Entrepreneurship

Do you have a hobby from which you can also make some money? Are you good with your hands and build more nest boxes for birds than you need? If you sell such products made as a hobby, you do not need to establish a company. Keep annual records of your income and expenses, including material and equipment purchases. You can deduct these expenses from income earned from non-professional activities.

If you have any profit remaining after the expenses arising from your non-professional activities, you need to pay tax on the profit. In this case, declare the income and expenses of your non-professional activities next spring in your pre-completed tax return under “Other earned income”.
If expenses arising from non-professional activities are equal to or greater than the income, no data needs to be declared in the tax return.

Do you and your schoolmates have a good business idea that you would like to test in practice? The Junior Achievement (JA) organisation allows students at the secondary and upper secondary levels to test business activities as part of their studies. Activities are carried out non-professionally, and your school supports you on your entrepreneurship path. If any profit remains after the expenses arising from non-professional activities, it will be divided between the company’s members. Declare your share of the profit next spring in your tax return under “Other earned income”. For more information about JA activities, contact your school.

A 4H Enterprise offers a way for all young people aged 13–28 to start a business. You can establish a company on your own or with your friends. You can realise your business idea as non-professional activities or by starting a real business. Your local 4H association helps you at different stages of entrepreneurship.

If you are studying at a higher education institution, you may also accumulate credits from your 4H Enterprise.  If you have any profit remaining from your non-professional 4H Enterprise after expenses, declare the income and expenses next spring in your tax return under “Other earned income”. If you have established an actual company with a Business ID, declare your income and expenses by submitting the appropriate business tax return     in accordance with your company form. 

Read more about starting your 4H Enterprise on the 4H website (4h.fi/en).

Read more about the business tax return (vero.fi).

Light entrepreneurship means that you employ yourself and use an invoicing service company. Light entrepreneurship is possible without starting a business. However, activities resemble full entrepreneurship, as light entrepreneurs are usually similarly responsible for their actions, as well as tax and other obligations.

As a light entrepreneur, you send invoices to buyers through an invoicing service, which they then pay directly to the invoicing service company. The invoicing service company pays the invoiced amount to you as regular wages or non-wage compensation for work. Contact your invoicing service company to check which type of income you receive and identify the type of tax card you require. Separate tax cards are used for wages and non-wage compensation for work.

Read more about how to apply for a light entrepreneur’s tax card (vero.fi).

The use of invoicing services carries a separate charge. Contact invoicing service companies directly to ask for their prices. While the income you receive through invoicing services is shown in the pre-completed tax return, remember to check that your income and other details are correct. You can deduct the expenses resulting from your activities as a light entrepreneur in your taxation.   These expenses include the invoicing service company’s charges and equipment expenses. Add them to the tax return as required.

Light entrepreneurs are usually responsible for their earnings-related pension contributions, as invoicing service companies do not normally collect them from the amounts they pay. In practice, you need to take out pension insurance for the self-employed, i.e. YEL insurance. Insurance is mandatory when certain conditions are met. These conditions are related to the duration of the activities pursued and the amount of income earned from them.  Visit tyoelake.fi/en to see when YEL insurance is mandatory. YEL contributions can be deducted in taxation.

As a light entrepreneur, you may also have   a VAT liability. You have a VAT liability if these two conditions are met:

1. You receive non-wage compensation for work, not wages, from your invoicing service company.
2. The amount of non-wage compensation for work is more than €15,000 during 12 months.

If you expect both conditions to be met during the first 12 months, you have a VAT liability from the beginning of your light entrepreneurship. As a light entrepreneur with a VAT liability, you have an accounting obligation, and you need to complete a business tax return next spring.

Keep track of the amount of non-wage compensation for work you have received, even if you do not have a VAT liability. If you still expect to receive more than €15,000 in non-wage compensation for work during 12 months, get registered in the VAT register as quickly as possible.

This is how you apply for VAT registration (vero.fi).

Are you already in the prepayment register?

If your company is in the Finnish Tax Administration’s prepayment register and you still want to use an invoicing service company, you do not need to send your tax card to it.  Instead, you need to see to your business taxes yourself by making tax prepayments.

Read instructions for new entrepreneurs for tax payments (vero.fi).

Once you have decided to start your own business, it is time to select the best company form for you. Read instructions for selecting the correct company form (Suomi.fi). You can be an entrepreneur on your own or with other people. As an entrepreneur, you are responsible for the obligations business activities present. Consider whether you need help in accounting from an accounting firm so that you have more time to focus on running your business.

Here are a few useful links for new entrepreneurs:

Guide for new entrepreneurs (vero.fi).

Checklist for the founder of a new business (vero.fi).

You can also subscribe to the three-part newsletter for new entrepreneurs, which provides you with valuable tax information during the first steps of your company. Subscribe to the Finnish Tax Administration’s newsletter (mailpv.net).