Web designer / light entrepreneur

Max studies website UI design. During his studies, he decides to challenge himself and test his designer skills in working life. Max’s long-term plans remain yet undecided, and his studies will still take time. This is why Max decides to work part-time as a freelancer. In practice, a freelancer carries out individual assignments, working independently without being in an employment relationship. This type of a work arrangement can also be called light entrepreneurship.

Max designs a website to demonstrate his services. He also prepares an indicative price list. Marketing is done by Max reaching potential customers by email. In the emails, Max describes his skills and services, and demonstrates his previous projects completed at school.

As the first assignment has already been landed, Max decides to find out everything related to charges and invoices. Max decides to send invoices through an invoicing service company. Invoicing services carry a charge. Max compares different options by checking the websites of invoicing services.

When Max invoices a client, he sends the invoiced amount and information about the client to the selected invoice service company, which then charges the amount from the client and pays it to Max. The invoicing service company can pay the amount as non-wage compensation for work or wage income, depending on what has been agreed. Charges are paid to Max as non-wage compensation for work. For this purpose, Max requires a new tax card. Max has a tax card for wage income, but it cannot be used for non-wage compensation for work. In MyTax, Max submits a complete tax card request: he clicks the “Select the complete tax card request” option. In the request, he enters an estimate of the amount of non-wage compensation for work he will receive during the year. It must be entered under “Other income”.

In some cases, light entrepreneurs who use an invoicing service company must also take care of their pension cover and take out YEL insurance. However, Max estimates that he will only receive €5,000 in income during the year. In this case, pension insurance is not mandatory. The income is also so small that Max is not liable to pay VAT.

When do I need YEL insurance? (tyoelake.fi).

When do light entrepreneurships give rise to VAT? (vero.fi).

Max receives a study grant and general housing allowance from the Social Insurance Institution of Finland (Kela). When starting as a freelancer, he also submits an estimate of his changed income to Kela.

Max’s checklist:

  • Build your own website to demonstrate your services.
  • Prepare an indicative service price list and plan how to market your services.
  • Select an appropriate invoicing service company to send invoices to your clients.
  • Find out whether the invoicing service company pays the invoiced amount to you as wages or non-wage compensation for work. If required, complete a tax card request in MyTax to obtain a tax card for non-wage compensation for work.
  • Identify whether you need YEL insurance (tyoelake.fi).
  • Find out whether you have a VAT liability (vero.fi).
  • Submit an estimate of your changed income to Kela if you receive a study grant or general housing allowance.