduated hairstylist Benjamin has decided to start his own business. A hair salon in his home town leases out four chairs. Benjamin decides to rent one of them. At the same time, he becomes one of many entrepreneurs in the shared business facilities.
Benjamin selects a self-employed person as his company form. He completes the start-up notification and enters his information in the VAT and prepayment registers. He decides to buy accounting services from an accounting firm.
Prepayment register and tax prepayments
The taxation of self-employed persons differs slightly from wage earners’ taxation. The Finnish Tax Administration calculates tax prepayments, which Benjamin must pay. The amount of tax prepayments is based on Benjamin’s estimate of the profit he will gain from his business activities during the year.
Self-employed individuals who are starting their business must estimate the amount of taxable business income and declare the estimate during the start-up phase. On the basis of this estimate, the Finnish Tax Administration calculates tax prepayments. The estimate can be changed at any time of the year by contacting the Finnish Tax Administration. During the following years, the amount of tax prepayments is based on previous years’ operating profit or loss. The Finnish Tax Administration sends bank transfer forms for the payment of tax prepayments by post. However, payment details are also always shown in MyTax.
Value added tax
Because Benjamin is in the VAT register, he must also pay attention to VAT in his business activities. It is a tax added to the price of a product or service by the seller and paid by the buyer. The VAT rate varies depending on the type of product or service. For example, VAT of 24% must be added to the price of Benjamin’s work as a hairstylist. This means that Benjamin collects VAT of 24% from his customers.
VAT is not income for Benjamin, as he must forward it to the Finnish Tax Administration. At the same time, Benjamin must also declare the VAT he has paid when buying products for his work. He can then deduct the tax from the tax he needs to pay forward.
- Submit a start-up notification (ytj.fi).
- Enter your company in the Trade Register, prepayment register and VAT register, if required (ytj.fi).
- Decide how to maintain your company’s accounting records. You can maintain the records yourself or buy accounting services from an accounting firm.
- If you decide to use an accounting firm and accountant, authorise the accountant to submit data on your behalf using the Suomi.fi authorisation. Instructions for granting the Suomi.fi authorisation.
- Take out YEL insurance, if required. Read more about pension cover for the self-employed (tyoelake.fi).