In this article, we have summarized everything a beginner should explore.
Private trader or light entrepreneurship
Simply put, a private trader entrepreneur i.e. your own business ID is worth setting up if your income through your business is going to be regular and/or your business requires purchasing expensive equipment or other products. Private trader entrepreneurship will then become cheaper in the long run, as you can deduct purchases in taxation and in the UKKO service you pay a monthly fee and can add an unlimited amount of vouchers to bookkeeping.
Light entrepreneurship, on the other hand, can be worthwhile if you have a need to bill your work occasionally or seasonally. In this case, you only pay the service fee for the invoices you send, and you will not have any fixed costs for the months when you have nothing to bill.
Private trader accounting - responsibilities and obligations
As a private trader entrepreneur, it is your responsibility to keep a record of your company’s incomes and expenses. The accounting of a private trader is quite straightforward, as single entry accounting is sufficient. The easiest way is to outsource accounting to a competent accountant or use a service that combines invoicing and accounting, such as UKKO Private Trader.
Can previous purchases be added to the accounts?
In the UKKO service, you can also add individual expenses to your accounts for purchases that you have made for your business in advance, before setting up a business ID. For example, the purchase of tools can be added, just remember to keep the receipts! However, the actual business and sales can only start once the business ID has been established.
Taxation of private trader - tax prepayment and VAT
Business income is taxed according to your personal taxation and paid in advance - this is called tax prepayment. Advance taxes are applied for in MyTax. After filling in the application you will receive a sum to be paid, dates when to pay it and instructions for the payment.
When you are an entrepreneur and sell products or services, you must add VAT to your sales prices. The amount of VAT depends on your industry, product and service. VAT is added to the sales price and thus charged from the customer. The entrepreneur collects the taxes to themselves until they declare and transfers it to the tax authority on a monthly, quarterly or annual basis.
Read more about private trader's taxation in Finland.
Unemployment security for entrepreneurs
An entrepreneur has to take care of the details of his or her own unemployment security a little more than a wage earner. That is why sometimes one hears nasty stories when an entrepreneur has forgotten about their social security and something goes wrong. However, an entrepreneur’s unemployment security is very good when you remember a couple of important things yourself.
You can read more on the website of TE services.
Can you get a startup grant?
If you are planning to become a full-time entrepreneur, you should definitely use the available startup money. Please note that the startup grant must be applied for before starting a business!
Read here how to apply for startup grant.
The only compulsory insurance for every entrepreneur is YEL, ie the entrepreneur's pension insurance - if the income from business activities is more than 8,000 euros a year. However, depending on your industry and activity, you may also need to have other compulsory insurances, and in some sectors you may want to have certain insurances, even if they are not mandatory. Take a look at your planned operations and field of business and ask for advice from your own insurance company if needed.
Industry selection and licensed industries
When you decide to set up a business name, the first decisions are the choice of industry. It can be challenging if you plan to do more types of work - for example, cleaning as an additional course of study alongside your studies and at the same time work according to your field of study. Invoicing for different jobs is completely allowed, but only one industry can be selected. The decision should be made based on what work you plan to bill the most.
Some industries are subject to a permit. This means that you need some permission from some authority for your business. Areas subject to a permit include, for example, healthcare, taxi driving and car inspections. Read more about licensed industries in Finland.
Please note that when operating in a licensed industry, you must join the Trade Register. Otherwise, joining the Trade Register is not mandatory for a private trader entrepreneur.
Ready to set up your own business? Register to UKKO Private Trader here and we will et up a business ID for you in a couple of minutes.