Thoughts on entrepreneurship

Entrepreneurship is usually related to an When I established a limited company and started doing
entrepreneur’s passion. Enthusiasm and working on business on a part-time basis alongside my studies and
something they find important helps them work hard paid work, it was by no means clear that my business
and succeed. However, holidays and vacations should would one day expand into a full-time occupation. But
also be considered in the business calculations. The once the business idea was tested and the company
entrepreneur must also rest, because the company made a good profit, taking a step towards full-time
cannot be developed if the owner is exhausted. entrepreneurship felt easy.

TOMMI VIRKAMA RASMUS LÖNNQVIST

Vaasanseudun Uusyrityskeskus Startia Prestige Car Center Oy

The size and development of the market affect the We do not sell just for the sake of selling – we
financial business plan. The company's marketing approach the electricity and energy sector from an
strategy should be updated regularly. The most innovative perspective. There is fierce competition
successful companies are those that constantly in the market, and companies have to stand out
monitor their own operations, customers' from their competition. If new technology becomes
consumption habits, industry trends, and the available for solar panels, we immediately acquire the
activities of competitors. operating system and offer it to our customers.

SVEN LANGBEIN RIIKKA AND VILJAMI MEHILÄINEN

Imatran Seudun Kehitysyhtiö Oy Elektroway Oy

At the business advisor meeting, we will go through I thought it would be good to come up with a bakery
issues related to starting a business, such as the business name with a reference to my own name. My son
idea, taxation, social security, and marketing. The made some suggestions, and eventually I chose the
entrepreneur is the most important resource of the name Tina’s Bakery. I used Google to check if the
company. Pension insurance for the self-employed (YEL) name was still available. In my shop window, there is
and the unemployment fund for entrepreneurs are the always a mouth-watering advertisement next to the
main sources of financial security for an entrepreneur. name.

MERJA LEHTONEN TINA KILICKESEN

Uusyrityskeskus Enter Satakunta Tina’s Bakery

2 UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Welcome to setting up your business

T
he main goal of the own personal advisor. The dream is We are committed to
Enterprise Agency is to pursued together. • Providing advice
promote the creation of Our service is personal, based on the customer’s needs
sustainable companies confidential and free of charge. • Confidentiality
in Finland and help its Aspiring entrepreneurs can benefit • Impartial assessment of
customers to establish companies greatly from the Enterprise Agency’s business ideas
that are as profitable as possible. advice – but they also have to work • Legal operation and good
We help new entrepreneurs assess hard themselves. Companies that business ethics
their business idea from several have started through the Enterprise • Transparency in
perspectives and test its profitability. Agency often survive longer than customer and stakeholder
The entrepreneur's happiness is other business start-ups. relationships
essential to us – whether it means The network of the Finnish • Collaboration with the
starting a business or giving up an Enterprise Agencies is Finland's authorities and businesses
idea. Our goal is to turn big dreams most successful and well-known • Leveraging the expertise of
into real-life successes. advisory network for aspiring successful companies
The Finnish Enterprise Agencies’ and start-up entrepreneurs. All • The continuous development of
extensive network consists of Enterprise Agencies have a uniform our network
regional Enterprise Agencies, quality management system,
business advisors, and various business advisory tools and a Our values
companies and organisations. New customer management system, and • Confidentiality
entrepreneurs receive support from participate in extensive network and • Collaboration
reliable partners as well as their stakeholder cooperation. • Expertise

We will assist you free

of charge in setting up
your business.

Find your nearest

Enterprise Agency at
WWW.UUSYRITYSKESKUS.FI/
IN - ENGLISH

Guide – Becoming an Entrepreneur in Finland 2021 WWW.UUSYRITYSKESKUS.FI/IN-ENGLISH

PUBLISHER Suomen Uusyrityskeskukset ry / SUK-Palvelu Oy ADVERTISEMENT SALES Susanna Kallama,

EDITOR-IN-CHIEF Susanna Kallama, tel. +358 40 587 2445, [email protected]
Suomen Uusyrityskeskukset ry THANK YOU FOR YOUR COOPERATION
EDITOR Anna Laaksonen and Minna Yläkangas, the Business advisors of the Finnish Enterprise Agencies
Suomen Uusyrityskeskukset ry and Kumppania Oy network, Fennia, Isolta Oy, maa- ja metsätalousministeriö,
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UUSYRIT YSKESKUS.FI/IN - ENGLISH 3

 Steps to becoming an entrepreneur

2 Obtain the necessary permits for your business.

Read more on page 35 4 Select the form and name of the company.
Read more on page 40

1 Test and write down your business idea.

Read more on page 20 3 Create a business plan.
Read more on page 22 5 Arrange financing.
Read more on page 32

Contents
Becoming Planning Setting up
an entrepreneur a business a business

How does entrepreneurship Things to consider Different forms of enterprise

affect your life? before starting a business and practical aspects

Entrepreneur story: A successful Entrepreneur story: The brand and Entrepreneur story: A bakery
entrepreneur is driven by sales.................6 service promise of Elektroway help that looks like its owner.............................. 38
What is entrepreneurial work?...................8 the company stand out......................................18 The form of enterprise matters............. 40
Unemployment security................................ 11 Turning an enterprise idea Stand out with a name and
Secure your livelihood.................................. 12 into a business idea ......................................20 protect your ideas...........................................46
YEL pension insurance provides Business plan...................................................... 22 Choose an accounting firm
security throughout life................................14 Calculations turn carefully.................................................................48
Remember to take a break!.......................16 your ideas into numbers............................... 26 Insurance brings assurance.......................50
Carefully considered pricing..................... 31 Consider safety in products
Initial business funding.................................32 and services.................................................................52
Identify and tackle risks..............................34 Contracts in order...........................................54
Industries under authorisations..............35

4 CONTENTS UUSYRIT YSKESKUS.FI/IN - ENGLISH

6 Complete the start-up
notification documents.
Read more on page 22
8 Find the necessary partners and networks (bank, accounting firm, insurance
company, contract and marketing specialist, business premises, etc.).
Read more on page 48

9 Obtain pension
insurance for the self-
employed (YEL) and other
necessary insurance.

7 Register the company in the Trade register

and the Tax Administration registers.
Read more on page 40
Read more on page 14
and 50

Running Business Closing down

a business development a business

Advice and support for How to grow Options at the end of

running a business or evolve? the business lifecycle

Entrepreneur story: Visuality as Entrepreneur story: An entrepreneur Making a bold start

a trump card....................................................... 56 found her calling in elderly by acquiring a company............................. 90
Marketing means helping home care............................................................ 82 Time to transfer your business?.............. 92
the customer...................................................... 58 Support for business development......84
Volume from the online store ................ 63 Networks provide opportunities...........88
Invoicing on time and with Business dictionary.........................................94
correct details................................................... 64 Checklist for new entrepreneurs...........98
Cash is king.......................................................... 67 Enterprise Agencies
Accounting in order.......................................70 at your service................................................. 100
What are financial statements?............... 71
Corporate income tax................................... 72
Learn about VAT............................................... 74
As an employer................................................. 76
Responsibility benefits all..........................80

UUSYRIT YSKESKUS.FI/IN - ENGLISH CONTENTS 5

 Becoming an entrepreneur

A successful entrepreneur
is driven by sales
Rasmus Lönnqvist has been a car enthusiast all
his life. He started selling cars as a part-time
in 2016. He now has 80 cars, offices in
entrepreneur alongside his studies and daytime Vaasa and Helsinki, and two employees.
work. Once the business idea proved successful, His company Prestige Car Center Oy offers
becoming a full-time entrepreneur was easy. cars, financing, insurance, and financial
leasing. The company also provides tyre
storage, washing and waxing services.
text MINNA YLÄKANGAS photo JUKKA VÄHÄLUMMUKKA The company has experienced strong

R
growth, and in 2020, it reached the 181st
asmus became interested place in the Financial Times’ list of the
in sales work when he was 1,000 fastest growing European companies.
in primary school and sold The risks are now greater than when he
Christmas magazines in his worked as a part-time entrepreneur, but
hometown of Hanko. Selling Rasmus is not worried.
felt like a competition: the more you sold, “I don't see a risk. I know our cars are
the higher were the sales commissions. good and well maintained. And I guess you
Dealing with people also felt easy. couldn’t be an entrepreneur if you were
Now, twenty years later, Rasmus has afraid of risks.”
his own company, and his sales work is However, Rasmus admits that he would
still about competing and dealing with not necessarily have become a full-time
customers. Every year the goal is to sell entrepreneur if he had not first received
more and provide a better service than the confirmation of his business idea.
previous year. He enjoys the smile on the “It would have been much harder to
customer’s face when they get the keys to abandon a good job to become a full-time
their new car. entrepreneur.”

Turning a hobby into Entrepreneurial spirit

a business Rasmus did not particularly dream of
After elementary school, Rasmus entrepreneurship. However, it is easy to
graduated as a Business graduate, then see why he became an entrepreneur.
as a Bachelor of Business Administration. “I want to do something all the time, and
“And I More recently, he has studied economics at I work a lot. I thought that if I was efficient
the University of Vaasa. He always worked and productive, it would be smarter to be
guess you alongside his studies, first in a sports an entrepreneur because then I would do

couldn’t be an equipment shop and later in a bank. all the work for myself. I also like making
Entrepreneurship came into the picture decisions.”

entrepreneur if when Rasmus was in college and started

selling cars imported from Sweden on
When applying for a start-up grant,
Rasmus was a customer of Vaasanseudun

you were afraid a part-time basis in the evenings and at

weekends. Cars had long been his hobby,
Uusyrityskeskus Startia. Startia’s Director
Tommi Virkama considers Rasmus an

of risks.” so working with them was exciting. As a

part-time entrepreneur, Rasmus had one
exemplary entrepreneur.
“Rasmus is service-oriented and is
or two cars for sale at a time and a rental constantly developing his business. He is a
warehouse. good example of the fact that personality
After about two years, it was clear that plays an important role, especially in the
the business was profitable and could be customer service sector. Starting a business
safely expanded into a full-time business. is pretty easy, but the entrepreneur behind
the business is often what determines how
Not afraid of risks the company develops and succeeds,” says
Rasmus became a full-time entrepreneur Virkama.

6 BECOMING AN ENTREPRENEUR UUSYRIT YSKESKUS.FI/IN - ENGLISH

Rasmus Lönnqvist's (left)
business idea was to import
cars from Sweden that he
would like to drive himself.
Tommi Virkama considers
Rasmus an exemplary
entrepreneur.

A good start to
entrepreneurship

• Test your business idea to make

sure it works.
• Set clear goals for your operations.
• Provide the kind of customer
service you would like to receive
yourself.

UUSYRIT YSKESKUS.FI/IN - ENGLISH BECOMING AN ENTREPRENEUR 7

 What is
entrepreneurial work?
Entrepreneurship gives you the opportunity to do things your own way and
according to your own values. As an entrepreneur, you are responsible for the
results of your work and the obligations of the entrepreneur. When you understand
what it takes to become an entrepreneur and prepare yourself carefully, you have
every chance of succeeding.

Are you planning to become an the employer company, is considered an part-time activity alongside paid work or
entrepreneur? Stop for a moment entrepreneur (such as a self-employed study is recommended if you are unsure
to consider whether you have an person or a person who works through about the profitability of your business.
entrepreneurial mindset and qualities an invoicing service company). Owning Part-time entrepreneurship is a good
that will help you succeed as an a company or a part thereof does not way to test whether you will have enough
entrepreneur. You should also consider automatically make you an entrepreneur. customers. Testing is particularly
your life situation as you should be able important if you are planning to provide
to focus on your business and perhaps be The various forms of a specialised service.
able to wait a while before your business entrepreneurship
starts making money. Your personal life situation and Things to consider in part-
Entrepreneurship is always a risky business idea will determine whether time entrepreneurship:
business. Most risks are manageable if you should become a full-time or part-
you identify them in advance and know time entrepreneur. Depending on your If you are employed, discuss your
how to prepare for them. The Enterprise situation, you should also evaluate plans for becoming an entrepreneur
Agency’s business advisors will help you whether you should start a business with your employer.
test and plan your business idea for free alone or with a partner. There are many As an employee, you are not allowed
so that you can start your business on a possibilities. to perform similar work as an
solid foundation. Remember that risk is Full-time entrepreneurship, as the entrepreneur. It is often sufficient to
often the very force that drives people to name implies, is the entrepreneur's inform your employer of your part-time
entrepreneurial activity. main job and main source of income. It entrepreneurship, but sometimes it is
imposes strict profitability requirements good to ask for written permission.
Who is an entrepreneur? on the operations, as you have to make
The definition of an entrepreneur a living from the business. On the other Find out how part-time
varies depending on the context. For hand, full-time entrepreneurship allows entrepreneurship will affect your
example, Statistics Finland defines an you to be fully invested in the operations unemployment security.
entrepreneur as a person who engages in of your company. This is worth doing even if you are still
economic activity on their own account The law does not distinguish between employed.
and at their own risk. An entrepreneur full-time and part-time businesses.
can be an employer or a self-employed The distinction comes from the Price wisely.
person. A person working in a limited entrepreneur's possible other sources of If you intend to expand your business
company who, alone or together income. You are considered a part-time into a full-time occupation, think
with their family, owns at least half entrepreneur if you have another full- carefully about the right price for your
of the company is also considered an time job. product or service. The price must be
entrepreneur. As a part-time entrepreneur, the high enough for you to make a profit
In the case of unemployment financial risk may be lower, but even even if you expand your business into
insurance, an entrepreneur is a person then you have to ensure you have enough a full-time occupation, because a steep
who works in a company of which they income to cover the expenses. price increase may be impossible to
or their family own a specific share Part-time entrepreneurship may be implement later on. An excessively low
determined by law. Furthermore, a just a hobby, a way to earn a little extra price level can give a false impression
person who works, but is not in an money, or an opportunity to try out a of the market demand if your large
employment or service relationship with business idea. Starting a business as a customer base is the result of low prices.

8 BECOMING AN ENTREPRENEUR UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Characteristics of
a successful entrepreneur
There are as many different ways to become an entrepreneur as
there are people. However, your personality is the most important
factor that determines the success of your business. You need certain
qualities and skills to make your work productive and meaningful.

As an entrepreneur, you must have:

• A good business idea
• Confidence in your own business idea
• Understanding and knowledge of your industry
• A desire to make money
• Spontaneity and determination
• Courage to take risks
• Ability to cope with uncertainty
• Clear goals

Running a business also requires entrepreneurial skills:

• Business management
• Sales
• Marketing and communication
• Financial management

Remember, you do not have to be able to do everything by

yourself. You can buy services from another entrepreneur,
such as an accounting firm or an advertising agency.

There are a variety

of training courses
on entrepreneurship.

UUSYRIT YSKESKUS.FI/IN - ENGLISH BECOMING AN ENTREPRENEUR 9

 • Who can do the work on your behalf the business to them.
if necessary? An enterprise can also be formed by
a team. In this case, several people who
Partnership wish to become entrepreneurs establish
Advantages a business together. The members of
• With your partner, you can the team commit to common goals,
complement each other's skills and complement each other’s expertise, and
attributes. are jointly responsible for the company’s
• You can share responsibilities, success.
successes and concerns with your
Private tradership or partner. Work integration social
partnership? Things to consider enterprises and social
Finland has a strong culture of • Can you be sure that your entrepreneurship
solopreneurship. Well over half of all cooperation will run smoothly in all A work integration social enterprise
Finnish companies are one-person situations? provides employment for the partially
enterprises. Starting a business alone • How would you share the company disabled and the long-term unemployed.
has its advantages, but working with a ownership and responsibilities with It aims to make a profit, like any business,
partner can also be a good option. your business partner? but at least 30 percent of the workers
employed are disabled or long-term
Private tradership Partnership and team unemployed. The company is entered
Advantages entrepreneurship in the register of social enterprises
• You can make all the decisions A partner is a person who owns one maintained by the Ministry of Economic
yourself. or more shares in a limited liability Affairs and Employment and can be
• You do not have to share the profit company. Operating as a partner can be granted an increased wage subsidy.
with anyone else. an entrepreneurial activity depending on In a social enterprise, business is
Things to consider how the responsibilities and authority are primarily conducted for a specific social
• Do you have the necessary skills, divided among the partners. For example, or environmental goal, and most of
networks and capital to succeed on the spouse and children may be partners the company’s financial profit is used
your own? in family businesses. In small businesses, in furthering the goal. A company
• Do you want to take on all the it may be possible to get key people to established for a social purpose may
responsibility yourself and work commit themselves to the enterprise and apply for the Finnish Social Enterprise
alone? its development by transferring shares in Label.

What is light entrepreneurship?

Light entrepreneurship is an the service with your customer. An unofficial form of
entrepreneur-like way to sell your We advise you to compare enterprise
own work without having your own different invoicing services. Light entrepreneurship is not
Business ID. A light entrepreneur When comparing service fee a legally recognised form of
acquires their own work and percentages, you should also look enterprise. It simply means that
determines its price. Invoicing and carefully at what the fee includes. you sell your own work and
payroll accounting are outsourced With some service providers, the expertise through an invoicing
to an invoicing service that collects fee includes accident and liability service. Some service providers
a service fee when paying wages. insurance, which is important mainly act as an online accounting
The invoicing service also handles for a light entrepreneur. Your firm and require you to create a
tax deductions and other required personal insurance is not likely Business ID.
payments for the self-employed to cover any damage that occurs You should always familiarise
person. during the assignment. yourself with the content of the
Light entrepreneurship is a When choosing an invoicing service and check whether it
good option if you want to test service, you should also find out requires a Business ID. The best
your business idea or if you sell whether the service is available option for you depends on your
your expertise on an occasional abroad and whether it accepts situation and business idea. If you
or temporary basis. This service is payment terminal or cash are planning a new business as a
not suitable for selling products. If payments. Your intended business light entrepreneur, the Enterprise
you use an invoicing service, you determines which invoicing Agency is happy to help you!
should always agree on the use of service best suits your needs.

10 BECOMING AN ENTREPRENEUR UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Unemployment security
In this ever-changing world, business conditions may deteriorate unpredictably,
even if an entrepreneur has a viable business idea and a high level of expertise.
New entrepreneurs should always think about their social and unemployment security.

According to the Unemployment Security ended and the entrepreneur has which is clearly higher than the basic
Act, an entrepreneur is a person who given up their YEL or MYEL daily allowance. The amount of earnings-
works in a company of which they or their insurance and filed a notification related daily allowance is determined
family own a specific share determined by with the Tax Authorities for on the basis of your pre-unemployment
law. Furthermore, a person who works removing the enterprise from the income or insurance. You can calculate
in a company without an employment prepayment register, the employer the amount of your earnings-related
or service contract, i.e. a self-employed register and the VAT register (or daily allowance on the Unemployment
person or a person who works through interrupting its VAT liability). Fund for Finnish Entrepreneurs’
an invoicing service, is also considered an In some cases, the TE Office may website at WWW.YRITTAJAKASSA.FI.
entrepreneur. consider the entrepreneurial activity to
An entrepreneur can join an be seasonal and grant unemployment Employment condition and
unemployment fund for the self- benefits for a period when the post-protection
employed if their YEL income is at least entrepreneur is unable to conduct their You can receive an earnings-related
€13,247 per year (Entrepreneur's YEL business. In this case, the entrepreneur daily allowance if you are a member of
/MYEL earned income and the company is comparable to a wage-earner and may the Unemployment Fund for Finnish
co-owner's TyEL salary). Entrepreneurs receive a benefit between assignments. Entrepreneurs and you have worked as
with a lower level of income are only A person's employment with a company an entrepreneur for at least 15 months in
entitled to labour market support. is considered to have ended if their work the four years preceding unemployment.
capacity has decreased permanently and The reference period cannot be extended
When is an entrepreneur materially. to a period when you have not been a
unemployed? member of the fund.
You are not entitled to unemployment Basic daily allowance If you change from being an employee
benefits if you are fully employed as or earnings-related to an entrepreneur, you usually have
an entrepreneur. In order to receive unemployment allowance? the right to post-protection. You may
the benefit, you need to close down An entrepreneur’s livelihood during receive an earnings-related daily
your business. According to the unemployment is secured by either an allowance based on the income from
Unemployment Security Act, you are unemployment allowance or labour the salaried employment you had before
unemployed if it can be proven that market support. Unemployment you became an entrepreneur if your
your business activities have ended or allowance can be a basic daily allowance business is closed down during the post-
if your employment with the company paid by Kela or an earnings-related daily protection period. The post-protection
has ended in a lawful manner. The TE allowance paid by an unemployment period is usually 18 months from the
Office always ensures that you meet the fund. start of the business. In order to receive
employment conditions for the payment Employees are insured by an a post-protection allowance, you must
of the benefit. The concept of terminated unemployment fund for salaried have joined the Unemployment Fund
entrepreneurial activity varies employees, and entrepreneurs are for Finnish Entrepreneurs within one
depending on the form of enterprise and insured by the Unemployment Fund for month of leaving the unemployment
the entity as a whole. Finnish Entrepreneurs (Yrittäjäkassa). fund for salaried employees. Entitlement
You cannot be a member of both funds at to an employee-based daily allowance
The entrepreneurial activity the same time. You should always choose ends when the entrepreneur's 15-month
is deemed fully terminated if an unemployment fund according to employment condition is met.
• the enterprise has been placed in your main occupation: if you are a part- More information on entrepreneurs’
bankruptcy time entrepreneur with a full-time job, unemployment allowance:
• the enterprise has been placed in you should belong to an unemployment WWW.YRITTAJAKASSA.FI,
liquidation fund for salaried employees. WWW.KELA.FI/WEB/EN > Our services
• a dissolution agreement has been The basic daily allowance in 2021 > Unemployment, WWW.TE - PALVELUT.
concluded between the partners is €33.78 per day, approximately FI/TE/EN > For jobseekers > If you
(excluding limited liability €726.27 per month. As a member of become unemployed > Unemployment
companies) the Unemployment Fund for Finnish security > The entrepreneur and
• the production and financial Entrepreneurs, you receive a daily unemployment security
activities of the enterprise have allowance based on your earnings,

UUSYRIT YSKESKUS.FI/IN - ENGLISH BECOMING AN ENTREPRENEUR 11

 Secure your livelihood
Setting up a business and acquiring customers local employment services in good
often take time. A new entrepreneur must also time to ensure your eligibility for a
start-up grant. Operations must not be
secure their own financial situation before the commenced before a decision on the
business starts to produce results. start-up grant has been made.
The application for a start-up grant
must be accompanied by a business plan,
A start-up grant supports a as well as profitability and financing
new entrepreneur calculations. The business advisors of the
A start-up grant secures a new Finnish Enterprise Agencies can assist
entrepreneur's livelihood at the starting you in completing them. You will also need
phase of full-time entrepreneurship. to include a certificate of the payment of
The grant is only meant to cover the taxes/tax debt certificate, i.e. a statement
entrepreneur’s personal living costs, not on whether the applicant has outstanding
the costs of business operations. Start- taxes to pay. A certificate may be ordered
up grants are taxable income, i.e. tax is via the website of the Finnish Central
payable on them. Tax Administration (WWW.VERO.FI/
A start-up grant can be granted EN > About us > Contact us > e-File >
to a person who is becoming a full- Information on MyTax > Request a tax
time entrepreneur at the startup and debt certificate).
establishment stage of the business. If you are applying for a start-up
A start-up grant may also be granted grant extension, the application must be
to a person who plans to expand their submitted to the employment services
part-time entrepreneurship into a full- during the valid start-up grant period.
time occupation. Start-up grants can
be granted to several entrepreneurs The amount of
who are working in the same start-up the start-up grant
business. You can apply for a start-up The start-up grant corresponds to the
grant when you own at least 15 percent of basic unemployment benefit applied
the company, are in a dominant position under the Unemployment Security
in the company, and are employed full- Act. In 2021, the basic grant is €33.78
time in the company. per day. The start-up grant is paid for
A start-up grant can be paid for a a maximum of five days per calendar
period of up to 12 months. A decision on week. The start-up grant is paid once a
the start-up grant is always made for a month retroactively on the basis of an
period of six months. After the first six application for payment submitted by the
months, the entrepreneur may apply for recipient of the grant. The application
an extension of the start-up grant for for payment must be submitted to the
another six months. Development and Administration Centre
(KEHA Centre) of ELY Centres and TE
How to apply for Offices within two months from the end
a start-up grant of the payment period.
A start-up grant is a discretionary A start-up grant can be granted if
Determine your allowance granted by the Employment the entrepreneur is able to establish
and Economic Development Office profitable business and if they have
eligibility for (TE Office), or municipal employment experience as an entrepreneur or have

a start-up grant services, if your municipality is business training. The entrepreneur

involved in a local government pilot on must work in the business full-time, and

in good time. employment and you belong to the pilot’s

target group. For more information on
the support must be necessary for the
entrepreneur’s subsistence. A start-up
the entities granting start-up allowances, grant cannot be paid if the income of the
please contact your local TE Office. new entrepreneur is secured in another
When considering setting up a manner, such as by wages or other
business, you should contact your benefits.

12 BECOMING AN ENTREPRENEUR UUSYRIT YSKESKUS.FI/IN - ENGLISH

 An entrepreneur's salary and Preconditions
taxation on salary depend on the for receiving
form of enterprise. a start-up grant
You may be eligible for
Starting a business during the same as the company’s sales, a start-up grant if
unemployment turnover, or business income. If your • you have or acquire adequate
If you are unemployed and start a enterprise is a limited company, capabilities for the intended
business, you may apply for a start-up you can pay salaries and benefits business
grant or an unemployment allowance. to yourself and your potential • you are a full-time entrepreneur,
You may receive an unemployment employees. Salaries are an expense and
allowance for the first four months that reduces the company's profit. • the intended business has potential
after the establishment of the If the company makes a profit, for continued profitable operation.
company, as the full-time/part-time shareholders can also receive
nature of the work is not assessed dividends from the company. An A start-up grant will not be
during this time. If your business entrepreneur’s salary is taxed granted if
generates income during the first according to their personal tax rate. • the intended business is estimated
four months, you will receive an Dividends are taxed as income and to secure a reasonable income for
adjusted unemployment allowance. capital income. the applicant at the start-up stages
After that, the TE Office will assess If you are a private trader, you do of the business operations
whether you are operating as a full- not actually pay yourself a salary but • the start-up grant is estimated to
time or part-time entrepreneur. If the you can make private withdrawals distort competition between the
business is deemed to be a full-time from your business account for your providers of the same products
job, you will lose your entitlement personal expenses. You can make or services to more than a minor
to unemployment allowance. If the as many withdrawals as you want. extent
business is deemed to be a part-time However, remember that all your • the private person who applies for
job, you may continue to receive business expenses must be paid from a start-up grant has started fulltime
an unemployment allowance. Note your business account. entrepreneurship before the
that the assessment is not based on Private withdrawals are not taxed decision on the grant was made
the profit of the business but on the upon withdrawal. The entrepreneur • the person who applies for the
time spent on the business. If the must pay the tax in advance. In start-up grant has materially
business is not deemed to be a full- practice, this means that you will neglected their obligations to pay
time job at the end of the four-month notify the tax authority of an estimate tax or other statutory payments,
period and you wish to continue as of the earnings for your upcoming tax or the person has experienced
an entrepreneur, you can apply for period and you will receive a decision material civil law default of
a start-up grant if you expand your on the withholding tax to MyTax. payment, unless the TE Office
business into a full-time job. The decision contains information considers the granting of the
for the payment of the tax, such as start-up grant appropriate.
Salary the amount and due date of each
An entrepreneur’s salary is not installment.

Entrepreneur
Secure you earnings-related unem-
ployment security. Join the Entrepre-
neur fund now.

Join yrittajakassa.fi
Income protection
for entrepreneurs

UUSYRIT YSKESKUS.FI/IN - ENGLISH BECOMING AN ENTREPRENEUR 13

 YEL pension insurance
provides security
throughout life
The only form of insurance that entrepreneurs
must take is pension insurance for the self- parental allowance and earnings-related
employed (i.e. YEL insurance). Although the name unemployment allowance are calculated
refers to a pension, YEL affects the life of an on the basis of the YEL income, not on
the basis of earned salary.
entrepreneur in a much broader sense.
YEL contributions
The YEL contribution of confirmed
You need YEL insurance if income is
• you are an entrepreneur and 18–67 • 24.10% for persons aged 18–52
years old • 25.60% for persons aged 53–62
The YEL • you work as an entrepreneur or light • 24.10% for persons aged over 62.
entrepreneur NOTE! A new entrepreneur will receive
income affects • your entrepreneurial activities a discount of 22% for the first 48

the amount continue for a minimum of four months. Thus, the YEL contribution
months is 18.798–19.968 percent of your

of sickness • your estimated income is more than

€8,063.57 per year (2021).
earned income, depending on your
age. The insurance premium can be

allowance. YEL insurance must be taken out

within six months from starting a
paid 1, 2, 3, 4, 6 or 12 times per year.
The entrepreneur’s pension insurance
business. The insurance is based on the contribution is fully tax deductible. You
entrepreneur’s YEL income confirmed can deduct the YEL contributions in
by a pension insurance company. The your personal or your spouse's taxation
YEL contribution is paid for all months or in your company's taxation. The right
of entrepreneurship. If the insurance is of deduction depends on who pays the
taken out after starting a business, the insurance.
contribution must be paid retroactively.

Assessment of earned
income
The YEL income is always assessed on an The determined
annual basis for the following 12 months. YEL earned income
The earned income should correspond affects the amount
to the annual salary you would pay an granted in the
employee with the same professional following benefits:
skills. Thus, the YEL income is not the
same thing as the profit generated by • sickness allowance
your company or the salary you earn as • parental allowance
an entrepreneur, but the monetary value • earnings-related daily
of your work input. allowance
The YEL income determines the • disability pension,
amount of your insurance contribution. rehabilitation allowance
The contribution is lower with lower • vocational rehabilitation
income, but with too little income, • old-age pension
the entrepreneur's social security and • survivors' pension
pension security may remain inadequate.
For example, sickness allowance,

14 BECOMING AN ENTREPRENEUR UUSYRIT YSKESKUS.FI/IN - ENGLISH

 YEL premiums and entrepreneur's social security
benefits 2021***
Source: Varma Mutual Pension Insurance Company

YEL contribution
24.1%, Contribution for
people aged 18–62 new entrepreneurs
and over 62 18.798% 3) Pension
**** **** Benefits 1) accumulation
YEL pension
accrued in
Sickness Parental Unemployment Accident
Per one year
Per Year Per Month Per Year allowance allowance allowance** allowance
Annual Month under YEL
€/day €/day €/day €/month
YEL insurance
income €/month 2)
€8,063.57 €1,943 €162 €1,516 €126 €18.81 €29.05 €33.78 €672 €10.08

€12,000 €2,892 €241 €2,256 €188 €28.00 €29.05 €33.78 €1,000 €15.00
€13,247 €3,193 €266 €2,490 €208 €30.91 €30.91 €41.62 €1,104 €16.56
€15,000 €3,615 €301 €2,820 €235 €35.00 €35.00 €43.59 €1,250 €18.75

€25,000 €6,025 €502 €4,700 €392 €58.33 €58.33 €60.31 €2,083 €31.25

€30,000 €7,230 €603 €5,639 €470 €70.00 €70.00 €70.84 €2,500 €37.50

€40,000 €9,640 €803 €7,519 €627 €80.02 €91.48 €86.70 €3,333 €50.00

€50,000 €12,050 €1,004 €9,399 €783 €86.68 €104.81 €94.45 €4,167 €62.50

€80,000 €19,280 €1,607 €15,038 €1,253 €106.68 €134.37 €117.71 €6,667 €100.00

€100,000 €24,100 €2,008 €18,798 €1,567 €120.02 €151.04 €133.21 €8,333 €125.00

€125,000 €30,125 €2,510 €23,498 €1,958 €136.68 €171.87 €152.59 €10,417 €156.25

€1 83 ,125 €44,133 €3,678 €34,424 €2,869 €175.43 €220.31 €197.65 €15,260 €228.91

1) The amount of the allowance is an estimate. The final ** An unemployed person is entitled to receive earnings-
amount must be verified with the entity providing the related unemployment allowance only when their
grant. For example, the amount of sickness allowance is earned income exceeds €13,247. Note! Earnings-related
based on the past 12 months' earned income. unemployment allowance requires that the employment
condition and the unemployment fund membership
2) The life expectancy coefficient has not been taken into condition are met.
account in the accrual of the pension. Requires that YEL
contributions have been paid. Increased accumulation of *** The insurance contributions and allowances have been
1.7% of earned income until the end of 2025 for persons calculated partly on the basis of estimated contribution
aged 52–63. percentages and earnings limits.

3) A new entrepreneur receives a discount of 22% on **** Due to transitional provisions, the contribution for
insurance contributions for the first 48 months. people aged 53–62 will be 1.5 percentage points higher
between 2017–2025. During the same period, they will
* Amount of YEL daily allowance for the first 9 days of accrue a pension at a rate of 1.7% instead of 1.5%. The YEL
illness. After that, the minimum rate of sickness allowance contribution will take effect from the beginning of the
is €29.05/day. following year in which the entrepreneur turns 53 or 63.

UUSYRIT YSKESKUS.FI/IN - ENGLISH BECOMING AN ENTREPRENEUR 15

 Remember to
take a break!
Breaks and vacations are extremely important for recovering from
stress and for coping at work. Planning a vacation may seem difficult
for an entrepreneur, but it is worth the effort.

Vacations are meant for rest and important thing is to set a date and turn off your work phone and email.
recreation. Taking a break from stick to it. Inform your customers Record a voicemail on your phone
work is important for your health about the vacation and make the explaining when you will be back at
and wellbeing. That is why an necessary arrangements in good work.
entrepreneur must also remember time. If necessary, arrange someone The purpose of a vacation is
to take a break. If you find it difficult to cover your work. If you have to to restore your body and mind.
to arrange a long vacation, you can take care of work matters during However, a single vacation will
take several shorter vacations. the vacation, determine your not achieve any miracles. You
Studies show that wellbeing only working hours in advance. Write must take care of your health
begins to improve more than a down any unfinished tasks so you and wellbeing on a regular basis.
week after the start of the vacation, can easily get back to them after Recovery from work must also
so taking even one longer vacation your vacation. An entrepreneur take place in your everyday life.
once a year is recommended. must also prepare for the vacation So remember to take breaks, limit
Anticipation and planning financially. Could you save a certain your workload and save enough
guarantee a successful vacation amount of “vacation money” each time for fun leisure activities
for an entrepreneur. The most month? When the vacation begins, – everyday.

Take care of your wellbeing

• Successful entrepreneurship requires good
health and ability to function: get enough
sleep, eat healthily and exercise regularly.
• Enthusiasm is a good thing, but exhausting
your resources can also cause burn out.
Cherish your enthusiasm by limiting the
amount of work even when the joy of work
seems to carry you away.
• Maintain a sense of control by developing
your skills on a regular basis.
• Plan your workdays in advance and alternate
difficult and easy tasks.
• Make your work more pleasant and
meaningful. Think about what you especially
like and try to integrate it into your days.
• Small breaks throughout the day make it
easier to recover from work after the workday.
• Stick to planned vacations and holidays.
• If you are worried about your wellbeing, ask
for help.

16 BECOMING AN ENTREPRENEUR UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Keep your stress
under control
Stressful moments and busy periods are part of the
job, constant stress is not. In order for a business
to be profitable and sustainable, the entrepreneur
must cherish their own wellbeing.

Wellbeing is crucial
The freedom to make your own
decisions and set your own schedules There are many ways to improve your Occupational
is one of the major benefits of being
an entrepreneur. However, in addition
wellbeing at work. Monitor your ability
to work and regularly assess whether
health care
to freedom, entrepreneurship is also it is sufficient for the requirements of
characterised by financial liability, your business. Think about what is As an entrepreneur, you
insecurity, urgency, and commitment. particularly rewarding in your work and c a n i n cl u d e p r e v e n t i v e
These load factors must be taken into what you enjoy the most. Then think occupational health care and
account when running a business. about how you could incorporate it into general medical care in your
your daily life. occupational health care. Kela
Stress affects performance Systematic and goal-oriented may reimburse part of these
Fatigue, difficulty concentrating, and planning will help you to reduce the costs if you are insured under
forgetfulness can be signs of stress. load. Make a plan on how to maintain the Self-Employed Persons'
A stressed person may have trouble your skills and prepare for future needs. ( Y E L ) or Farmers' ( M Y E L )
coping with work. Restlessness often Monitor and regulate the amount of Pensions Act.
drives us to do several things at the work and the length of your workdays. Yo u c a n o b t a i n yo u r
same time, i.e. multitask, which in Short busy periods are easy to handle occupational health care from
turn further impairs our performance. as long as they are followed by a quiet a municipal health centre, a
In addition, multitasking reinforces period. You have to give yourself enough private medical centre or from
the experience of urgency. A stressed time to recover from the rush and stress. a self-employed occupational
and busy person often makes the During a busy period, try to focus on health professional. In order
same mistake: skips breaks and works one thing at a time and remember to to receive reimbursement for
overtime. take breaks. List your most important occupational health care costs,
Breaking a prolonged stress cycle daily and weekly tasks. Focus on you and the service provider
requires concrete changes that either performing these tasks – and these must have a valid agreement
reduce the workload or increase tasks only. Forget about all other things on occupational health care,
resources. Change is most effective that are not mandatory. a plan of operations for
when both of these are materialised. Learn to be more tolerant of yourself. occupational health care, and
The first step is to examine your own If you have trouble coping with work, a workplace survey.
actions and thoughts. Where does the be proactive and ask for help. One Learn more: WWW.KELA.FI/
concern come from? Is there a concrete person can only do so much, even an WEB/EN > Our services >
cause for concern or stress? Measures entrepreneur. Everyone needs a support Sickness > Occupational
to reduce the burden are only possible network to succeed. So remember the health services
once you have identified the stress following mantra: network, outsource,
factor. prioritise, and delegate.

UUSYRIT YSKESKUS.FI/IN - ENGLISH BECOMING AN ENTREPRENEUR 17

 Planning a business

The brand and service promise of

Elektroway help the company stand out
Entrepreneurial couple Viljami and Riikka
Mehiläinen started a company from their own A distinguished brand
garage. In just a few years, Elektroway has emerged The Enterprise Agency’s Business Experts
Miia Ruohio and Sven Langbein from
as a success story in the electricity and energy sector. Imatran Seudun Kehitysyhtiö Oy describe
Elektroway as a model student.
text TIINA SAARI photo ANNA LASHKEVICH “The company’s brand alone is so

V
elegant that it stands out from other
iljami and Riikka players in the industry.”
plunged into full-time Miia and Sven praise Elektroway's
entrepreneurship together, professional service.
which also deepened their “You get a good feeling from Elektroway
relationship. even when paying a bill. It is a pleasure to
“We did not become entrepreneurs notice that growth is possible even during
overnight. We weighed our options the most challenging times. The hearts
carefully.” of the two brave young people are full of
The couple pondered over the idea of entrepreneurial spirit.”
setting up a company for three years. When As CEO and supervisor of electrical
Viljami worked as an electrical engineer at work, Viljami focuses on sales and
the Kaukopää factory in Imatra, he started technical roles. Riikka, on the other hand,
doing electrical work in his spare time to is in charge of business development,
earn extra income. Word of this spread administration and customer service.
quickly. He started to get more work orders “Viljami is a bedrock that keeps my feet
and his customer base gradually increased. on the ground, I am more of an innovator.
Viljami and Riikka had previously Not everyone has to do things the same
lived in Spain for a few years. Viljami, who way,” says Riikka.
worked as a golf teacher and electrician
at the time, established a business name Sunshine from year to year
for himself. When the couple returned to Viljami states that as the business grows,
Finland, Viljami kept the Business ID and the company's operations must also evolve.
retained a dormant company. The company is currently developing
In Imatra, Riikka worked as an comprehensive electrical and energy
As the business occupational health nurse at Terveystalo, solutions for the customers.
but in her free time, she helped her spouse “When new technology enters the
grows, with the company’s paperwork. In January market, we are at the forefront of testing it.

the company's 2018, Riikka resigned from her job and We suggest the most suitable combination
began creating a brand for her husband’s for each customer.”

operations must company with the help of an advertising

agency.
Elektroway's concept has secured a
substantial market share outside South

also evolve. The couple branded their company as a

pioneer in smart energy solutions.
Karelia. The company installs photovoltaic
systems for customers all around Finland
“We thought about how we could stand and is aiming towards the international
out from the competition. We also wrote market.
down the company’s service promise.” “Photovoltaic energy is an evolving field
The company was changed to a limited of the future. The sun shines from year to
company, and the spouses became year, and you get a steady return on your
partners. Viljami resigned from the factory, investment,” says Viljami.
and later that year the couple had already Viljami and Riikka also use solar
acquired employees. electricity themselves.
In two years, the company has grown “We aim for self-sufficiency and reducing
tremendously, and now it already employs emissions.”
ten people.

18 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

Business Expert Sven
Langbein (left) praises the
company of Riikka and
Viljami Mehiläinen as a
model example. Elektroway’s
entrepreneurs invest in
clarifying and developing
their competitive advantage.

Tips for
a new entrepreneur

• Think about the market for your

product or service.
• Who is the product or service
intended for? Will there be a
demand for it in the future?
• Who are your competitors?
• How can your company respond
to the changing needs of the
market?

UUSYRIT YSKESKUS.FI/IN - ENGLISH PL ANNING A BUSINESS 19

 Turning Evaluate your

an enterprise business idea

from different
perspectives
idea into 1. Benefits to the customer
For what purpose will the customers

a business idea use the product/service? Why would

a customer want to buy the product
/service?

2. Brand
A business idea is an idea that indicates why Why would the customer want to
you want to start a business. When considering buy the product/service from you?
a business idea or an operating model, the most
3. Competitive advantage
important thing is to make sure that there are How can you stand out from
customers willing to pay for your solution. the competition? What will your
product/service cost? How will you
package and deliver the product?
Make sure you consider your business different about your business idea?
idea from the point of view of potential How will you stand out from the 4. Customers
customers. How can you create value competition? What are your customers How will you reach your customers?
for the customer by offering your willing to pay for? Identifying How many customers do you have?
expertise? Which operations do you customers’ needs and market trends is How do the customers want to
have the best knowledge, skills and important in order to understand what buy? How much are the customers
financial preconditions for? qualities the customers value. willing to pay? How would the
An enterprise idea must be Is your product or service, for customers like to pay?
developed into a concrete business example, more effective, cheaper, of
idea. The business idea answers the higher quality, more pleasant or simpler 5. Way of working
following questions: than that of your competitors? Do you Will you manufacture the products
• What does your company do? make buying easier for the customer? yourself? Will you buy the products
• What are you selling? You will get the best insight when from a subcontractor? Will you
• Who is your target audience and you conduct a market survey and a operate locally or globally? What
how do you sell your products or competitor analysis. The most genuine will be your business hours? How
services? feedback about your product will will you handle support functions
Your business idea is your competitive come from your potential customers. such as accounting? How will you
advantage in the market. What is However, an opinion poll does not market and sell the product/
always necessarily tell the whole truth service?
about customers’ buying habits.
Analyse the competitive situation 6. Resources
in your industry. Industry refers to the How will you get the necessary
sector in which the company operates, facilities? Will you need separate
such as catering (restaurants and production and office facilities?
cafes), hairdressing and beauty care Will you need any machinery or
services, construction, or cleaning. equipment? Where will you get the
Some industries are more competitive finances you need to get started?
than others. If you operate in a highly Do you (and your partners) have
competitive industry, you need the necessary expertise and
to be able to stand out from your experience?
competition. What can you do a little
better than others? In addition, be sure to check
if implementing your business
idea requires a professional
What can you do a little qualification or a license.

better than others?

20
10 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH
 Where to get
the business
idea?
A good business idea is based
on market demand and the
entrepreneur's own know-how.
The success of companies is often
dependent on the knowledge and
expertise of their owners.

Own idea, best idea?

Implementing a business idea and obtaining funding may be very will have to earn their customers.
based on one's own knowledge and difficult at first. The Enterprise Agencies are
expertise is the most common way Finding new market needs there to assist you if you want to start
to start a business, especially in the requires active following of the a business by buying an existing
service sectors. The idea does not corporate environment and the company. We will help you get
have to be new to be successful. For recognition of needs as early as acquainted with the company and
example, hairdressers often start a possible. The entrepreneur who assess the risks and opportunities
barber-hairdresser enterprise and first recognises a new market gap involved in the transaction.
drivers become entrepreneurs in the may base their business idea on You can find available companies
transport sector. filling this gap. A new idea may be at WWW.YRITYPÖRSSI.FI,
A business idea can arise from a a success. WWW.FIRMAKAUPPA.FI and
problem you encounter in everyday WWW.YRITYSKAUPAT.NET/EN.
life for which you have a solution. Leverage an existing idea You can also search for a suitable
While your idea may seem like the and buy a company company on your own and contact
greatest idea in the world to you, You can also start a business by its owner, even if the company is
you should always consider it from leveraging an existing business idea. not publicly for sale.
the point of view of the customer. You may implement it in a new and
The product (goods or a service or more competitive way, or in a new Franchising
a combination of these) must be market area. Acquiring an existing business
something that the customer is You can also become an idea and operating model, i.e.
willing to pay for. You should always entrepreneur by buying an existing franchising, is an effective way to
be prepared to adapt your idea based company or part thereof. The get started as an entrepreneur. A
on customer needs and market acquisition of an existing company franchise agreement will provide
demand. naturally involves risks but it offers you access to a pre-developed,
a new entrepreneur a simple way market-tested and successful
Something completely to get started and a possibility to concept. As a franchisee, you will
new commence business operations pay a membership fee based on your
A company may be established to immediately as the customers and operating income, which often also
commercialise a completely new turnover already exist. However, if covers training and various support
business idea, product, service or you buy a company, you should keep services.
invention. This way of starting a in mind that you cannot buy the Learn more:
business often involves the most risk, market. Even the new entrepreneur WWW.FRANCHISING.FI

UUSYRIT YSKESKUS.FI/IN - ENGLISH PL ANNING A BUSINESS 21

11
 Business plan
A business plan is a written plan that indicates how an enterprise will implement
its business idea in practice. The business plan is used as a roadmap when
starting a business and as a tool for business development.

The business plan provides the key

information about the business and its
chances of success. The business plan is
a tool that enables entrepreneurs to plan,
and it can also be used in negotiations
with potential investors and business
partners.

A business plan outlines

the business idea
A written business plan will help you
outline your business idea. The business
plan outlines the entrepreneur’s skills,
the features of the company’s product
and/or service, the target customer
groups, and how the enterprise intends
to sell and market its products. The
business plan also describes the
operating environment and competitors
of the enterprise.
The future activities should be
assessed in the most comprehensive
and honest way possible. A good plan
also highlights the risk factors that may
affect the success of the business.

Calculations are key

Financing, profitability and sales volume
calculations as well as the cash flow
statement are a key part of the business
plan. They allow you to assess your
company's profitability and the need for
investment, i.e. the amount of money you
need to start your business.

A business plan
will help you
outline your
business idea.

22
10 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH
 Is your
A business plan is a tool that company
can be used in negotiations a start-up?
with possible investors.
So far, there is no single, widely
accepted definition of a start-
up. Therefore, identifying
a startup company is not
always simple. According to
Steve Blank, a professor of
A well-prepared business plan gives The business plan is not meant entrepreneurship at Stanford
an idea of the profitability of a business to be set in stone, it is a document University and a well-known
and its prospects. It allows you to show that evolves with the business. The serial entrepreneur, a start-up
that your business has a chance to business plan should be regularly is a temporary organisation
succeed, even if you do not have any revised and updated in order to be searching for a repeatable and
financial data yet. useful for the company’s strategic scalable business model.
development.
The business plan evolves Start-up company
with the business How to prepare features:
Define the scope and content of the a business plan • From the outset, scaling
business plan according to your needs. Invest enough time to develop your and rapid growth play a
A business plan always reflects the business plan. You do not have to significant role in planning
entrepreneur’s own thoughts and complete the business plan in one and testing the business
ideas, which is why it should not be sitting, you can refine the plan later. model. Scaling is based,
prepared by anyone else. The scope What is important is not the for example, on replicable
of the business plan depends on amount of text, but the fact that product or service
the business. A good business plan you outline all the key information innovation or a business
includes a brief summary of the intent about the business, your own skills, model that resolves growth
of the company. and future plans. Make sure that an constraints in a new way.
In addition to the current situation, outside person, such as an investor, is • The business model may
the business plan should clearly able to read and understand the plan. change several times as the
communicate the company’s future You do not have to create the entrepreneur gains more
plans. A clear, yet sufficiently detailed business plan in the exact order of practical experience. A
business plan will make it easier for our example, but we recommend you start-up company may not
you to make decisions related to your to consider all the aforementioned have extensive or long-
business. aspects when you create your plan. term information on the
profitability of the business.
Therefore, the activity
usually involves a high risk.
• Business is also often
unprofitable in the initial
A business plan is stages, Thus, setting up and

important for investors growing the business may

require external funding.
Due to the high risk, most
A business plan allows your investors to assess your business’s start-ups fail – either
prospects. A business plan is required when applying for external completely or in achieving
funding, start-up funding, public business grants, or investments from their growth target. For this
potential shareholders. reason, investors usually
A business plan can also be used in negotiations with other expect a fairly high return on
business partners, such as lessors, subcontractors, or suppliers. their investments.

UUSYRIT YSKESKUS.FI/IN - ENGLISH PL ANNING A BUSINESS 23

11
 Business plan structure

Basic company your products or services to Risk management

information consumers or other businesses? • What risks may be
• Names of the entrepreneur and • Describe your typical customer associated with your
/or team members on a general level. business? How likely are
• Original name of the company • Specify your key customer the risks to materialise?
• Company address groups. • Describe how your
• Main industry company is prepared for
• Company form or mode of Markets and competitors the identified risks.
operation • Where is your target market
geographically located? Your company
Business idea • Does your company operate on • Company premises and
• Briefly describe your business the Finnish market or does it location
idea. How would you describe have international potential? • What acquisitions or
your company to a stranger for • How many potential customers investments do you need
the first time? are there in the market? How to make in the beginning?
• What types of products or and why will your company • What is your role in the
services do you provide? attract customers? company? Do you hire
• Who is your target audience and • What are the prospects for employees and/or use
how do you sell your products or market development? subcontractors?
services? • Who are your competitors? List • What permits does your
3–5 key competitors. company need? What
Expertise • How do you stand out from notifications do you have
• How does your education, skills, other players in the same to make to the authorities?
or work experience support industry? What is your • How do you take care of
becoming an entrepreneur in competitive advantage? your company's intellectual
this industry? property rights?
• What skills do you think you Sales and marketing • What kind of pension
need to improve? • How well do you know your insurance and social and
customers’ needs? unemployment security
SWOT analysis • How do you sell your products do you need as an
• The SWOT analysis describes or services? Which channels do entrepreneur?
the internal strengths and you use? • Are you going to apply for
weaknesses of the business • How and where do you sell your a start-up grant from the
idea, the entrepreneur, and the products or services? Employment and Economic
company, as well as the external • How can the customers find Development Office
opportunities and threats (see your products or services? (TE Office)?
example on page 34).
Business goals Financial management
Products and services • What concrete goals have you and contracts
• What products or services do set for your business for the next • How will you handle
you offer to your customers? At 3–5 years? accounting and billing?
what price? What is your pricing • Calculations related to the • How will you organise the
based on? business plan (financing, early-stage financing of
• How much do you aim to sell in profitability and sales volume your business?
a day, in a week, in a month, or calculations) will help you to • What type of contracts
in a year? define your goals in numbers does your company need?
and euros.
Customers • Together, the text section and
• Who are your customers, i.e. the calculations form your
who do you sell to? Do you sell business plan.

24 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Calculations turn
your ideas into numbers
The business plan should include at least a financing, profitability and
sales volume calculation. The information provided by these calculations
will help you outline your pricing and sales targets and understand where
all your costs come from.

The business plan calculations will The calculations form own capital and property you can
help you determine the following: a whole invest in the business. The sources
• How much does it cost to start The financing statement should take of funding need to cover all your
your business? into account all the investments funding needs, so you will probably
• How are you going to fund your and operating expenses required also need to obtain funds from
business activities? to start a business. These include, outside sources, such as a bank.
• What costs will your business for example, costs related to tools, Keep in mind that the start-up grant
incur and what should be your machinery, cars, rent, marketing, is not considered an actual source of
sales target? initial inventory, and possible funding, because it is meant to cover
• How much working capital do salaries. Be realistic when making the entrepreneur’s personal living
you need to manage your early- the financing calculation: the figures costs only.
stage costs? must be based on actual amounts A profitability calculation shows
You will also need this information and needs. how much you need to sell to make
later on as you develop your When making the calculation, your business profitable. In the sales
business. think about how much of your volume calculation, the minimum
invoiced sales target indicated by
the profitability calculation can
be apportioned among different
customer groups and products. The
cash flow statement (pages 67–69)
helps you ensure that you always
have enough money in your bank
account to pay the bills.
The calculations are estimates of
the future and should be examined
as a whole. If your investment
needs change, it will also affect
the profitability of your business.
Update your calculations as your
plans materialise.

Calculations help
you determine your
financing needs.

26 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Financing statement (12 months)
The financing statement calculation will help you determine how much money
you will need to start your business (expenditure requirements) and plan how
you can finance your business (sources of funding).
• What are the necessary purchases for your business?
• How much working capital do you need to survive the first few months?
• Can you invest your own capital and/or property in the business?
• How much credit do you need, where can you get it and what does it cost,
and do you need collateral?

Expenditure requirements (before starting a business) € INSTRUCTION: Enter the

registration fee (€60 for private
Purchase price in the case of
Investments traders / €275 for limited
a business acquisition
companies in 2021) and legal fees,
Administrative expenses, e.g. registration fee 60
e.g. for drawing up a shareholder
Equipment and machinery, incl. IT equipment 2,000
agreement, here.
Property given as a capital contribution
500
(existing machines, work tools and supplies)
INSTRUCTION: This value is
Phone 200 mainly informative and does not
Equipment installations affect the calculations. If you are
Car a carpenter and you already have
Furniture 1,600 tools worth thousands of euros,
enter their estimated value here.
Renovations 1,000
Be sure to add the same figure to
Marketing investment 740
the funding sources as well.
Working capital Websites, brochures, booking systems 1,000
1 – 6 months
Once the business Facility rental/rent deposit 1,400 INSTRUCTION: If you estimate
is established, it Equipment rental/leasing that it will take 3 months before
will take some time you can pay the rent with internal
before the sales Entrepreneur's own salary 4,000
financing (money received from
revenue will cover Employee salaries
your costs and salary. customers) and you have to pay a
You should estimate 3-month rent deposit, enter your
the length of this Other working capital expenditure
monthly rent x 6 here.
period.
Current and
TIP: Calculate the total amount
liquid assets Initial inventory 500
of compulsory expenditure from
Cash reserve 1,000 your last month's statement
and multiply it by the number
Total exp. requirement 14,000 of months you estimate it will
take before you can use internal
financing.
Sources of funding (how you arrange start-up funding) €
NOTE! In the income statement,
Equity Property given as a capital contribution 500
machinery, equipment and
Personal cash investments 3,500 furniture with an estimated service
Share capital (only applies to limited companies) life of more than 3 years are
Partnership loan depreciated by 25% annually. See
Loan capital
(only applies to limited companies) the three-year income statement
Bank loan and Finnvera loans 10,000 (page 29).
Other loans (e.g. related party loan)
Others (e.g. credit limit)

Total sources of funding 14,000

The sources of funding must cover

the expenditure requirements.
UUSYRIT YSKESKUS.FI/IN - ENGLISH PL ANNING A BUSINESS 27
 Profitability calculation (12 months)
The profitability calculation allows you to determine your minimum
turnover target.
1) Target profit
If you are a private trader, enter your
Per Year target profit here. If you are setting up
Per Month
(12 months) a limited company, the target profit is
Target profit 1) 1,800 21,600 usually zero, and your own gross salary
+ Loan repayments 240 2,880 is added to the fixed costs.

= Net income 2,040 24,480

2) Taxes
+ Taxes2) 500 6,000 You can calculate your personal tax
= Gross income rate using the information on:
2,540 30,480
(Before taxes and loan repayments)
WWW.VERO.FI/EN > About us >
+ Loan interest 27 324 Contact us > e-File > Calculators
A = Total 2,567 30,804 The corporation tax for limited
companies is 20%.

Fixed operating costs (excluding VAT) 3) Per Month Per Year 3) Fixed costs
(12 months) Fixed costs are costs that remain fixed
Pension insurance for regardless of changes in sales volume.
313 3,756
the self-employed (YEL) 4) Typical examples of fixed costs include
Other insurance 100 1,200 rent, pension insurance, and employee
Employee salaries 0 salaries. If the cost depends on the
Indirect remuneration costs (approx. 40%) 0 sales volume, it is a variable cost that is
recorded in the sales calculation (page
Entrepreneur’s own salary
0 30).
(excl. private traders)
Rent and electricity 700 8,400
4) YEL pension insurance
Leasing payments 0
YEL pension insurance is mandatory
Marketing, advertising, trade fairs and and should correspond to your earned
100 1,200
other sales promotion activities
income. However, you can decide at
Telephone and internet 50 600 what level you want to maintain your
Travel and car expenses 200 2,400 pension contributions. The statutory
Bookkeeping 100 1,200 minimum earned income will cost
Office expenses, bank payments, etc. 20 240 €125 per month in 2021. For a full-
time entrepreneur, a YEL income of at
Training 0
least €20,000/year is recommended,
Magazines, subscriptions,
0 in which case the YEL payment is
professional literature, newsletters
approximately €313/month. Read
Repairs, maintenance
20 240 more about YEL: WWW.VARMA.FI/EN >
and software updates
Entrepreneur > All about YEL insurance
Unemployment fund 0
Other costs 100 1,200 5) Value added tax (VAT)
B = Total fixed costs 1,703 20,436 All values ​​in this calculation are
exclusive of VAT, but it is added at the
Per Year end to illustrate the difference.
Per Month
(12 months)
The formula uses a general tax rate of
A+B Sales margin required 4,270 51,240 24%. (Other VAT rates are 14%,
Purchases 575 6,900 10% and 0%.)
= Turnover 4,845 58,140
+ VAT (24% used in this formula) 5) 1,163 13,954 6) Monthly invoiced sales target
The monthly values ​​are multiplied by
= Total sales/invoicing 6,008 72,094
twelve to calculate the annual value.
Excl. VAT Incl. VAT However, the entrepreneur also has to
take a vacation sometimes, and their
Invoiced sales target 58,140 72,094
customers are also occasionally on
Monthly invoiced sales target
(e.g. 11 months/year) 6)
5,285 6,554 vacation. Therefore, in the monthly
target calculation, the annual values are
​​
Daily invoicing target (e.g. 20 days/month) 264 328
divided by eleven. In many cases, there
Hourly invoicing target (e.g. 8 h/day) 29 36 are even fewer active sales months.

28 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

Income statement (3 years)
The three-year income statement provides an example of the development of the company's
business and operating results. The calculation should be updated at least once a year.

Year 2 Year 3
Income + 5% + 5% The calculations
Expenses + 5% + 5%
should be
Euros
Sales revenue
Year 1
72,094
Year 2
75,698
Year 3
79,483
examined as
VAT 13,954 14,651 15,384 a whole.
Operating income/loss 58,140 61,047 64,099
Materials and supplies 6,900 7,245 7,607
Personnel expenses 0 0 0 Depreciation
Machinery, equipment and furniture
Rent 8,400 8,820 9,261
with an estimated service life of more
Marketing 1,200 1,260 1,323
than 3 years are depreciated by 25%
Other operating expenses 10,836 11,378 11,947 annually. Depreciation reduces the
Depreciation 900 675 506 company's taxable income.
Operating profit 29,904 31,669 33,455
Financing costs
Financing costs 324 230 137
Loan interests can be deducted as
Profit before taxes 29,580 31,439 33,318
financing expenses. The profit for the
Taxes 6,000 6,288 6,664 financial period must also be sufficient
Profit for the period 23,580 25,151 26,654 to cover loan repayments.
 Sales volume calculation (1 month)
Example of a sales volume calculation. The example entrepreneur’s business idea is
providing beauty care services.

Product/ € Product/ €
product group 1 product group 2
Products/ Facial care Pedicure
name of product group
unit price 85.90 unit price 61.71
- expenses 10.00 - expenses 7.00
= margin 75.90 = margin 54.71
Customer/ Unit, hours Unit, hours
customer group etc. etc.
A. Women >50 yrs 7 531.30 9 492.39
B. Women 30-49 yrs 15 1,138.50 7 382.97
C. Youth 15-18 yrs 5 379.50 1 54.71
D. Men 30-50 yrs 3 227.70 5 273.55
E. Young adults
2 151.80 1 54.71
19-29 yrs
Total sales margin 2,428.80 1,258.33
Product sales total 32 2,748.80 23 1,419.33
Total expenses -320.00 -161.00

Product/ € Product/ € Product/ € Excluding

product group 3 product group 4 product group 5 VAT
Eyelashes and Sugaring Body care
eyebrows
unit price 28.23 unit price 23.39 unit price 75.84
- expenses 1.50 - expenses 3.00 - expenses 5.00
= margin 26.73 = margin 20.39 = margin 70.84
Unit, hours Unit, hours Unit, hours
Total
etc. etc. etc.
5 133.65 5 101.95 2 141.68 1,400.97
12 320.76 15 305.85 8 566.72 2,714.80
5 133.65 0.00 0.00 567.86
0.00 2 40.78 2 141.68 683.71
3 80.19 2 40.78 2 141.68 469.16
668.25 489.36 991.76 5,836.50
25 705.75 24 561.36 14 1,061.76 6,497.00
-37.50 -72.00 -70.00 -660.50

Month Year
Revenue (excluding VAT) €6,497.00 €77,964.00
Costs €-660.50 €-7,926.00
Total sales margin €5,836.50 €70,038.00
Sales margin required, i.e., monthly invoicing target from
€5,285.00 €63,420.00
the profitability calculation
Difference (must be positive) €551.50

A sales volume calculation helps you see how much of

your products and services you need to sell.

30 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Carefully considered pricing
Pricing is crucial to your company’s profitability. Before determining the sales
price of each product or service, you should calculate carefully how much it costs
you to produce or supply it.

The three main factors to consider when to the cost price of the products or remember that the hourly price charged
setting prices are the customers, the services. To calculate the sales price, to your customer is not the same as
competitors and the costs. These factors the variable costs, such as the purchase the hourly pay you would receive as an
are also the basis for three commonly price or material costs, are multiplied by employee. On top of your gross wages,
used pricing models a pricing factor. your employer will also have paid
• value-based pricing If you are selling products or services employer contributions. As a rough
• market-based pricing directly to consumers, list the final estimate, you need to multiply the gross
• cost-based pricing. prices including VAT on your price list wage you received as a paid employee by
In value-based pricing, the price and invoices. Corporate customers will 1.5 to achieve the same level of income as
consists of the value your product or be interested in the price excluding an entrepreneur.
service creates for the customer. Ask VAT, because VAT on purchases can be You should also keep a record
yourself what added value customers deducted from VAT on sales. of the hours you spend on business
are prepared to pay for. Will they pay, for management, marketing and sales
instance, for the image, product quality, Importance of sales margin work. In most cases, you will not be
good customer service, a warranty Carefully consider what the correct able to charge any customer directly for
/guarantee or the location? price for your product or service is. these hours of background work, so the
Marked-based prices are guided by Your company must retain some of the time spent on such tasks must also be
the balance between supply and demand. product’s sales price as the sales margin. covered by your hourly price.
Your competitors are key players in this If you sell products or services at a high In addition to your own hourly pay,
model, so get to know their price level. margin, you don’t need to sell a lot of you also need to take all other expenses
If you sell products or services at much them to make your business profitable. related to your business into account
lower prices than your competitors, you If your margin is low, you will have to when determining the billable prices.
may be able to gain customers quickly, sell more. So be sure to check how large These include, for example
but it can be difficult to raise the prices the sales margin will be for each product • VAT
later on. You can use temporary devices or service sold. Is the margin sufficient • YEL premiums and other
such as introductory offers, but do not when the sales volume is taken into premiums
permanently compromise your margin. account? • tools, phone, internet connection,
In other words, avoid underpricing Keep in mind the fixed costs and the car
your product or service. Price is always total use of your time. A profitability • travel expenses
an indication of quality, as well. Be calculation will give you a good idea of • workspace rent and cleaning
careful not to ruin your image of quality the lower limits of your price range. • accounting expenses
by setting the price too low. • marketing
In a cost-based approach, prices are Pricing your own work • professional literature and
determined by adding a profit margin As an entrepreneur, you need to trainings.

Example of pricing Competitor’s price 20% cheaper price

Sales price €55.00 €44.00
Example
You sell a product that
- 24% VAT €-10.65 €-8.52
costs €28 to produce. Your
Price excluding VAT €44.35 €35.48 competitor sells the same
- Purchase price (0% VAT) €-28.00 €-28.00 product to customers for €55
Margin €16.35 €7.48 (incl. VAT). Note how the
20 percent difference in price
Example of calculating the sales price affects the profit margin.
Total costs of the product €150.00
+ Target sales margin (35 %) €80.77
= Sales price excluding VAT €230.77
+ VAT 24% €55.38
= Sales price including VAT €286.15

UUSYRIT YSKESKUS.FI/IN - ENGLISH PL ANNING A BUSINESS 31

 Initial business
funding
In the early stages of a business, money is always (supplier credit), leasing solutions,
bank accounts with overdraft facilities
needed to start up operations and make initial and credit cards can also help to secure
investments. The amount of funding needed funding in the short term. Leasing refers
depends on your business idea and varies greatly to long-term rental of movable fixed
assets, and it can be used to obtain IT
between industries. equipment and machinery, for example.
The leased asset also acts as security for
The easiest way to work out your the funding, so separate collateral is not
financing needs and sources of funding required.
is to perform a financing calculation
when drafting your business plan. Your Finnvera funding to help
business idea and the nature of your get started
business have a significant effect on If your company does not have the
your need for funding. For example, collateral required by banks, Finnvera’s
offering interpreting and translation partial guarantee (Start Guarantee) can
services requires a much smaller be a suitable solution. The bank files the
initial investment than establishing a application directly to Finnvera on your
restaurant or a company manufacturing behalf.
goods. The minimum amount for a Start
In most cases, initial funding comes Guarantee is €10,000. Finnvera’s
from three sources: guarantee coverage can be 80% at the
1. the entrepreneur's own financing most. However, the maximum amount
2. loans granted for a single financing need at any
3. possible grants one time is €80,000.
Self-financing refers to investing your A new Start Guarantee can be granted
own savings or other assets (property to your company after a minimum of two
Finnvera’s Start given as a capital contribution), such as months have passed since the decision
machinery, real property or car, into the on the previous guarantee was made. The
Guarantee business. total sum of Start Guarantees granted to

can be used Loans (also known as liabilities or one company may not exceed €160,000.
borrowed capital) are granted by banks, If the Start Guarantee criteria are

in place of pension insurance companies and other

financial institutions, such as Finnvera.
not met, your company can apply for a
Finnvera Guarantee for funding obtained

the collateral Even if you have kept your personal

assets at the same bank for many years,
from a bank. In addition, you can apply to
Finnvera for an investment and working

required by you should always contact many different

banks for quotes on a business loan.
capital loan (Finnvera Loan), as well as a
personal Entrepreneur Loan.
the bank. If certain preconditions are met, your
company may also qualify for publicly
Additional information:
WWW.FINNVERA.FI/ENG > Start >
funded business subsidies which do not Setting up a company
need to be paid back.
Start-ups can also turn to business The EU EaSI Guarantee for
angels or venture capitalists for funding microfinance loans
to get their operations started. You can Funding from the European Union’s
find additional information on page 87 of Programme for Employment and Social
this guide. Innovation (EaSI) is available through
Extended payment terms for supplies the bank.

32 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 The EaSI Guarantee is a Support may be granted for • investment and development needs
microfinance guarantee programme for purposes such as of SMEs involved in agricultural
microenterprises. It is meant for funding • starting up the company product processing.
companies, entrepreneurs and self- (establishment support) You can apply to the ELY Centre or
employed individuals. The guarantee • investment and development needs the local Leader Group for the business
can be granted directly to the business of microenterprises and small subsidy. Establishment support can be
or personally to the entrepreneur to businesses granted for purposes such as acquiring
help establish the company and start • projects promoting operational guidance to prepare for business
operations. opportunities for different operations, product development,
The EaSI Guarantee covers loans industries and livelihoods or production pilots, test marketing and
of up to €25,000 for a maximum enhancing the vitality of the compiling a marketing plan.
term of 6 years. The EaSI Guarantee Finnish countryside Additional information: WWW.ELY -
offers a microcredit guarantee rate of • investment and development needs KESKUS.FI/EN > Business and industry
80%. The guarantee is free of charge for of farms
the customer.
Additional information:
WWW.OMASP.FI/EN

Business development aid Ask for help with the applications

The ELY Centre may grant business
development aid to SMEs that meet when necessary.
the prerequisites for profitable business
and have enough of their own resources
for development measures to improve
competitiveness. Business development
aid is always granted on a discretionary
basis. The contribution is based on an
assessment of the company and project,
performed separately for each initiative.

A grant may be issued for

• business development
• innovation
• development and investment
projects related to growth or
internationalisation.
The contribution must be applied for
before the start of the development
project. At least half of the project
funding must come from the company
itself.
Additional information: WWW.ELY -
KESKUS.FI/EN > Business and industry

Business financing for

rural areas
ELY Centres also help to facilitate
entrepreneurship in the Finnish
countryside. Subsidies from the Rural
Development Fund provide newly
established or expanding companies
with opportunities to develop and
modernise their operations.
The subsidies are meant for
companies operating in rural areas,
and they are not related to farming or
agriculture. From the perspective of
rural business subsidies granted by the
ELY Centre, up to 95% of Finland is
regarded as an eligible rural area.

UUSYRIT YSKESKUS.FI/IN - ENGLISH PL ANNING A BUSINESS 33

 Identify and tackle risks
Business is always associated with uncertainties, i.e. risks. You need to identify
the risks to be able to prepare for them, manage them and protect your
business against them.

In business, a risk is more than a potential and systematic. You can also ask the external factors which are beyond the
loss: it can also be an opportunity. To business advisors and experts at your company’s own influence but still need to
succeed as an entrepreneur, you have to local Enterprise Agency for help with risk be taken into account. The abbreviation
be ready to take controlled risks. management. stands for political, economic, social,
Typical examples of the risks faced by technological and environmental factors.
companies include business, contractual Tools help
and liability risks, data security and You can use a four-field matrix known
product risks, environmental and as a SWOT analysis to help identify
business interruption risks, as well risks. The SWOT analysis describes
as risks from crime. Risks can also
be divided into strategic, economic
the strengths and weaknesses of
the business idea, entrepreneur and
Spotting scams
and operative risks, as well as pure company, as well as the opportunities
risks (risks of loss). Pure risks include and threats. Scams or frauds preying on
property, operational and personal The top half of the matrix shows the companies have increased
risks. Insurance is a means of risk current situation and the internal factors s i g n i f i c a n t ly. A s a n e w
management that transfers some of the of the company. The bottom half shows entrepreneur, you might be
risks from your business to the insurance the future and external factors. Positive targeted by deceptions such as
company. factors are shown on the left side and directory scams, offers masked
As an entrepreneur, you should negative factors on the right side. This as invoices or counterfeit
think about how events in your personal analysis helps you examine how to invoices demanding money for
life would affect your business. What further develop your strengths, eliminate a trademark.
preparations should you make in case of weaknesses, exploit opportunities and Do not place any orders or
a severe illness or accident? What would counter threats. enter into agreements over
happen if you had a divorce? The PESTE analysis is another tool the phone, unless you are
Good risk management is proactive for identifying risks. It is used to examine absolutely sure of what you
are ordering and how much it
costs. If you receive an invoice
for a service you do not think
Here are examples of questions you can use when using the SWOT analysis. you ordered and the call was
recorded, you can demand
• What special skills • What skills or resources
access to the recording. If you
do you have? are you lacking?
• What is the strength of • What entrepreneurial skills have refused to purchase a
your business idea? should you strengthen? service but receive an order
• How is your product or • What is your business idea’s confirmation or invoice anyway,
your service better weak spot?
than any other?
file a complaint.
Carefully review all received
invoices. Some of them may
actually be offers disguised as
SWOT- invoices, in which case you do

analysis not need to pay.

You can find additional
information in the guide of
the Federation of Finnish
Enterprises: “Yrittäjä, näin
• How could you benefit • What challenges does tunnistat ja torjut huijaukset”,
from the market situation? your business WWW.YRITTAJAT.FI/EN and
• How could you take environment have? WWW.PRH.FI/EN > Trade
advantage of your networks, • How does the competitive
register > Protect yourself from
for example? situation or demand in
• What new innovations could your industry evolve? scams
your company bring • How are you coping?
to the market?

34 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Industries under
authorisations
There is freedom of trade in Finland, which means for the licencing of social welfare and
people are generally free to conduct business without health care professionals in Finland.
Licences are subject to application
a licence. However, there are also some industries and appropriate qualifications. Self-
for which a licence is required by law. In these fields, employed health care professionals
you must apply to the competent authority for (independent practitioners) must also
submit a notification of their operations
authorisation before starting operations. to the Regional State Administrative
Agency. Providers of social welfare
services are also required to submit a
Licences are granted by local authorities notification. The provision of private
(municipalities and cities), Regional health care services or round-the-clock
State Administrative Agencies, social services requires authorisation
government departments, local by the Regional State Administrative
environmental protection authorities Agency.
and other licensing authorities. In Electronic applications for permits
some cases, permits from several and licences in the social and health care
different authorities are needed. In sector are available via the SUOMI.FI
Licences and the catering industry, for example, service. The portal is meant for service
hygiene certification and licences to providers licensed by Valvira, as well as
permits are serve food and alcohol are required, and those authorised by the Regional State

often granted notifications must be submitted to the Administrative Agencies.

health inspector, rescue services and W W W . S U O M I . F I / F R O N T PA G E >

for a fixed building control services.

Licences and permits are often
Information and services > For
companies and organisations > Permits

period of time. granted for a fixed period of time, and

some need to be renewed periodically.
and obligations > Social welfare and
health services
Applications are usually subject to a fee.
Before starting a company, always ask Food premises
about the following: If you are starting a food establishment,
• Will you need to get a business be sure to contact your municipal food
licence, submit notifications or control authority when setting up your
register the company based on your company. In general, you must have your
intended operations? food premises authorised by submitting
• Will your business operations either a notification or an application
require approval by an authority or for approval to the local food control
special professional qualifications? authority. Remember that premises
You can find information on permits, related to an e-commerce food business
licences and approvals specified by are also considered food premises.
industry and municipality at WWW. Read more about the notification
SUOMI.FI/FRONTPAGE > Information and approval process on the Finnish
and services > For companies or Food Authority website: W W W .
organisations > Permits and obligations. RUOKAVIRASTO.FI/EN > Companies >
A comprehensive list is also available Food Sector > Setting up a food business
at W W W . U U S Y R I T Y S K E S K U S . F I >
Yrityksen perustaminen > Yrityksen Notification under
perustamisen luvat (in Finnish). the Health Protection Act
If the activities of your company may
Social welfare and health cause a health hazard to customers or
services housing, you must submit a written
The National Supervisory Authority notification to the municipal health
for Welfare and Health Valvira (WWW. protection authority in accordance
VALVIRA.FI/WEB/EN ) is responsible with the Health Protection Act.

UUSYRIT YSKESKUS.FI/IN - ENGLISH PL ANNING A BUSINESS 35

 The contact details of the supervisory background music are available from
authority in each municipality are GT Musiikkiluvat Oy, a joint venture
available on the Valvira website: between copyright organisations Teosto Producer
WWW.VALVIRA.FI/WEB/EN > and Gramex: WWW.MUSIIKKILUVAT.
Environmental health. FI/EN . To perform live music, you responsibility
The notification process applies to can receive permission from Teosto:
businesses such as public accommodation WWW.TEOSTO.FI/EN. When products are discarded,
apartments, gyms, public saunas, If you intend to copy or scan companies are obligated to
spas and swimming pools, schools and copyrighted materials (such as books arrange the collection and
after-school centres, day-care centres, or magazines) at your company, you recycling of those products that
children’s homes, nursing homes and need to obtain a permit from Kopiosto: fall within the scope of their
reception centres, as well as solariums, WWW.KOPIOSTO.FI/EN . Permits are producer responsibility – at
tattoo parlours and beauty salons. also required for copying and printing the company’s own expense,
A notification is not required materials from online newspapers, All companies with producer
if the operations are subject to an magazines or journals. responsibility mus t either
environmental permit in accordance Images of a work of visual art can join a producer responsibility
with the Environmental Protection Act. only be used on the company website or ganisation or submit an
Read more about environmental permits: or in brochures, posters and annual application to the Pirkanmaa
WWW.AVI.FI/EN > Services > Businesses reports with the permission of the artist, ELY Centre for registration in the
> Licences, notices and applications photographer or their right holder. producer database.
> Water and the environment > Licenses for using images of artists’ Fu lf i ll i n g t h e p r o d u c e r
Enviromental permits work are available from the copyright responsibility is a statutory
organisation Kuvasto: WWW.KUVASTO. obligation set by the Waste Act,
Copyright permissions FI/IN - ENGLISH. Free image banks can and neglecting it may result in a
Playing music in public places, such also be found online. negligence penalty. The penalty
as the company’s premises, is subject fee is equal to one percent of the
to statutory fees paid to the copyright Additional permits and turnover for the previous year,
organisations. A music licence is provisions but no less than €500 and no
required if you play music in your • Depending on the city or more than €500,000.
premises using a radio, television, CD municipality, there may be different Producer responsibility
or streaming service intended for public regulations concerning outdoor applies to packaging materials,
use, or if live music is performed at your advertising and sales, for instance. paper, tyres, vehicles, batteries
establishment. • Import and export related. and electronic devices. The
The entrepreneur is responsible for For permits, visit the Customs responsible parties are the
acquiring the music licence, and the website: WWW.TULLI.FI/EN > companies that impor t or
liability to compensate begins when the Businesses > New importer/ manufacture these items. In the
music starts playing. Licences to play exporter case of packaging, producer
responsibility pertains to the
packers and importers of the
packaged products.
Learn more about the
c o m m o n w e b s e r v ic e f o r
environmental management:
WWW.YMPARISTO.FI/EN - US >
Consumption and production >
Waste and waste management >
Producer responsibility

36 PL ANNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Permits and notifications applicable
to foreign citizens
Foreign employees and entrepreneurs
need permits to work and conduct
business in Finland.

Citizens of Nordic countries

• If you are a citizen of another Nordic country
moving to Finland, you do not need to apply for a
residence permit. If you plan to stay in Finland for
longer than six months, register with the Digital
and Population Data Services Agency
(WWW.DVV.FI/EN > Individuals > Moving to
Finland > Registration of a foreigner) within a
week of moving to the country. You must visit the
authority in person to complete your registration.
• If you want to set up a business electronically in the
Business Information System (WWW.YTJ.FI/EN >
Notifications > Start-up notifications), you should
have a Finnish identity number. A Finnish personal
identity code is not needed if you file your start-up
notification on paper.

Citizens of EU/EEA Member States

• If you are a citizen of another EU Member State,
Liechtenstein or Switzerland, you do not need a
residence permit to move to Finland. However,
register your residence permit with the Finnish
Immigration Service (WWW.MIGRI.FI/EN > Permits a residence permit for at least a year, register with
and citizenship > EU citizen) within three months the Digital and Population Data Services Agency
of moving to Finland. If you plan to stay in Finland (WWW.DVV.FI/EN > Individuals > Moving to
for at least a year, register with the Digital and Finland > Registration of a foreigner), where you
Population Data Services Agency (WWW.DVV.FI/EN will receive your home municipality and Finnish
> Individuals > Moving to Finland > Registration of personal identification number.
a foreigner). • The process of establishing a company is the
• The process of establishing a company is the same same as for Finnish citizens, although your
as for Finnish citizens, although your place of place of residence may matter in certain
residence may matter in certain situations. situations.

Permits and notifications applicable to Individuals residing permanently

non-EU citizens outside the EEA
• If you are a citizen of a non-EU country and move • If you intend to establish a Finnish company or
to Finland to become an entrepreneur, you need serve in a management role of a Finnish company,
either an entrepreneur, an employee or a startup but live permanently outside the European
residence permit from the Finnish Immigration Economic Area (EU, Iceland, Liechtenstein,
Agency (WWW.MIGRI.FI/EN > Permits and Norway), regardless of your nationality, you will
citizenship > Residence permit > First residence need permission from the Finnish Patent and
permit > Working in Finland > Applications > Registration Office: WWW.PRH.FI/EN > Trade
Entrepreneur). Once you have been granted register > Permits to persons from outside to EEA

UUSYRIT YSKESKUS.FI/IN - ENGLISH PL ANNING A BUSINESS 37

 Setting up a business

A bakery that looks

like its owner
Tina Kilickesen realised her dream by starting “The thought of starting a café in a
Tina’s Bakery, a patisserie café in downtown shopping centre, for example, never even
crossed my mind.”
Ulvila. The bureaucracy that goes into starting To kick things off, Business Developer
a café is complex, but it can be overcome by an Merja Lehtonen from Uusyrityskeskus
entrepreneur who is ready to work hard to get to Enter Satakunta advised Tina to talk to the
licensing authorities.
the bottom of things. “Tina was excited, and she had a clear
vision of her company. She had every
text TIINA SAARI photo VEERA KORHONEN chance of success going into the bakery

T
business,” Merja says.
ina runs her bakery, patisserie There are a lot of laws and regulations
and café business as a private controlling entrepreneurs in the food
trader, and she also provides industry. The first order of business was to
confectioner y for private make sure that the premises Tina had her
events upon order. She is a eye on were suitable for a bakery.
skilled professional with a broad selection Tina rented premises built in early
of products. As an entrepreneur, Tina the 1970s, and she and her spouse began
often works long hours. renovating them to her liking. The café
“I’ve been working alone, but my dream decor includes old cake covers and coffee
is to be able to hire a café assistant,” Tina pots turned into self-made lamps.
says. Tina and Merja went over contracts, cost
“This is the job I’ve wanted since the calculations and similar papers together.
ninth grade of elementary school. I wanted “The main thing is for the entrepreneur
to become a baker-confectioner, but I was to assess how much money they will need
allergic to flour dust at the time.” in their first three months of business,”
Tina studied to become a dressmaker, Merja notes.
but baking remained an important hobby Tina learned that it is important for an
of hers for decades. entrepreneur to examine all agreements in
Starting up Eventually, Tina decided to study for detail.
her dream job and graduated as a baker-
a café requires confectioner in 2017. Two years later, she A long-awaited bakery
several permits also completed the Further Qualification Tina started her business with a small loan
for Confectioners. Today, her allergies are and a modest amount of capital.

and notices. long gone.

“Setting up a business was surprisingly
“Instead of reaching for the stars, I did
as many things on my own as I could.”
easy, thanks to the great support I got Tina has not regretted setting up
from Uusyrityskeskus Enter Satakunta. her bakery café once. Her hard work is
The bureaucracy felt heavy at times, and balanced out by the positive customer
there was a lot of paperwork. However, feedback.
everything sorted itself out when I simply “There had been a lot of demand for a
worked hard to get to the bottom of bakery in Ulvila. Customers say coming to
things,” Tina explains. my café makes them happy.”
Tina’s passion is to make everything
Lamps from cake covers beautiful and delicious.
Tina has been working in Ulvila for 17 “I want to spend enough time on
years, so there was nowhere else she would creating my confectionery. The products
rather find premises than in this small need to be visually appealing, as well. You
town. Tina wanted to set up a unique café. eat first with your eyes, then your mouth!”

38 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

“I love a little fuss and want
to bring joy to people,”
says Tina Kilickesen (right).
Business Developer Merja
Lehtonen helped Tina
sort out agreements when
setting up the business.

A quick ABC into

starting up a café

• Get in touch with your

municipality’s food control
authorities.
• Make sure that your premises
are suitable for a café/bakery.
• Location of the premises: Is the
location easily accessible?
• Are the premises versatile? Are
the premises spacious enough?

UUSYRIT YSKESKUS.FI/IN - ENGLISH SET TING UP A BUSINESS 39

 The form of
enterprise matters
Our business advisors are often asked what is the best form of enterprise. There
is no universal answer to this, because the choice of the form of the enterprise
must always be made based on the case. The business advisors at the Enterprise
Agencies will help you find the best form of enterprise for you.

The main forms of enterprise in Finland recommended for entrepreneurs, so you instructions on how to file and pay taxes.
are a private trader, a limited liability can concentrate on creating profit. A When you are setting up a private
company, a cooperative, a general private trader has no board of directors trader, it is not necessary in all cases
partnership and a limited partnership. or a managing director. An audit is also to register with the Trade Register.
The most common forms are private not mandatory, so the administration of However, it might be a wise choice so
trader and limited liability company. a private trader is very light. that you can have an exclusive right to
The choice of form of enterprise is As a private trader, you cannot your company name.
affected by pay yourself a salary. Instead, you will You should register at the Trade
• the number of founders withdraw money from the company Register if
• the need for equity and its account. This is called a private drawing. • you operate in a licensed trade
availability This is simpler than paying salaries at • you operate in permanent premises
• the responsibilities and decision- a limited liability company, because no that are separate from your home
making withholding taxes et cetera are paid. You • you employ people other than
• the flexibility of business operations will pay taxes for your business according your spouse, or a minor child or
• the continuity of business to the annual income. Even though you grandchild
operations own your private trader company, you • you wish to have an exclusive right
• the attitude of the financiers must, through accounting, separate the to your company name
• profit distribution and covering company’s finances from your own. • you are applying for an enterprise
losses A private trader is often the most mortgage, meaning that you
• taxation. suitable form of enterprise for a fresh are pledging movable property
entrepreneur with a maximum turnover belonging to the enterprise as
Private trader of up to a few tens of thousand euros. security.
Being a private trader means that you are A private trader can later be changed There is a fee for registering at the
conducting a business alone or with your into a limited liability company if the Trade Register. The fee for an online
spouse. Even if you start up a private business grows. A private trader is also notification is €60, and for a printed
trader company together with your the easiest form to “put on hold” if there notification €115.
spouse, the company is only registered are changes in your life. Additional information: WWW.YTJ.
under the name of one party. Private FI/EN
traders often work alone, but with a Setting up a private trader
private trader, you can hire employees as Setting up a private trader is easy, and Limited liability company
with other forms of enterprise. no separate notification documents You can start up a limited liability
As a private trader, you will make all are necessary. However, you have to company alone or with other people. A
decisions yourself and be responsible complete a start-up notification. You can limited liability company is a good form
with your personal assets for the do that through the YTJ online service at of enterprise especially when there is
company’s commitments such as debts. WWW.YTJ.FI/EN. more than one entrepreneur. It can
This means that there is personal risk If you complete the notification also be established by a community.
attached to private trader companies. online, you must also make a separate The Limited Liability Companies Act
If you only sell your own work, the risk notification to the Tax Administration does not set requirements for the
in practice is very small. You can also register either through the MyTax shareholders’ place of residence or
control the risks through insurance and service or by using YTJ’s notification of domicile, which means that the founders
careful accounting. Using an accountant changes. Once the company is registered, can live outside the European Economic
or a bookkeeper is in any case highly the Tax Administration will send you Area.

40 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 The form of
enterprise best
suited to you
depends on
the nature of
your business.
Consider your
choice carefully.

Summary of different forms of enterprise

Minimum number Minimum Main decision-making Statutory Liability for the company's
of founders capital body bodies commitments

The entrepreneur None. The entrepreneur The The entrepreneur

Private alone. A spouse can themselves. entrepreneur themselves.
trader also be included in themselves.
the business.

One. A limited liability Shareholders in a general The Board of Shareholders with their
Limited company can be meeting. The annual Directors with invested capital, unless
liability founded without general meeting must at least one they have guaranteed
company share capital. be organized within member and one loans.
6 months of the end of deputy member.
the financial period.

One. The number of None. The capital Members of the The Board of Members with their
members can vary. varies. cooperative in a meeting. Directors with invested capital (usually
Cooperative An annual meeting must at least one a cooperative fee), unless
be organized within member and one they have guaranteed
6 months of the end of deputy member. loans.
the financial period.

Two. No monetary Partners together None. Partners (also for each

General contribution, or according to the other’s commitments).
partnership work contribution memorandum of
sufficient. association.

Two individuals, A monetary Active partners None. Active partners (also

one of which is an contribution or together or according for each other’s
Limited active partner and other kind of asset to the memorandum of commitments). A silent
partnership the other a silent contribution is association. partner is only liable
partner. required from the according to their
silent partner. contribution.

UUSYRIT YSKESKUS.FI/IN - ENGLISH SET TING UP A BUSINESS 41

 All forms of enterprise
require successful risk
management.

Do not be
misled by
seemingly
easy things
There used to be a €2,500
minimum capital requirement When setting up the company, you and income according to the amount and the
for setting up a limited liability other potential founders must issue all of company’s net assets.
company. This requirement was the company’s shares. As a shareholder, A limited liability company must
removed in 2019, which has you are not personally responsible for the have a board of directors which will be
increased the popularity of the company’s commitments, but instead chosen by shareholders. If the board of
limited liability company as a you are responsible with the capital that a limited liability company has fewer
form of enterprise. In practice you invest in the company. This means than three members, at least one deputy
however, it is difficult to get that in a limited liability company, the member must be elected to the board.
started with zero capital. It can personal risks are lighter than those of The board takes care of the company’s
also be impossible to receive a private trader. In principle, however, administration and represents the
outside investments if the members of a limited liability company company. It can choose a chief executive
owners have not invested their often guarantee the company’s loans, and officer (CEO) to run the company’s day-
own wealth in the company. thus there is a risk. When starting up a to-day management. Choosing a CEO is
An investor can think that the business and planning its operations, not mandatory, however. In addition, a
owners themselves do not you should remember that the form limited liability company must organize
have any trust in the company’s of enterprise alone does not protect a general meeting and usually choose an
potential or are not sufficiently anyone, but instead the risks must be auditor.
committed to making a profit. managed through thorough planning The requirements for board members
Setting up a limited liability and by quickly responding to changes. and deputy members often comes as a
company is easy, but closing A limited liability company is an surprise for new entrepreneurs. If you are
it can be difficult. In practice, independent legal entity, which means setting up a company alone, it is worth
a limited liability company is that its assets are separated from the considering if a limited liability company
always closed down through owners’ assets. The company’s affairs carries too much administrative work
a bankruptcy process at a are decided upon by shareholders, and compared to a private trader. A limited
District Court or through a power in decision-making is distributed liability company is a suitable form of
legal liquidation process if the according to the shares. Usually a person enterprise especially when there are
company’s assets can cover with more shares also has more power in several founders and the company aims
all commitments. The process decision-making. There can, however, be at growth.
of closing down can become differences in shares: certain shares can
expensive because it usually carry more power in decision-making Setting up a limited liability
requires legal help. The business than others. company
of a limited liability company A limited liability company can pay A limited liability company is created
c an also b e sus p end e d . entrepreneurs and employees a salary when it is registered with the Trade
However, a financial statement which is subtracted from the company’s Register. Setting up a limited
must be submitted to the Trade profit and loss. It can also pay its owners liability company requires a written
Register annually. A limited a dividend. A 20-percent corporation memorandum of association, signed by
liability company is a good form tax will always be collected from the all shareholders. Articles of association
of enterprise but it should not limited liability company’s income for are attached to the memorandum, and
be chosen based on improper a financial period. The salary paid to they must include a minimum of three
grounds. an entrepreneur will always be taxed items of information: company name,
as earned income, and dividends will place of registered office and line of
be taxed as capital income or earned business.

42 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 The memorandum of association • Potential auditors, holders Shareholder agreement
must mention of procuration and persons If there is more than one founder,
• the date of the memorandum authorized to represent the it is always a good idea to draw up
• all shareholders company must have a Finnish a written shareholder agreement.
• shares issued by each shareholder personal identity code. It is a contractual document that
• price per share paid to the company If the afore-mentioned conditions are defines the relationships between
in euros (issue price) not met, a printed start-up notification shareholders as well as their rights
• date for the payment of shares must be submitted. To fill out the and obligations in the company.
• members of the board of directors. notification, you can use the Set-up The agreement should be drawn up
If necessary, the CEO and auditors package of the Finnish Patent and carefully and with consideration.
must also be mentioned. The financial Registration Office, which you can Changing the agreement after
period must be determined either on the find on the YTJ website. The printed starting the business can be difficult
memorandum of association or in the notification includes the start-up if disagreements arise between
articles of association. notification form Y1 and its appendix you and your business partners.
You can complete the start-up form 1. Changing the shareholder agreement
notification for a limited liability When starting up the company, you always requires a joint agreement
company through the YTJ online service should also register for value-added tax between all of the parties.
if the following conditions are met: with the Tax Administration, for the The shareholder agreement can
• Share issuers are natural persons Prepayment Register and, if necessary, describe, for example
of full age and they, as well as the for the Employer Register. You can do • the organization of the company’s
board members and potential CEO this with the same start-up notification operations
must have a Finnish personal that you use to register with the Trade • task distribution
identity code, personal banking Register. Once you have completed • profit distribution
credentials, a mobile ID or an the start-up notification, you will be • restrictions to choosing
identity card with a chip. assigned a Business ID. shareholders
• Standard articles of association are Registering a limited liability • principles for redeeming shares
sufficient for the company. company through the YTJ online • non-competition
• The shares have no issue price and service costs €275. Registration in a • what happens to shares in the
the share capital is zero euros. printed form costs €380. case of the death of a shareholder.

Cooperative single cooperative member is usually A cooperative is

A cooperative is a community that can be restricted to the cooperative fee that
formed by one person or several people. they have paid upon joining. Note, a popular form of
enterprise in the
Members can be private individuals, however, that in order to operate, a
companies or other communities. cooperative needs funds, and members
A cooperative can be a consortium
of entrepreneurs, an employer or a
may need to personally guarantee the
company’s loans. creative field.
combination of these two. Each member The cooperative will decide on the
can operate in their own sector or with cooperative fee in their rules. The
their own clients, but all invoicing is cooperative fee does not need a nominal aim of a cooperative is usually not to
performed through the cooperative. value, and its issue price may fluctuate. create a surplus.
A cooperative is a flexible form The community members decide on the The benefit of a cooperative is that
of enterprise where the number of cooperative’s issues in meetings. As a together it is easier to be effective and
members can fluctuate, if necessary. rule, each member has one vote. This cost-efficient than alone. Marketing can
It is a popular form of enterprise feature makes a cooperative a more benefit all members, and things such as
among actors, musicians and artists, equal and democratic form of enterprise materials can be more affordable as the
for example. Members make decisions than a limited liability company. The orders are larger. In a cooperative, joint
on new members together, and a cooperative will choose a board to run tasks can be distributed according to
membership cannot be bought or sold. administration and to represent the members’ skills. If the cooperative can
Members can somewhat freely agree on cooperative. The cooperative can also afford it, it can also hire an employee
their responsibilities and liabilities in the choose a CEO, if it so chooses. to take care of tasks like marketing
cooperative agreement drawn up during The cooperative’s net assets and and sales. When operations are more
the founding of the company. surplus belong to the cooperative. The concentrated, entrepreneurs have more
A cooperative is an independent legal rules can govern their distribution and time for their own profession. In addition
entity. The financial responsibility of a grounds for distribution. However, the to costs, risks are also distributed.

UUSYRIT YSKESKUS.FI/IN - ENGLISH SET TING UP A BUSINESS 43

 For a community to be efficient, A personal information form must also Essential issues
members must be committed. be completed. Registering a cooperative
Disagreements can arise if one member costs €380. should be agreed
upon in writing.
takes on fewer responsibilities than
another or if someone is deviating from Member agreement
common rules to pursue their own The internal matters of the cooperative
interests. should not be registered in the afore-
mentioned legal rules because the rules
Setting up a cooperative are a public document, available to
To set up a cooperative, a written everyone. The principles for operational Must be
memorandum of association is drawn matters should be registered in a
up and signed by all members. Once the separate member agreement that is mentioned in the
members have signed the memorandum,
the cooperative must submit a start-
not attached to the memorandum of
association. memorandum
up notification to the Trade Register.
The cooperative is created through the
The purpose of the member
agreement is to create ground rules for
of association
registration. the cooperative to clarify the company
The cooperative’s financial period culture and to ease the members’ day-to- • the date of the memorandum
must be determined on the memorandum day activities in the cooperative. • all founding members
of association or in the rules. The The member agreement should cover • memberships issued by the
cooperative’s rules are attached to the • the handling of administrative founders
memorandum, and the rules must at issues • fee to be paid to the
a minimum state the company name, • the distribution of tasks cooperative for membership
domicile in Finland and its line of • responsibilities (issue price)
business. In addition to mandatory • how to deal with disagreements • date for membership fee
rules, the rules can mention a CEO, as • the selection criteria for new payment
well as additional fees and obligations members • board members
for additional payments. Standard legal • maintaining client relationships If necessary, you should also
regulations are applied to issues that have • internal and external mention
not been covered in the cooperative rules. communications • the CEO, the auditors and
Document templates, notification • quality assurance operations inspector
forms and instructions for founding • the scheduling and pricing of • members (and the chair) of the
a cooperative can be found in the Set- projects. supervisory board
up package of the Finnish Patent and The member agreement should also • if the afore-mentioned are
Registration Offices on WWW.YTJ.FI mention sanctions for deviating from given shares: shareholders
/EN. The cooperative must be registered the rules. For significant violations, and shares issued to each
in the Trade Register no later than three the sanction can even be a dismissal. shareholder, price to be paid
months after signing the memorandum The grounds for dismissal must also be to the cooperative for a share
of association. Otherwise the foundation clearly explained in the cooperative’s (issue price), date for share
becomes void. The notification is given legal rules. payment.
through the YTJ service with the Additional information:
form Y1 and its attachment form 2. WWW.PELLERVO.FI/EN

44 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Partnerships: a general money or assets with monetary value. The Setting up a partnership
partnership and a limited law does not, however, regulate how large The partners will draw up written
partnership the investment must be. A silent partner memorandum of association, which,
A general partnership and a limited does not have the right to participate in according to the law, must include the
partnership are partnerships that decision-making inside the company, company name, domicile in Finland, line
require at least two partners/people unless otherwise agreed. They are also of business and partners. The articles for
as founders. Usually these are natural not responsible for the company’s issues a limited partnership must also mention
persons, but a partner can also be a legal without a separate agreement stating the active and silent partners, as well
entity, i.e. a company or a community. In otherwise. as the value of each silent partner’s
a partnership, the activities are usually In a general partnership, the partners contribution in euros.
based on individuals, so it can be a good are equally responsible for the company’s After signing the memorandum of
option when the business is focused commitments; in a limited partnership, association, the company should be
on the partners’ professional skills or the responsibility falls on the active registered with the Trade Register and
personal work contribution. partners equally. If one partner makes the Tax Administration. The company
The partners will invest in the a commitment, the others are also should be registered in the Trade
company in the form of money, assets responsible for it. Register through the YTJ service with
or work. In a general partnership, Partnerships are somewhat the Y2 form within three months of
a partner’s work contribution is an unpopular, but in some cases, they can be signing the memorandum of association.
adequate investment. All partners an excellent form of enterprise. A general A personal information form must
are responsible for the company’s partnership is a cheaper and lighter also be completed. The memorandum
commitments with their entire personal option for joint entrepreneurship than a of association is attached to the
property and will together decide on limited liability company, and a limited notification. The registration must be
the company’s issues, unless otherwise partnership suits a single entrepreneur completed within three months of
agreed. with a private investor. signing the memorandum of association,
In a limited partnership, there are two The benefit of partnerships is that otherwise the foundation becomes void.
kinds of partners: active and silent. The they are easy to establish and administer. Registering a partnership costs €240.
company must have at least one active and However, they require clear agreements In addition to the legal articles, it is
one silent partner. For an active partner, and a mutual understanding. A worthwhile for a partnership to draw
a work contribution is an adequate partnership is usually a good choice for up a partnership agreement that is not
investment. A silent partner must invest family companies. attached to the start-up notification.

Advantages and challenges of different forms of enterprise

Advantages Challenges To whom

• easy to set up • personal risk: entrepreneur • for a sole proprietor who does not
• light administration personally responsible for debts have large investments
Private • simple to make private withdrawals etc. • for a small-scale business
trader from the company’s revenue
• easiest form of enterprise to “put on
hold” if there are changes in your life

• no personal risk per se: a • requires administration (which • several founders

Limited shareholder is responsible for the can be outsourced) • operations aimed at growth
liability company’s debts only with the • closing down is difficult • operations require investment or
company capital that they have invested financing
• allows tax planning

• members responsible for the • individual members can sometimes • when several people are doing
commitments only with the be poorly committed to the same or a similar job and they
cooperative fee that they have pursuing the common interest can then take advantage of the
invested • founding members might not company’s joint operations
Cooperative • expenses and risks can be understand that the cooperative • when the members might fluctuate
shared together has no funds and the founders • for people who want to work as a
• collectivity must guarantee loans part of a community
• equality and democracy in • responsibilities and obligations
decision-making can become blurred or confused

Partnerships • easy to set up • requires strict agreement as well • for partners when a private trader
(general • light administration as a mutual understanding and is not an option
partnership, trust • for family businesses
limited • limited partnership: for a single
partnership) entrepreneur with a private
investor

UUSYRIT YSKESKUS.FI/IN - ENGLISH SET TING UP A BUSINESS 45

 Stand out with a name
and protect your ideas
When you are setting up a business, one of the biggest decisions is the name of
your company. The names of products and services are also important. The name
creates a basis for your corporate brand which helps you to stand out among the
competition.

The name must always be Obtain a domain not infringe someone else’s protected
distinguishable and it cannot be in use. Once your company has a name, it name or domain. You could lose the
When considering a name, make sure is time to register a web domain for registered domain if the owner of
that a suitable domain is available. the company. A national domain is by the infringed name or trademark so
Also consider how you can protect your default intended for sites in that specific insists. For more information on .FI
intangible assets. country. The Finnish national domain domains, visit the Finnish Transport
ends in .FI, and it is most common in and Communications Agency
Look into name options Finland. To register a domain, you will website: W W W . T R A F I C O M . F I / E N >
Invest in the choice of a name. A good need a registrar. They will often also offer Communications > FI domains
name is catchy, easily remembered other services for the domain, such as an You can obtain information about
and distinguishable and it supports email service and web hosting. generic domains .COM, .NET and.ORG,
your business. Also make sure that Everyone registering a domain by using the search engines operated by
another company is not using the name must make sure that the domain does web ID brokers.
as a company name, a trademark or a
web domain. The Finnish Patent and
Registration Office has a Name checking
service for companies where you can Ideas can be easily copied
check in advance whether the name
you are considering can be registered: if they are not protected.
NIMIPALVELU.PRH.FI/NIPA/EN

Managing a company’s intangible assets in a nutshell

Protection Purpose Validity
Perpetual as long as the company is
Company name Protects the company name.
in operation

Protects your product or service ID. Separates a

Trademark Eternal, renewal every 10 years
product or service from other companies.

Protects a new and inventive product, 20 years (annual fees), certain products
Patent
device or method. 25 years

10 years, valid for 4 years, renewal first

Utility model Protects a simple device or product invention.
for 4 years and then for 2 years

Design right Protects the external form of the product. 25 years, valid for 5 years, renewal every 5 years

46 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

Rights to intangible assets only cover the products and services
– IPR mentioned on the application. Therefore
Ideas are easy to copy. Therefore, you you should carefully consider the classes
should protect your skills, business ideas of products and services before applying
and results of product development, for a trademark.
which constitute the company’s Check out trademarks:
intangible assets. The abbreviation TAVARAMERKKIKAMPANJA.PRH.FI,
IPR comes from the words Intellectual WWW.TAVARAMERKKI.FI
Property Rights.
You should carefully consider in A patent or a utility model
advance how to protect your company’s for an invention
products, services and inventions. Did you know that an invention or
Protection methods include a trademark, a product developed by you is your
a patent, utility models and a design property? You should protect it.
right. Potential protection methods for new
Read more about intellectual technical solutions include a patent and
property: WWW.PRH.FI/EN > About a utility model. A patent is an exclusive
us > Information and services > IPR right that helps you prevent others
Information for SMEs > Service Manual from utilizing your invention in their
for Intellectual Property business activities. A utility model is, Design right for
like a patent, an exclusive right, and it is design products
Trademark for a product especially suitable for simple device and A design right protects the appearance
or a service product inventions. It can be a suitable of a new product or a part thereof. A
You can protect your products and protection method for you if you need to design is protected by registering the
services by trademarking them. Thus, protect your product quickly and a 10- model, which means that the design
no other company can use the same year protection period is sufficient. right applicant confirms an exclusive
mark as a logo for a similar product or Read more: WWW.PRH.FI/EN > right to their designed products.
service. Please note that the exclusivity Patents, WWW.PRH.FI/EN > Utility Read more: WWW.PRH.FI/EN >
and protection offered by the trademark Models Designs

FINNISH TRADE REGISTER –

CHECKLIST FOR ENTREPRENEURS
Make sure your registered company
details are up to date – file changes at
ytj.fi. Our online service is available in
Finnish and in Swedish.

File details of beneficial owners with

the Finnish Trade Register. Read more
at www.prh.fi/beneficial_owners.

Check if your company must file

financial statements with the Finnish
Trade Register. Read more at prh.fi.

File online. It is cheaper and faster

than filing by paper forms.

www.ytj.fi www.prh.fi
 Choose
an accounting
firm carefully
By outsourcing accounting, you can save time for
your actual business activities and creating revenue.
A proper accounting firm will also offer you advice
on taxation and increasing business.
There are numerous individual
accounting firms. You should choose
one carefully because an accounting firm
can be one of the cornerstones of your
success and an important advisor. Five
tips for choosing an accounting firm:

1. Make sure that the accounting

occurs online
Online accounting makes the job easier
for both you and your accountant, makes
the service swifter and ensures that
all necessary materials are available
on time. Purchase invoices are always
easily available, sales invoices are sent to
customers easily and collection is easy.
Less paper is also cheaper and better for
the environment.

2. Find out what the costs

consist of
Accounting firms have different pricing
patterns. Pricing can be based on a fixed
monthly fee, the time used for the work,
the number of transactions handled, or
a service package that includes a certain
number of transactions and where
additional transactions are charged
separately. The accounting firm’s size
and the staff’s expertise might affect
their pricing. An accounting firm that
updates their staff’s education and
skillset regularly might offer slightly
higher prices than average, but their
service quality should be better in
return. You should ask whether their
services cover only bookkeeping and
financial statements, or do they include
consultation and going through the
financial statements with the client.

48 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 3. Ensure that they have 5. Ask for recommendations from
a substitution system in place entrepreneurs that you know
It is important that the accounting An accounting firm with a high- Service quality
firm has ensured that they can arrange quality service is usually found
a substitute for your contact person. through a recommendation. Other is more
important
If they cannot offer a substitute, the people’s experiences of an accounting
tasks might be left undone because firm’s service can provide valuable
your contact person is on sick leave for
example. This would naturally affect
information. Familiarising yourself with
their reputation before entering into a than price.
your operations as well. customer relationship ensures that you
will receive a quick and smooth service.
4. Preferably use an authorised
accounting firm
When an accounting firm is a member
of Taloushallintoliitto in Finland, it is
‘authorised’, meaning that its know-
how, systems and procedures have
been reviewed and that their operations
are being monitored. An authorised
accounting firm has a liability insurance,
it operates strictly in accordance with
legislation and keeps its staff up to date
with new regulations well before they
enter into force.

Compare banks too

At the bank, your company will, at minimum, need a bank account
for payment transactions. At some point, you will probably also need
financing services. Many banks also offer insurances and consulting.

By comparing the banks beforehand looking for a suitable bank for your local, the bank in your own area
you will find the best for your enterprise, make sure that you might have area-related knowledge
situation and needs. It might feel understand your company’s banking that can help you secure financing,
natural to use the same bank for needs. If you operate as a sole trader for example.
your business as you do for your and sell services, you may do well with It would be wise to pay more
personal finances and loans. The just the basic account functionalities. attention to the service quality than
bank might offer you a discount if you If, however, you have large investment price when choosing a bank, because
concentrate all your finances with needs and you aim for growth, you good advice may show its worth in
them, and, you are already familiar might require financing services or financial terms. The most important
with their operating environment investment advice. thing is to choose a bank that you
and personnel. can trust and that makes you feel
However, the best bank for your Service selection varies like your needs have been met. At
business might not be the one you Different banks have different its best, a relationship with the bank
use as a personal customer. The service selections. When choosing a is an active exchange of information
bank’s service selection might not bank, make sure that they offer all and a smooth business experience.
correspond with the needs of your the services you need and that you do Be an active customer by taking
company, or it cannot offer financing not pay for services that you do not advantage of the bank’s services and
for your operations. When you start need. If your operations are strictly expertise.

UUSYRIT YSKESKUS.FI/IN - ENGLISH SET TING UP A BUSINESS 49

 Insurance brings assurance
YEL pension insurance is the only mandatory insurance for entrepreneurs, and it
collects contributions for your pension and affects your social security. Running a
business has its risks, however, so it would be wise to consider other insurances as well.

You need new, separate insurances for manufacturing or tied to a specific of insurance the owner wants you to take
your business operations. Your personal location, consider taking a business or has already taken. Remember to also
insurances are not likely to cover your interruption insurance. It will prove pay attention to the size of the deductible
business operations. The extent and useful when revenue is lost due to an in the property insurance.
line of your business determine the type interruption in operations. A fire, water
of insurance you should take. Whether damage, vandalism or the breakdown of Accident and medical
your business is tied to one location and a machine, for example, could cause such expenses insurance
what kind of property your business interruption. The entrepreneur is often the company’s
owns also affects your insurance needs. biggest liability. If you have an accident
If you employ other people than yourself, Property insurance or get ill, your business operations might
you need to have an employer’s statutory Make sure to also protect your business come to a halt. As an entrepreneur, you
insurance. property, such as telephones, computers do not have separate work and free time
and products. With regard to leased so your insurance should cover all the
Liability insurance property, make sure to check what kind hours of the day.
As an entrepreneur, you might cause
damage to your customer or their
property. According to the Tort
Liability Act, you are liable for the Personal insurances do not cover
damages you have caused. The liability
insurance will help you in situations damages related to business
operations.
where your actions as a business have
caused damage to a person or an object.
You should also find out whether
your operations are such that a more
extended insurance could be useful.
Make sure that the insurance comes
into effect immediately once you start
your business operations.

Legal expenses insurance

During your business operations, you
may encounter conflicts regarding
agreements, deliveries or employment
that result in court proceedings. With
legal expense insurance, you can reduce
the amount of legal costs. The nature of
your business affects what the insurance
should cover. Sometimes it would be
wise to take an insurance that covers the
other party’s costs as well. Take out a
legal expenses insurance before making
the first agreement so that all of your
agreements are covered from the start of
your operations.

Business interruption
insurance
If your business is related to

50 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Consider taking a medical expenses These insurances are statutory for Pay attention
insurance in addition to the accident employers.
insurance. It could ease your access to If the employees are working to the size of
insurances’
healthcare and make your return to work remotely, this should also be taken into
swifter. We recommend that you include consideration when their insurances are
a daily allowance in both insurance types
to complement the allowance offered
being arranged.
deductible
Data security insurance
to you for your incapacity period by the
Social Insurance Institution of Finland. If you keep an online store or your amounts.
business has a customer register that
Life insurance could fall into the wrong hands, a data
When you become an entrepreneur, security insurance might be worth your
you may have to make large financial while. A denial-of-service attack could vehicle-specific voluntary motor vehicle
commitments. With a life insurance, you halt your online store’s operations for insurances.
can provide some security for your next example, and you are nowadays obligated
of kin. You can include an additional by the EU’s General Data Protection Travel insurance
insurance in case of work incapacity. Regulation to keep even better care of If your operations are international, you
This solution would ease your own your customer information than before. and your possible employees might travel
daily life and that of your close family If information should fall into the wrong overseas to conventions and customer
significantly. hands, it could do irreparable damage to meetings. It would be wise to cover your
your company’s reputation. travelling personnel with the company’s
Employee insurance own travel insurance. Personal travel
If your enterprise provides employment, Vehicle insurance insurances taken together with a home
the employees must be insured with Motor vehicles must be insured with insurance are meant for personal
an accident insurance and with the a statutory motor liability insurance holidays and they do not cover travel
employees’ pension insurance (TyEL). which can be complemented with related to business activities.

There is more than

just one future.

From now on taking

out an insurance
means preparing for
all the possibilities
your future holds.
We are here to help
your company in
every step of the way. Your future. Fennia.
 Consider safety in
products and services
As an entrepreneur, you are always responsible for
the safety of the product or service that you offer or Consider safety when acquiring
equipment and machinery, the
sell. Products and services must not cause any danger service itself, the number of staff
to anyone’s health or property. Products and services as well as their expertise, and
must meet their safety requirements. the marketing and guidelines or
directions given to the customers.
• Identify any possible dangers
with care and document them!
Safe products and services that meet Deconstruct the service in your
their standards are a competitive mind and identify any possible
advantage for your company. Monitor dangers for the customer: what
the changes in your operational causes the danger, what has been
environment and applicable legislation done to prevent them, and what
and react in a timely manner. more should be done to ensure the
Discover the requirements of different safety of the customers?
product categories and services for • Make the necessary safety
consumers on the website of the Finnish documents. Certain services require
Safety and Chemicals Agency (Tukes) the safety document to fulfill
WWW.TUKES.FI/EN > Products and regulatory requirements.
services. You can contact Tukes experts Safety is about constant supervision
and ask more: WWW.TUKES.FI/EN > and maintenance. Monitor any changes,
About us > Contact details > Contact learn from incidents, and report all
search > Browse by unit and group serious accidents to Tukes.

Provider liability Product safety

When you are planning a business When you plan on starting a business
Safety is about that offers leisure-time activities for that manufactures or imports products
the customers, such as beauty or well- in Finland, find out
constant being related services, or exercise, • whether there are any safety

supervision and event and nature services, consider the requirements for the products in
following: question

maintenance. • Plan and determine the nature of

your service and who it is offered to.
• how you as the entrepreneur must
ensure the safety of those products.
• Ensure that you and/or your staff Safety requirements vary from one
have sufficient know-how about the product category to another. Toys,
service. Acquire further training machines and electronics, and personal
and experience if needed. protective equipment for example
• Make sure you understand the safety have their own detailed requirements.
requirements, legislation and possible However, the requirements for many
official guidelines and standards consumer products are rather generic.
related to the service. Ask for more In order to find out the specifics,
information from the authorities you must identify whether you are a
when necessary, as it is their duty to manufacturer, importer or retailer of the
guide and advice businesses. said products. A manufacturer has more
• Plan the customer experience so that responsibilities than a retailer as regards
it is safe from beginning to the end. product safety.

52 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 The Finnish Safety
and Chemicals
Agency (Tukes)
experts can help you
in any safety-related
matters.

Familiarise yourself with the and that the product will fulfill the batch) and that the product will
requirements that a product requirements even after transport or fulfill the requirements even after
manufacturer or importer must take storage. transport or storage.
into consideration. Remember that the • Include your company’s name and • Keep track of any occasions
requirements depend on the product type. postal address in every product when a product has not met the
Check the detailed requirements from the packaging. requirements and inform your
product-related regulations. If you suspect • Check whether a CE marking must be distributer of them if needed.
that a product might not follow the attached to the product. The marking • Make sure that the manufacturer/
requirements, take the necessary actions shows that you have taken care of the importer has attached their name
and collaborate with the authorities. product’s safety and that it meets its or trademark and address to the
requirements. products.
If you plan to manufacture • Check whether the product requires • Document where you have
products: a declaration of conformity where you acquired the products and where
• Check the product’s safety declare that the product meets its you have delivered them for
requirements. safety requirements. further distribution. Keep the
• Evaluate the risks the product could • Keep track of any occasions when a information for 10 years after
cause for its user. product has not met the requirements the product has been removed
• Design and produce the product and inform your distributer of them if from your product selection, if
so that it fulfills the safety needed (product name, serial number, legislation so requires.
requirements. production batch).
• Keep the product’s design If you import products from
documents for 10 years. If you plan to import products from outside the EU, please also note
• Create user instructions and the EU or outside its market area: the following:
include them in the packaging. • Make sure that the product fulfills its • Ensure that the manufacturer has
The user instructions must include safety requirements. tested the product and performed
instructions on the safe setup, use, • Make sure that either you have or will all the other appropriate
maintenance and decommission of receive from the manufacturer the conformity procedures if
the product. The user instructions product’s technical documents should legislation so requires.
must be in Finnish and in Swedish the authorities ask for them. • If a CE marking is required, keep
in Finland. If you plan to export your • Ensure that the manufacturer has the EU declaration of conformity
products to somewhere in Europe, tested the product and performed available for authorities for 10
check the language requirements of all the other appropriate conformity years after you have sold the last
the country in question. procedures if legislation so requires. piece of the said product. With
• Make sure to also check whether • Check that the product has a CE some products, the declaration of
the product must be tested in a marking if legislation so requires. conformity must be delivered to
testing facility before it can be sold. • Ensure that the product has some the customer.
• Ensure that the product has a kind of identification label (product More information: WWW.TUKES.FI/EN
some kind of identification label name, serial number, production > Do this > Setting up a business

UUSYRIT YSKESKUS.FI/IN - ENGLISH SET TING UP A BUSINESS 53

 Contracts in order
You should make all business contracts in writing and review their
contents carefully. The contract needs to be comprehensive enough
not to leave anything open to interpretation or commercial practice.

Freedom of contract allows companies that sell them. You can check the situations that cannot be resolved by
to agree on the terms as they wish, but registration status in the Prepayment negotiation. The dispute can be handled
within the limits of employment law, Register by using the YTJ company in a district court or via arbitration.
consumer protection and environmental search (WWW.YTJ.FI/EN). Arbitration is usually faster.
protection. The law does not require If the counterparty is a legal person, If there is more than one entrepreneur,
a written agreement, but it is always check the competence of the company’s it is important and prudent to agree
recommended. representatives. You can usually find the on the rights, responsibilities and
Always read the contract carefully information in the Trade Register, which obligations of each by means of a written
before signing it. Use legal experts if you can find in digital format on the shareholder agreement. Always agree
necessary. In conflicts, the contract text Finnish Patent and Registration Office’s on a shareholder agreement with any
has priority. website (WWW.VIRRE.FI > In English). partner, even with those you know. In
Find out about your contracting the shareholder agreement, prepare for
partner's background. You can check Be prepared for conflicts the prospect of the death of one of the
credit reports through the companies Record the pattern of actions in conflict partners.

Lease and leasing contracts

Compare
You can lease business premises with would like to make repair and alteration
a fixed period or until further notice work, ask for permission for them from different
contract. Always make the agreement in
writing, even though this is only required
the property owner and agree on the
distribution of costs. Keep your copy of
payment
for fixed period contracts.
You cannot terminate a fixed period
the inspection record during the lease
period until the final inspection.
terminals
lease agreement by giving notice during
the lease period. The statutory notice Financing movable assets If you do business with
period must be three months when the With a leasing contract, you acquire consumers, you need a
lessor gives notice and one month when movable assets so that the financing payment terminal. By
the tenant gives notice on the lease company buys the equipment or exploring your options, you
agreement – unless otherwise agreed in machines and leases them on to your will find a solution that suits
the lease contract. enterprise. The leasing period can be your operations. For example,
The security deposit for a lease optimized according to the estimated the mobility of the terminal
usually corresponds to three months’ economic life. Your seller may choose to and your internet connection
rent. The use of a rental guarantee is also transfer the installment agreement to may affect your choice. The
possible. Rent increases are often tied the financing company. payment terminal can be
to the index of real estate maintenance The down payment on the installment purchased or acquired under
costs or the cost-of-living index (WWW. transaction is about 30 per cent of a lease agreement, which
STAT.FI/INDEX_EN). the value-added tax purchase price. includes maintenance and
Make sure to check from the Building You can also use trade-in equipment repair.
Control Service that you can use the as the down payment. You can deduct The mos t affordable
premises in the way you intend, or add your acquisition expense, interest and solution for small business is
a condition to the lease agreement about amortisation on your accounting. The the payment terminal that is
how the premises must be approved whole VAT should be deducted after connected to a phone. It does
before the agreement enters into force. delivery. not require a fixed Internet
When conducting the initial inspection You usually only receive ownership connection, and its use is not
of the premises, any deficiencies, defects, once the entire purchase price is paid. tied to any particular location.
targets for immediate repair and the Contract failure entitles the financier to
repair schedule must be recorded. If you reclaim the item.

54 SET TING UP A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Running a business

Visuality as a trump card

Jasmiina Kolehmainen markets her products
for free on social media. Her home decor brand “Puine has done an exceptionally
is a success, and online sales are booming. elegant job of building its brand.”
Puine’s revenue model is primarily
Thousands of likes on Instagram carry the based on online sales. Jasmiina believes
message of Puine Oy forward. that the informative content and visuals of
the website are the most important factors.
text TIINA SAARI photo LEA BJÖRN “People won’t buy things from a shabby-

J
looking website.”
asmiina has been marketing
the products of her Lahti-based Keeping the threads in her
company almost exclusively own hands
via social media. Puine Oy Jasmiina was studying for a Bachelor of
makes small objects and Engineering degree in wood technology
ornaments from birch plywood. Jasmiina when she came up with the idea of taking
photog raphs the products for the a course for young entrepreneurs. There,
company’s website, Instagram account and Jasmiina was able to try her wings together
Facebook page. with two course mates.
“I haven’t really had much need for paid She already had an idea that was
advertisements in my marketing.” ready to go. Jasmiina had been writing a
Occasionally, Jasmiina has paid home improvement and interior design
Instagram or Facebook to boost posts that blog focusing on the renovations she had
have already attracted some attention on completed with her husband.
social media. “I used to make objects and furniture
“We use up to €200 at a time to increase out of plywood for our home. People took
our visibility.” an interest in them, which sparked a
One of the ways Puine gains more demand for my products.”
customers is through people spreading Jasmiina never graduated as an
the word about the company in groups engineer. Her business took off and
on social media. In addition, Jasmiina became her priority. For a long time,
Good visuals publishes newsletters. The largest item she persevered as a sole trader with the
of expenditure in Puine’s marketing has support of her spouse and worked long
support brand- consisted of a few trade fair appearances. nights. Jasmiina was nervous about hiring

building her first employee.

Thousands of likes “I’ve always wanted to keep all the

and sales. Puine is an excellent example of how a

company can use social media for sales
threads in my own hands. I felt that there
was a risk of hiring someone who wasn’t
promotion in a sophisticated way. right for the company.”
Business Developer Mikko Kyle from Jasmiina was pregnant with her due
the local Enterprise Agency, Lahden date soon approaching when she opened
Seudun Kehitys LADEC Oy, is particularly a physical store in Lahti. At this point, she
impressed with the photography of Puine’s finally hired someone she knew beforehand.
products and the visually appealing e- Jasmiina only felt she had time for
commerce platform. seven weeks of maternity leave. Since then,
“Puine is one of the leading companies she has hired a few more employees. Her
as regards the use of social media to market husband has also become a full-time Puine
a product-based business. Thousands of employee.
Instagram likes cannot be wrong.” “I want to keep getting my hands dirty.
In Mikko’s view, Puine has been great at In our company, I’m the one who does most
telling the story of the company. of the design and planning of the products.”

56 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

“My products are first and
foremost beautiful things,”
Jasmiina Kolehmainen
says. According to Business
Developer Mikko Kyle,
Puine has built its brand
exceptionally well.

Tips for tracking

finances

• In the beginning, plan how you

manage your finances.
• Develop your own financial
expertise. You can't outsource
everything.
• Find out what kind of
financial services you need.
• If you have problems,
ask for help in a timely manner!

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 57

 Marketing means
helping the customer
Many new entrepreneurs find it hard to start selling and marketing their products
or services. It can be tempting to just sit back and wait for customers to contact
you. However, successful marketing and sales are the cornerstones of your
company’s success.

Right from the start, you should set aside defines how and where to market. on their own. An effective sales and
the idea of unpleasant touting and ask There is no one-size-fits-all approach to marketing approach is based on precise
the question instead: “How can I help?” marketing for all entrepreneurs to adopt. targeting, i.e. strategic choices. You can
Your goal is to solve a problem for your Nevertheless, there are certain common use the template on the next page to
customers or meet their needs with a elements that can help you succeed. design your plan.
solution that is either new or better than Your choices help to guide your
those of your competitors – something Let your marketing operations in the desired direction:
your customers will be happy to pay guide your company towards work and focus groups that
for. This kind of sales and marketing When thinking about marketing, it you find particularly inspiring and that
approach is a joy to implement. is easy to focus on campaigns, social you believe will make your business
The starting points for your media posts or the visual look of the profitable. So, imagine your ideal
marketing should always be your company. However, there is no point in working day: what kind of customers
customer and the product or service diving straight into these practical tasks, would you serve, what type of work
you are selling. Who you sell to also because these tactics are often ineffective would you do and who would you be
working with? You can use the questions
in the template to support your thought
process. When you have written down
your thoughts, you can hone them by
talking to a few potential customers.
If you decide not to make these
choices or target your marketing,
the direction of your business will be
determined by your customers. For
example, imagine an entrepreneur in the
construction business: a builder who has
strong expertise and a burning interest
in traditional building methods but
never highlights this in their marketing.
The builder spends all their days working
on home renovations, never being able to
use their special expertise and do work
that might even have a higher profit
margin.

Useful advice and

positive experiences get
customers moving.

58 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Strategic Marketing Choices template

Why should a customer buy from you? Brand

“What do I gain from this?” What kind of an image do you want to achieve?
What do you want customers to tell others about you?

Target groups Customer Solutions Key messages Means and

Who is your needs How can you How do you let channels
product intended What kind of make life easier your target group How and through
for? challenges for your target know that you which channels can
do people in your audience? have the solution you reach your
target group face How do you to meet their target audience?
in their daily lives? generate value needs?
What experiences for your target Meters
is your target audience? How do you
group looking for? measure
your marketing
success?

Listen and stand out design your company look, which the right time.
You need to identify the need that your consists of the logo, fonts, colours and Since buying behaviour has changed,
potential customer has. Only then imagery. old-school sales tactics and means of
can you communicate through your In the mind of the consumer, the marketing are becoming less and less
marketing that you have a solution that brand is always connected to a promise effective. Advertisements and cold
meets this very need. In addition to your of something. Your brand will grow calling are considered irritating, whereas
target group, you also need to know your either stronger or weaker with customer useful advice and positive experiences
competitors and make yourself stand contact. You can draft messages for your get customers moving. So before trying
out if you want to succeed in the same brand marketing, but if your actions to sell anything, do not hesitate to offer
market. What do you have that nobody are not in line with your messaging or the customer something useful, such as
else can offer? you fail to deliver on your promise, your advice, how-to guides, samples or a trial.
It takes a lot of thought and the right brand is pointless. Customers will reward your business in
choices to find your unique selling point the long run.
and put it to words. Having a unique Buying behaviour
selling point does not mean that every has changed Maintain customer
company should do things completely More and more people are making relationships
differently. Rather, it is the X-Factor that purchase decisions on their own When a customer has selected you
helps customers distinguish between initiative, using their networks and the and made the decision to purchase
similar operators. Internet. Recommendations and useful something, you should absolutely
content can help customers find their continue to target them with marketing
Brand is a promise own way to the company. Google Search content. Maintaining customer
Another way to stand out from the crowd results, product reviews on online stores, relationships is much easier and
is through impressions and reputation, customer stories and the experiences of more affordable than bringing in new
i.e. your company brand. Everything said bloggers and one’s personal network customers. In most cases, purchases
and done by the company contributes on social media have a huge impact on by regular customers also generate the
to the brand, as does the look of the the choices made. Sales work is still largest sales volume, so be sure to serve
company. You should have a professional important, but contact has to be made at them particularly well.

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 59

 Customer experiences are key
Positive customer experiences and the desire to recommend the company are
based on the company meeting or exceeding the customer’s expectations.

The better the feedback a company receives

from its customers, the greater the group Good customer experiences
of potential customers, and this growing help companies to grow:
interest translates into more sales. The customer commitment is
higher sales volume allows the company driven by a combination of
to develop its operations and serve its marketing, sales and
customer service.
customers even better, which leads to
more recommendations and drives a
further increase in sales. Positive customer
experiences keep the wheels of marketing,
sales and service production running and
speed up the growth of the company.

Intrigue
• How can you reach the people who could
benefit from your product or service?
Without any marketing actions, few
people will find your company or its
website. Attract traffic to your website
and store by offering interesting from your website, useful emails, or
articles complete with search engine a chatbot. personal means of contact. To send
optimisation, by posting on social media • Help customers via their preferred letters, you need the customer’s
and by using Google Ads. channels and nudge them towards consent in accordance with GDPR
• Contact customers who are interested the decision to buy from you. requirements.
and ask more about their needs – it’s • Use communications to set clear • Make the buying experience easy
never too early to start sales work. expectations about how your and pleasant. Surprise customers
• Show customers how easy it is to use service works and what benefits it with a refined service experience,
your service, for example by means of brings. Then, aspire to exceed these additional materials or other types
a free trial, video demonstrations or expectations. of giveaways.
consultative selling. • The key to making customers happy
Charm is creating realistic expectations
Commit • Reach out to your customers to for the service from the start.
• One way to get interested customers offer additional assistance, useful In other words, you should not
to commit is to offer assistance, such advice and interesting content via make impossible promises in your
as guides that can be downloaded newsletters sent by email and other marketing and then fail to deliver.

Remember privacy
The EU’s General Data Protection Regulation (GDPR) your duties as an entrepreneur.
applies to companies collecting, storing or using Start by identifying the personal data files related
personal data. The goal of the regulation is to enhance to your business and collected in connection with your
an individual’s right to make decisions on the processing operations. Find out your roles and responsibilities.
of their own information. The same rules apply to all Write a privacy policy and ensure data security.
companies operating within the EU, regardless of their Remember to update your policies when necessary.
place of registered office. Following GDPR may feel like a difficult chore, but be
Personal data refers to information that can be sure not to ignore it. There is help available, so do not
used to identify an individual, such as names, email hesitate to ask.
addresses, phone numbers and IP addresses. In Learn more: WWW.EUROPA.EU/YOUREUROPE/#EN
practice, this means that nearly all companies process > Doing business > Dealing with customers > Data
personal data, and protecting personal data is part of protection > Data protection under GDPR

60 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Marketing rules
1. Clarify your objective
Ask yourself what you want to achieve with your marketing. Do you aim to make your company better known to
customers, direct people to contact you or get visitors to order products from your online store?

2. Define the metrics of success

Before taking action, you should consider how to measure your success. For example, the number of customer
inquiries or product sales could be a suitable indicator.

3. Get to know your customers

Your customer is not you. Do not market the business for yourself or based on assumptions. Instead, you should get to
know your target group and customers. You can discover new opportunities by trying different tactics and asking your
customers.

4. Serve the recipient

Overly aggressive marketing can be irritating. From an image standpoint, it makes a huge difference whether your
messages come across as self-seeking or attentive to the recipient’s needs.

5. Choose the right channels

There are numerous tools and channels that can be used for marketing, from trade fairs to street advertisements,
newspapers to television and Facebook to Youtubers. Find out where you can best reach your target audience.

6. Invest in content quality

An effective message captivates, while an ineffective one is lost in the flood of communications. Digital channels employ
algorithms to make posts with a lot of reactions visible to more users. So, you should invest in quality over quantity.

7. Take care of websites and search engine visibility

The website is the digital shopfront of the company. Its imagery and text content must convey a convincing and
interesting idea of your company’s unique selling point. Useful, up-to-date content is appreciated by search engines
as well as your customers.
When writing texts and blog posts for your site, include words that customers would use to search for products and
services in your field. This is actually how simple search engine optimisation is. You can then use the same list of words in
your Google Ads. Create a profile for your business on Google My Business to improve visibility in Google search results.

8. Choose your social media

Social media requires continuous presence and can take up a lot of your time. Don't try to do everything, focus on
the channels in which you can find your target group. In addition to marketing, social media can also function as a
customer service channel.
Visibility on social media is divided into organic and paid visibility. You can get organic, free visibility when your
content attracts attention and receives reactions, such as shares, likes and/or comments.

9. Keep customers happy

Your customers are the best marketers when they recommend your product. When disappointed, they can also leave
a poor assessment. Value a good image — in the digital world, positive and negative feedback are often permanently
on view.

10. Learn and follow your time

With regard to search engine optimization, keyword advertising, social media marketing,
email marketing and GDPR issues, use the trainings for entrepreneurs, for example. The
digital world is constantly changing, so update your competencies regularly.

+ Remember that you do not need to do everything yourself. It is important that you know
what marketing is all about, who are in your target group and what your goals are. You can
always buy implementation from an industry professional as well.

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 61

 Social media followers 2020, % of Finland's population
Service Facebook WhatsApp Instagram Snapchat Twitter LinkedIn TikTok YouTube*
Connect,
Photo Fast image Professional Fast video Viewing
Purpose brand Connect Discussion
sharing distribution content, B2B distribution videos
awareness
Users
total
58 50 39 14 13 13 6 59
(% of the
population)
16-24 yrs 67 78 80 71 27 8 34 92
25-34 yrs 81 72 65 26 20 25 9 79
35-44 yrs 76 58 50 5 18 21 3 58
45-54 yrs 66 56 40 6 14 20 2 56
55-64 yrs 52 44 24 2 10 10 1 47
65-74 yrs 42 27 12 0 4 3 0 25
75-89 yrs 13 6 2 0 1 1 0 -

*YouTube user figures are from 2018

Sources: Statistics Finland, Meltwater, “Yhteisöllistyvä media” research (IRO Research Oy)

Nine tips for B2B sales

If your business sells to businesses, 1. Set the goal of the first call, called 2. A couple of days before the phone call,
there is still a place for phone contacts. cold calling, to map the situation send a customized message to the
Here are nine practical tips for B2B, or and the needs of the potential customer to prepare for the discussion.
corporate sales. customer. At this stage, it is not the 3. When you have agreed on an
time to try to sell the service when appointment, prepare for it with care.
you don’t know the person and there Ask how much time the customer has
is no confidence built. for a meeting, and draft a meeting
agenda – customers usually appreciate
it.
4. During the meeting, ask about the
client's challenges and listen to the
answers. Prepare for the most common
objections.
5. Tell a client story about the results
achieved, show an example.
6. Minimize customer risks: provide an
opportunity for a trial, a warranty, etc.
7. Help close the deal and ask, “How
does this sound to you now?”,
“I suggest that you try...” or “Shall we
start like this...”
8. The best target audience for sales
is usually your current customers.
Ask how they are doing and report
your news regularly.
9. Marketing also produces a list of
potential customers. These include
subscribers to a newsletter or
guide, or people who have started a
conversation with you on social media.
You should complement this list with
companies that you see as potential
and interesting.

62 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Volume from
the online store
An online store can bring additional sales 3. Appearance
alongside the physical shop. You can also Responsiveness, that is, adapting
to different terminals, is very
become an entrepreneur with just an online important, since more and more
business. In the online store, the importance consumers use a smartphone. A
of your company's location decreases and clear structure and visual hierarchy
make it smooth and pleasant to do
you can obtain customers from anywhere in business on an online store.
Finland or the world.
4. Content production
Large enough product images and
Don't set up an online store just descriptive product information
because one “needs to have one”. will help with making a purchase
Think about how the online store decision. Clear order and delivery
supports your company's operations, terms and the ability to contact the
and make a careful business plan. trader build confidence.
A good online store stems
from the product and customers. 5. Promotion of sales
First, define what you sell and to When browsing products, you
whom. Study online commerce as can highlight the most popular
First, define an operating environment and be products and/or products in product
sure to learn about online shopping groups that other customers have
what you sell regulations. After that, you can start already purchased, and thus you

and to whom. thinking about these items: can generate additional sales. The
internal search function on the
1. Software online store is an important element
Compare different e-commerce in facilitating purchases.
platforms and software, and the
expansion opportunities they offer, 6. Marketing
so that the selected solution is not Engage customers from the
too small right from the start. Also beginning and they will form an
check out the various options to deal interested group of regulars. When
with payment and logistics traffic. increasing visitor numbers, search
engine optimization and keyword
2. Budgeting marketing play a central role.
The largest costs for a starting
trader consist of store construction, 7. Development
marketing and personnel costs. Also Automate routines and regularly
storage binds capital. track visitors on your online store
using analytics tools. Factual data
generated by analytics allows you to
measure the effects changes have on
purchasing behaviour.

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 63

 Invoicing on time and
with correct details
An invoice is a document that asks a customer for money for the product
you sell. A well constructed invoice is easy to pay and takes into account
the information required by the tax authorities. The invoice is a tool for you
to ensure that you receive the money, but it is also part of the customer
experience. Handle the invoices with class.

Invoice as soon as sending the invoice, make sure that there

you are ready are no errors in the data. The customer is
The invoice is usually sent to the under no obligation to pay an invoice if
customer after delivery. If a product or the information is erroneous. Be sure to
service is a project spanning a longer send any invoice attachments.
period, it is often billed in parts during Do not edit the submitted invoice. You
the project, and the last part is invoiced can edit the invoice until you send the
when everything is complete. The invoice invoice to your client and accounting. If It often takes
must contain certain legally required there is an error in the invoice sent to the
items. customer, the invoice must be refunded weeks from an
order before the
Typically, the invoice is given a and a new invoice made.
payment term of 14 to 30 days. In B2B
Payment reminders
transactions between companies, a
payment term can be agreed upon. If your customer has not paid the invoice money arrives in
According to the law, the payment term
can only exceed 30 days if it is agreed
you sent by the due date, send a payment
reminder. However, notify them politely, your account.
upon separately. as the most common reason for an
Sometimes it takes several weeks unpaid invoice is forgetfulness. Your goal
from the order before the money is to maintain the customership.
from the sold product is in the In many invoicing systems, you can
company’s account. Finished goods automate the sending of a payment
and services should be billed as soon as reminder after the due date, at a time you
possible. The invoice information should have specified. You can send a reminder
be pre-recorded as an offer, a sales order right after the due date, but in practice
or a draft invoice as soon as possible. A it's worth waiting a few days. This way
rapidly sent invoice gives the customer you can be sure that no payment has
an image of professionalism. been made at the due date. Archive
You can choose to collect a reminder
Please note the customer's fee of up to €5 for the payment reminder invoices
wishes you send to a consumer. However, you
Send the invoice in the form the customer will have to wait 14 days after the due Remember to archive invoices.
wishes to receive it. You could send it date before sending a payment reminder As an entrepreneur, you are
as an online invoice, by email, or as a with a reminder fee. If you do not charge a obliged to keep all accounting
traditional paper bill. Under the Finnish reminder fee, you can send the reminder material for six years from
E-Invoicing Act, the person ordering the earlier to the consumer. the end of the calendar year in
item can request an electronic invoice. If your client is a company and the which the financial period ends.
The invoice, sent as the customer wishes, invoice has not been paid by the due For example, if the financial
will be paid with greater likelihood and date, the law allows you to collect a period ended on April 30, 2020,
faster. By responding to the customer's standard payment of €40. However, it is records must be kept until
wish, you are also creating a positive more common to send a payment note December 31, 2026.
customer experience. where the reminder fee is more moderate
Check the invoice carefully. Before than the standard payment.

64 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 The invoice must always include
certain statutory items.
Invoice
You can also charge penalty
interest if you do not receive payment
prices offered by collection agencies
vary, so it's worth getting to know
content
by the due date. There must always be the different agencies and how they
a mention of the penalty interest for operate. A good collection agency 1. Seller details
late payments in the original invoice. handles the collection with elegance. Also your company’s Business ID.
The maximum penalty interest The collection process continues 2. Customer details
charged from the consumer is 7%. after the payment reminders with a 3. Title
The interest charged from companies payment claim, i.e. a collection letter. 4. Date of the invoice
is usually 8%. At this point, the costs incurred by 5. Invoice number
the collection to the creditor and the The invoices should have
Using a debt collection collection agency will be added on unique numbers at least within
agency top of the reminder costs and penalty the financial period, but it is good
Typically, a company sends two interest. If, even after the payment to have numbering as an ever-
payment reminders to the customer. claim, your customer does not pay increasing series.
If, after the reminders, your customer the invoice and does not manage to 6. Reference no
does not pay the invoice, it should be negotiate a new payment term or You will automatically receive a
transferred to a collection agency. plan, you have two possibilities: to reference number from the invoicing
This saves you time and energy, record the invoiced amount as a credit software or from the reference
and often a letter from a collection loss and decide to end the collection number calculator on your bank's
agency has the desired effect. Claims or proceed to legal collection. For a website.
collection is a licensed activity, which small business owner, credit loss is 7. Due date
means that it cannot be done by practically always the most likely 8. Amount of late interest
anyone. However, the services and option. If you collect penalty interest,
it needs to be included in the
original invoice.
9. Date of delivery
10. Term of payment
11. Name of your bank
12. Account number in
IBAN format
13. Swift/BIC = your bank tag
14. Additional information
For example the person you've been
dealing with.
15. Invoice lines:
• products you sold
• quantity

Online invoicing is handy •

•
unit
unit price excluding tax
• credits and discounts,
Using an online invoice, or an payment of the invoice, which means if they are ignored in
electronic bill, is environmentally that you too will receive your money the unit price
friendly and saves invoicing time and faster. • VAT rate
effort. In addition, sending online The company has the right to • share of taxes (EUR)
invoices is more affordable than receive an invoice from another • total price of the product
printing and mailing paper bills. company in electronic form. The 16. Price excluding VAT,
Online invoicing is not difficult. Finnish E-Invoicing Act does not the VAT amount
All you need is invoicing software apply to businesses with a turnover and the total price including
through which you can send online less than €10,000 or businesses VAT on the invoice
invoices, as well as your customer's that only sell to consumers. The law In the case of an amended invoice,
online invoice address. obliges the public administration it must include a reference
A company that pays its invoices to accept electronic invoices – for to the original invoice.
online can accept, pay and submit the example, the state can only accept
invoice electronically to accounting. online bills.
This will speed up the process and

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 65

 3. INVOICE 1(1)
1. Seller Oy
Seller Street 12 5. Invoice number 193
00111 Selling, FINLAND Reference No 6. 1931
4. Date 17.02.2021
Due Date 7. 03.03.2021
9. Delivery Date 14.02.2021
2. Buyer Ltd
Method of delivery DDP
Betty Buyer Term of payment 10. 14 days net
Buyer Road 34 Our reference Sally Seller
00222 Buyer Village, FINLAND
Your reference Betty Buyer
Buyer order number 1234
8. Interest for late payment 7.50%
Reminder period 7 days

Delivered to the warehouse in Buyer Village in accordance with order 1234 dated 14.02.2021
15.
Description Unit price € Amount VAT % Total €
1. Item 1 60.55 2 pcs 24 121.10
2. Item 2 12.18 5 pcs 24 60.90
3. Item 3 20.15 3 pcs 24 60.45
4. Item 4 18.65 4 pcs 24 74.60
5. Item 5 12.85 2 pcs 24 25.70

16. Total excluding VAT € 342.75

Total VAT € 82.26
Total payable € 425.01

1.
Tel. +358 40 123 4567 [email protected] www.seller.fi Business ID: 1234567-8 VAT number: FI12345678
IBAN BIC
The recipient’s My bank 11. 12. FI21 1234 5600 0007 85 NDEAFIHH 13.
account
number

Seller Oy
Recipient 14.
Seller Street 12
00111 Selling, FINLAND

Payer’s Buyer Ltd

A WIRE TRANSFER.

name and
address Betty Buyer
Buyer Road 34
00222 Buyer Village, FINLAND

Signature Reference
No
1931

Due Date Euro

From Account
No
03.03.2021 425.01

The payment is forwarded to the beneficiary

under the terms of the payment instructions,
and only in accordance with the account number
indicated by the payer.

66 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Cash is king
As an entrepreneur, you should spend time planning and monitoring cash
flow. This will ensure that there is always money in the company's accounts
for salaries and bills.

You must have heard that companies long time, which means there are more money you have in the account and in
monitor finances on a semi-annual basis expenses than income. cash to spend on company expenses.
or quartile basis. This means comparing The company funds are affected by all The cash flow statement also offers
realized sales as well as purchases and of the business. In the context of cash an outlook for monetary traffic in the
other expenses with the budgeted items. flow, sales, payment schedules, expenses, coming weeks and months. It will take
In practice, you go through the income investments, potential loans and their into account upcoming bills, as well as
statement and look at whether you are repayments all have their effects. purchases and sales for which revenues
making a profit or loss. However, there and expenditures are not expected until
is one downside to simply following an In real-time and in the future later. The cash flow statement is the
income statement: it is like looking in a Cash flow can be monitored at three third basic statement of the company’s
rearview mirror. As you plan and track different levels. The up-to-date cash flow financial management, along with the
your company's finances, you should also tells you the current situation: how much income statement and balance sheet.
look out of the windscreen too, that is, the
up-to-date funds and future cash flows.

What does cash flow mean?

Cash flow, as its name indicates, is
the currency flowing through your
company's register, that is, money
entering and leaving your company's
accounts or cash register. Cash flow tells
you the liquidity of your business, which
means the amount of money you have
right now to pay bills, loan repayments
and salaries.
Good liquidity is the basis of a
sustainable business, and therefore
it is important for you to monitor the
cash flow of the company in a front-
weighted manner from the very start.
It is recommended that when starting
a business, you consider the need for
money, how to start accumulating funds,
and what kind of fees you have to pay
as an entrepreneur. Even a successful
company can run into bankruptcy if
the cash flow remains negative for a

The cash flow calculation

will reveal monetary
traffic in the coming
weeks.

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 67

 A cash flow forecast estimates cash have time to react before the crisis. With
flow further into the future. It takes sufficient time, you will have time to
into account the regular expenditure negotiate payment terms for invoices or
of the company, as well as estimates of to obtain temporary financing.
the upcoming costs and the income from
future trading. You can also draw up a
cash flow forecast by also including any
offers made. But it is worth remembering
that the forecast is then more uncertain
in the longer run.

Cash flow keeps you alert

Learn how to run your business through
cash flow, because then you will always As long as
be up-to-date on how much money the
company has available. When you take the cash flow
is positive,
cash flow into account in all business
decisions, you will see if the decision is
good or the time right.
As long as the cash flow is positive, your business
your business can survive even in
turbulent times. If, on the other can survive.
hand, the cash flow forecast shows a
downswing after three months, you'll

Make sure you have sufficient funds

The goal of the cash flow statement is simple: to make sure there is
a sufficient amount of money. However, keep in mind that money does not
increase by counting.
Sufficient funds are the lifeline of a sell today with a 30 day payment money, cash flow planning is easier.
business. In addition to calculations, period, the money will arrive in your You can schedule investments or
you actually need to take measures account in a month from today. invest the extra money in more
that have effects on your funds. The After sales, you list expenses, i.e. productive targets .
cash flow statement differs from purchases, salaries, leases and other In an ideal situation, you should
other important economic tools, expenses. Then collect the cash react to a decline in direction
such as the income statement and flows from your investments, loan even before the accounts are
balance sheet, in that there is no repayments and interest payments, negative. The result of the cash flow
official calculation formula for it. and any loan withdrawals. Then statement is poor when the results
It is worth starting by dividing the you add together all the payments drops to zero or negative. If the
transfers of money into three areas: coming in and leaving the accounts. result is negative, measures should
the cash flow of the business, the be taken quickly. You can ponder
cash flow of the investments and the What is a good result? on whether you can speed up the
cash flow of financing, and divide The result of the cash flow money coming from customers, or
them into smaller parts. Collect statement is balanced when the negotiate longer payment terms
data in a spreadsheet program. result is not negative. A positive for purchases, taxes and loan
result means there is enough money repayments.
Start with sales and you can cover known payments. A cash flow statement is a tool
Start drafting a cash flow statement In addition, there should be some that helps you see the situation
on the largest item that will have an flexibility. You will sleep better of the funds as a whole. View it
impact on the funds. This is usually at night when you have at least monthly with other accounting
sales. In the cash flow statement, adequate funds for a few months in reviews. If your company's financial
you need to note the delay in the your account. situation is tight, you may have to
transfers of money. When you If you have sufficient amounts of update your calculations every day.

68 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Cash flow statement
Financial period Before
begins start up JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Total

1.1.2021 Estimation 01 02 03 04 05 06 07 08 09 10 11 12

Cash and equivalents

at the beginning of
10,000 7,900 4,500 3,315 2,411 1,507 1,307 1,207 1,407 1,707 2,207 2,807 3,907 3,907
the period (so called
opening balance)

Cash receipt
Cash sale
0
(0% VAT)
Payments on trade
2,000 4,215 4,496 4,496 5,200 5,300 5,600 5,700 5,900 6,000 6,500 8,000 63,407
receivables (0% VAT)
Other income
0
(0% VAT)
Total 0 2,000 4,215 4,496 4,496 5,200 5,300 5,600 5,700 5,900 6,000 6,500 8,000 63,407
Opening balance
10,000 9,900 8,715 7,811 6,907 6,707 6,607 6,807 7,107 7,607 8,207 9,307 11,907 67,314
+ income

Cash disbursement (0% VAT)

Taxes 0

Loan repayments 0
Loan interests and
0
withdrawal fees

YEL 300 300 300 300 300 300 300 300 300 300 300 300 3,600

Other insurance 80 80 80 80 80 80 80 80 80 80 80 80 960

Employee salaries 0
Employer
0
contributions

Lease 500 500 500 500 500 500 500 500 500 500 500 500 6,000

Rental deposit 1,000 1,000

Electricity and water
50 50 50 50 50 50 50 50 50 50 50 50 600
charges
Telephone and
60 60 60 60 60 60 60 60 60 60 60 60 720
internet expenses

Accounting fees 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Office, banking and
10 10 10 10 10 10 10 10 10 10 10 10 120
postage expenses
Travel and car
600 600 600 600 600 600 600 600 600 600 600 600 600 7,800
expenses
Marketing and
500 100 100 100 100 100 100 100 100 100 100 100 100 1,700
advertising expenses
Cleaning, real estate
0
and waste costs
Software and
0
license fees

Membership fees 0
Entrepreneur’s salary
3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 3,600 43,200
or private withdrawals
Repair and
0
maintenance
Purchases (raw
0
materials, warehouse)
Investments/
0
procurements
One-time/
0
start-up expenses
Other expenses
0
(specify)
Cash disbursement
2,100 5,400 5,400 5,400 5,400 5,400 5,400 5,400 5,400 5,400 5,400 5,400 5,400 66,900
total
Liquidity
7,900 4,500 3,315 2,411 1,507 1,307 1,207 1,407 1,707 2,207 2,807 3,907 6,507 414
(at the end of month)

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 69

 Accounting in order
All companies are financial period of the private trader
obliged to take care of using single-entry accounting is always a
calendar year.
Learn
their accounting. Even if to manage
it is worth buying services What is recorded?
from an accounting firm, Accounting is based on receipts. Receipts company
you need to study the
arise from transactions, i.e. sales and
purchases, as well as purchase receipts, operations
basics. You are personally bank statements, travel invoices and yourself
responsible for your pay slips. The accounting firm usually
handles the recording of receipts in the When you're starting a business,
company. accounting. It will be up to you to draw accounting can seem like a
up sales invoices, pay purchase invoices, difficult thing to do. Corporate
The main function of accounting is and track sales receivables. accounting is closely regulated,
to produce information about the You can use a financial management and it is also monitored. It
company's finances. The income system for the accounting and handling of is advisable that you let an
statement will determine the receipts. In an ideal situation, you could accountant or accounting firm
performance of the company. The use the same system as the accounting handle the accounting and
balance sheet provides information firm, in which case the software produces focus on raising the income.
about the solvency and liquidity of receipts for invoices and payments you However, studying accounting
the company. Accounting can provide make and the accounting material in an matters is worthwhile so that
other calculations to help with business electronic form. This way, accounting is you know how to take advantage
planning and decision-making. always up to date. of the knowledge generated by
Accounting is normally done on a While a company's accounting accounting in the development
monthly basis. Once the company's is worth putting in the hands of an of your business.
financial period is over, financial accounting firm, it is important to Additional information:
statements are prepared. The financial understand the basics and monitor WWW.TALOUSHALLINTO ­
period is normally 12 months and may the finances of the company. As an LIITTO.FI > Tilitoimiston
also be a non-calendar year. The first entrepreneur, you are responsible for the asiakkaalle > Kirjanpidon ABC
financial period may be shorter or legality of the receipts and the accuracy
longer than usual, up to 18 months. The of the accounting.

Varying requirements
In the Finnish Accounting Act, according to the Finnish Accounting entry accounting. Single-entry
accounting requirements are Act. A company is deemed to be a micro- accounting is only possible if your
determined by the size and form of enterprise if the balance sheet totals less company's balance sheet is below
the company. The larger the company, than €350,000, the turnover less than €100,000, the company’s turnover is
the greater the requirements applied €700,000, and an average of up to 10 less than €200,000 or your company
to accounting, and in particular to people work in the business during the employs up to three people. One of
financial statements. If you are a financial period. One of the above limits the limits can be exceeded. Single-
private trader i.e., a trader with a fixed can be exceeded. entry accounting is essentially the
workplace or a self-employed person, However, you might want to consider recognition of a company's revenues
there is a significant amount of relief in compiling financial statements, even and expenditure. In double-entry
the accounting requirements. if it is not compulsory. However, the accounting, each transaction is
entrepreneur must produce a tax return recorded into two accounts, resulting in
Consider financial equivalent to the financial statements. an income statement and balance sheet.
statements Many authorities or financiers may In a limited company, cooperative,
When you are a private person engaged anticipate receiving financial statements general partnership and limited
in business or professional activities in from your business. partnership accounting must always be
the micro-enterprise category, you do As a private trader, you can double-entry, and financial statements
not have to draw up financial statements choose between single- or double- must also be prepared.

70 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 What are financial statements?
When the company's financial period ends, financial statements are
prepared. The objective of financial statements is to provide a correct
and adequate picture of the company's operations.

Once your company's financial annual report in the notes if the Audit
period is over, you should prepare income statement and balance The financial statements will
financial statements within four sheet do not provide sufficient pass through the audit, if the
months. For micro and small information on the company’s balance sheet of a limited liability
business, the financial statements performance and financial position. company, cooperative, general
include the income statement, or limited partnership exceeds
balance sheet and their notes. From Confirmation of €100,000, the turnover exceeds
the income statement, you can see financial statements €200,000, or the company employs
the formation of the company's Financial statements should always more than three people. A trader
earnings, and the balance sheet include a date and a signature. As a with a fixed workplace and a self-
shows the financial position of private trader, i.e. an entrepreneur, employed person do not need to
the company, namely assets and you sign the financial statements choose an auditor. If the articles
liabilities. Large companies also yourself. In a limited company and of association, memorandum of
produce an annual report detailing, cooperative, the CEO and the Board association or rules provide for an
among other things, the risks and of Directors approve the financial audit or the selection of an auditor,
uncertainties of their operations. statements with their signature. act accordingly, even if the limits
The objective of financial In a general partnership and are not exceeded in the financial
statements is to provide a correct limited partnership, the financial statements.
and adequate picture of your statements are signed by the The auditor is chosen by the
company's operations. The notes responsible company partners. supreme decision making body
clarify the information provided by Upon approval, the shareholders of the company, for example, the
the income statement and balance of the limited company or general meeting. Select a chartered
sheet. The scope and content cooperative must confirm the accountant (HT or KHT) as the
requirements of the notes depend financial statements at the General auditor. The auditor enters the
on the size of the company. A Meeting or in a written document. audit in the financial statement
small business should also provide There is no need for a private trader and provides an audit report on the
information corresponding to the to hold a formal meeting. audit.

The registration of financial statements

Once the financial statements Private traders, self-employed €6 million or an average of
are approved, limited liability persons, general or limited 50 people employed by the
companies and cooperatives must partnerships are not required to company. A general or limited
send their the financial statements report financial statements for partnership must also provide
for publication in the trade registration, except where business financial statements for registration
register. You can register financial operations have grown to millions if the company or the responsible
statements with your tax return of euros. partner is a limited liability company.
or report the financial statements The registration should be made The majority of financial
directly to the Finnish Patent and within six months of the end of statements are forwarded to the
Registration Office. The registration the financial period if two of the trade register through the Tax
should be made within two months following limits are exceeded: Administration. The registration
of the confirmation of the financial the company has a turnover of of financial statements is free of
statements. €12 million, a balance sheet of charge.

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 71

 Corporate income tax
Companies pay income tax based on the company's
performance. Income taxes are primarily paid as
prepayment taxes. The corporate form affects income Take advantage
taxation.
of MyTax
MyTax is the Tax Administration’s
When you start a business, you need When you become an entrepreneur electronic service, where you
to enroll with the tax administration and start a new business, you need can manage almost all your
registers. to assess the income, expenses and tax affairs. You can sign in
It is worth signing up for the potential results of the company. Based with either bank credentials
prepayment register because then it is on your assessment, you will apply for or a mobile ID. If you want an
much easier to sell your service. If you the prepayment tax in the MyTax accounting firm to take care of
don’t belong to the register, your client service. Based on the application, the tax matters for you, you need to
would have to do the tax deductions tax authorities calculate the amount give your accountant a mandate
for you. You cannot be listed in the of prepaid taxes. You will receive a in the SUOMI.FI/FRONTPAGE
prepayment register if there are failures prepayment tax decision and payment authorisation service.
in filing and paying of taxes. Being on instructions in the MyTax service. Another public service you
the prepayment register shows that as Prepaid taxes will be taken into might want to investigate is
an entrepreneur, you handle tax matters account in the final taxation of your the Tax debt register. It can be
reliably. company. found through the Business
All VAT payers must register for the You need to keep track of how your Information System web service
VAT register. This also applies to private estimate is realized during the financial (WWW.YTJ.FI/EN). From there,
traders. If your company’s financial period. If it looks as if your income is you can check any company's
period has started on or after January 1, lower or higher than estimated, apply tax liabilities and defaults on tax
2021 and the turnover does not exceed for a tax amendment in the MyTax returns.
€15,000 in 12 months, you do not need service. When dealing with the tax
to register as a VAT payer. A company authorities, you should be
operating as a regular employer must Income tax return careful and, if necessary, agree
always register in the employer register. When your company’s financial period on payment arrangements
ends, you need to prepare financial in a timely manner. The tax
Taxes are paid in advance statements. In addition to the financial authorities are the last party with
The company pays income tax based statements, under the tax laws, you whom you should leave things
on the company’s performance. must provide an income tax return undone.
Prepayment tax is a term for income tax for the Tax Administration. A limited It is worth getting to know
paid in advance. If there is not sufficient liability company and cooperatives the guidelines of the tax
prepayment tax paid during the financial must issue an income tax return within administration: WWW.VERO.FI/
period, the missing part will be paid as a four months of the end of the financial EN > Businesses and corporations
residual tax. period. A general or limited partnership > Start-up and changes > New
The corporate form affects income and a private trader will issue a tax business enterprise
taxation. If you are a private trader, the return in the April of the following tax
income you receive from the company year. If your accounting firm handles
is taxed as your personal income. The your company’s accounting for you, you
limited liability company, on the other should also consider outsourcing the
hand, is itself liable for its taxes. filing of tax returns to the accountant.

Your accounting
firm can also file
your tax returns.

72 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Differences in taxation
If you become a private trader, the corporate income is earned income. tax purposes; instead, the taxable
income you receive from the company If the result is small and you do not income of the whole company is divided
will be taxed as your personal income. have other earned income, it is often between you and the other partners and
Part of the company’s earnings is capital worth emphasising earned income. You taxed as your personal income.
income and part is earned income. pay tax on earned income according to A limited liability company and a
In general, capital income is the progressive income tax scale, and cooperative are independent taxpayers,
calculated as 20% of the company’s in the lower income categories, earned in which case your tax is not affected by
net assets. Net assets are calculated by income is taxed at a lower rate than the income of the company. A limited
deducting business-related liabilities capital income. You pay a tax of 30% liability company and a cooperative pay
from related assets. However, as an on capital income and 34% on any part 20% tax on taxable income. The salary
entrepreneur, you can either choose to exceeding €30,000. paid to you by your limited liability
have your capital income represent only General and limited partnerships are company is subject to deductions in the
10% of the net assets or that the total not separate taxable entities for income same way as salary incomes in general.

Income taxation in a limited liability company Taxation of

From a limited company, you can withdraw funds either as a salary or as a dividend. a private trader

Limited company operations Income

Turnover - expenses = profit - Expenses

Profit
- Entrepreneur deduction 5% Deducted by the
Tax Administration
A corporation tax of 20% - Income Tax
is paid from the profit
Net income = Entrepreneur’s
income

Entrepreneur’s salary
The entrepreneur pays the tax­ Dividend
according to the personal
tax rate.

The limited
If the dividend is paid for not If the dividend is paid for
more than 8% of the share’s more than 8% of the share’s liability
mathematical value mathematical value
• Up to €150,000 is 75% tax- • 25% is tax-free and company and
free and 25% taxed as capital
income
75% at the earned income
tax percentage the cooperative
• That part over €150,000, is
15% tax-free and the other are independent
85% taxed as capital income
taxpayers.

What if the company is not profitable?

Entrepreneurship carries its risks. entrepreneurs with financial and • you don’t know what to do when
Business is not always successful and payment difficulties. The advisors sales are down
the company might not make a profit. are experts in finances and company • you feel that you can no longer cope
If you face financial difficulties, don’t health. The service is confidential and with financial difficulties alone.
try to cope on your own. Ask for help free of charge. It is important that you ask for help in
from your network, such as from an You can contact Financial Aid when time.
accounting firm, a business advisor or • your company has accumulated My Enterprise Finland’s Financial
My Enterprise Finland’s Financial Aid unpaid invoices Aid, tel. +358 29 502 4880
counselling service. • you will no longer be able to pay the SUOMI.FI/FRONTPAGE > Running
Financial Aid helps and advises loans and their interest into financial difficulties

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 73

 Learn about VAT
Value-added tax is a general tax on consumption, added to almost all
products and services. The tax is intended to be paid by the consumer,
but companies act as the tax collector.

Even if you are new to are tax-free and you do not need to
entrepreneurship, you have been
dealing with value-added taxes all
register for value-added tax. If your
company only sells products or services
VAT rates
your life. Value-added tax (VAT) is a like these, you also cannot deduct the
general tax on consumption, added value-added tax on purchases. General tax rate 24%
to almost all consumed products Value-added tax is a self-assessed • Most goods and services
and services. Even though the tax is tax. As a taxpayer, you must
intended to be paid by the consumer, independently calculate, file and Reduced tax rate 14%
companies act as the tax collector. As pay the taxes of a certain taxation • Food supplies
an entrepreneur, you should include period to the Tax Administration. If • Feeds
value-added tax into your selling price your company is partnered with an • Restaurant and catering
and then pay the collected taxes to the accounting firm, you can delegate the services (however, alcoholic
state. In order for the tax to finally be filing and payment of the value-added beverages and tobacco
paid by consumers, companies have tax to your accountant. products 24%)
the right of deduction. With your
company’s purchases, you can deduce Reduced tax rate 10%
the VAT you have paid from the taxes • Subscriptions to newspapers
you are paying for sales. Please pay the and journals (including
Almost all companies that sell electronic books, audiobooks,
products or services must register for value-added tax electronic journals and single

independently
value-added tax. The usual VAT rate issue sales)
in Finland is 24 percent. Additionally, • Books
there are two reduced VAT rates:
10 and 14 percent. A zero rate is to the Tax • Medicines
• Sports and fitness services
applied to some goods such as export
transactions. In this case, your sales Administration. • Cinema
• Cultural and entertainment
event admissions
• Passenger transportation
• Accommodation services
• Compensation received from
TV and broadcasting
Calculating the amount of
Operations exempt from
value-added tax value-added tax
• Sales and rental of real estate
Price including and apartments
Excl. VAT VAT 24%
VAT • Health and medical services as
€1,200 well as social services
Sales €6,200 €5,000
= tax payable • Educational services specified
Purchases €1,860 €1,500
€360 in the Value Added Tax Act
= deductible tax • Financial and insurance services
Payable €840 • Fees received for copyright
VAT = tax to be paid
or performances, separately
defined in the Value Added
File the value-added tax online through MyTax. If your company is Tax Act
registered for VAT, remember to file the taxes regularly, even if your • General postal services
company is not active. You can also delegate the tax filing and payments
to your accounting firm.

74 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Relief for small businesses
The Value Added Tax Act includes relief for small businesses. A company
may be fully exempt from VAT liability.

As you start to manage your to financial periods starting on 1 Filing VAT

company’s finances, you will usually January 2021 or after. Value-added tax is a self-assessed
recognise purchase and sales Even if your company’s turnover tax, which means that you
transactions in your accounting is below the threshold, you can still must calculate, file and pay it
records under the date the purchase register for value-added tax if you independently. You can outsource
or sale took place. This is known want to. In this case, you must always VAT filing to your accountant.
as accrual-based accounting. As remember to file the VAT, even if Usually, value-added taxes are
a rule, the Value Added Tax Act your company is not always active. filed and paid according to the
requires you to follow accrual- financial period once a month. The
based accounting, which means VAT relief due date for filing and payments is
that the value added tax is aligned If your company’s turnover is less the 12th of every month. The filing is
with the date of purchase or sale. than €30,000 during a financial not completed immediately during
However, the seller may have to period, VAT relief will be applied. If the next month but the month after
wait to receive money for their sales, your turnover is less than €15,000, that. For example, filing the VAT for
and therefore companies with a the VAT paid for the entire financial January is completed by 12 March.
turnover of less than €500,000 can period will be returned to you. If Self-assessed taxes are filed
pay taxes for their sales based on your turnover is between €15,000 online through the MyTax service,
the money transactions (cash-basis and €30,000, partial VAT relief will for example. Through the service,
accounting). In this case, the value- be applied. Apply for VAT relief on you can also pay taxes. You can also
added tax is aligned with the month the final value-added tax report of file taxes through some financial
where the monetary transaction the financial period. management software.
actually occurs.
You can also start a small-scale
business, for example simultaneously
with your job, in a manner that does The due date is the 12th
not require you to register for value-
added tax. If your company’s turnover of every month.
during a 12-month financial period is
less than €15,000, you do not need
to pay value-added tax to the Tax
Administration. When estimating
the scale of your company’s turnover,
you should try to remain realistic.
If you have estimated the turnover
being less than €15,000 but it goes
over this threshold, you must pay the
value-added taxes retroactively from
the beginning of the financial period.
A fee for late payment will also be
added to the sum.
If your company is not obligated
to pay value-added tax, you cannot
also deduct the value-added
tax on purchases. To make the
administrative obligations of small
companies lighter, the threshold
for tax liability based on turnover
during a financial period was raised
at the beginning of 2021 to €15,000.
The new threshold will be applied

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 75

 As an employer
Before hiring employees, it is important to understand the obligations of an
employer. The obligations are based on laws and collective agreements.
Which insurances are necessary? What payments and reports must be handled?
What other things need to be taken care of? When you are aware of these issues,
you can safely become an employer.

The duration of the employment can be leasing company will take care of the employee’s bank account on the last
open-ended or fixed-term. A fixed term employer’s obligations. Your job is to day of the pay period, unless otherwise
requires a reason, such as substitution, familiarise the employee with their tasks agreed. Always provide a pay calculation
internship or the seasonality of the and to supervise them. The employment for the employee. Wages must also be
work. If you want to agree on variable terms and conditions will, as a rule, follow paid for an annual holiday. Check the
working hours, you must explain in the the collective agreement that binds your collective agreement to see what it
employment contract the situations company. Staff leasing can lead to hiring. states on holiday bonuses and wages for
where employees are needed and the sick leave, maternity leave and a brief
frequency of these situations. Data processing absence due to a child’s sudden illness.
The beginning of the employment When hiring, you can only collect An employee accumulates two days of
can include a trial period. During a trial such data from the employee that annual leave per month during the first
period, both parties can terminate the is considered essential for task year, and after that, 2.5 days. If there is no
employment contract but only on proper performance. Request the data from the annual leave accumulated, an employee
grounds. The duration of the trial period employee. To acquire data elsewhere, is entitled to holiday compensation.
can be at a maximum six months or half you will need the employee’s consent.
of the duration of a fixed-term contract. The law has separate regulations for Deductions and insurance
situations where such matters as credit There are statutory obligations related
Make a written employment reports can be checked. This must also to the payment of salaries. You must
contract be communicated to the employee. deduct the taxes withheld in advance
You should always make a written You cannot ask or collect data that from the wages and compensations for
employment contract even though may breach the law on discrimination. labour or service, unless the recipient is
digital and oral contracts are also valid. Sensitive data such as health data registered in the Prepayment Register.
If there is no written contract, you must can only be collected if it is necessary Obligatory insurances for an employee
provide a written statement of the terms from the perspective of the rights and include a pension insurance (TyEL
and conditions of the employment. obligations defined by the employment insurance), unemployment insurance,
Minimum conditions for an relationship. insurance for occupational accidents and
employment relationship are set, for Retain the employee data for a year diseases, and a group life insurance.
example, by the Employment Contracts because that is the limit for prosecution The wages and health insurance
Act, the Working Hours Act, the Annual according to the Non-discrimination Act. contributions you pay must be reported
Holidays Act and collective agreements. After a year, the data must be destroyed. to the Incomes Register. Employer’s
If you are a member of an employers’ contributions can be paid through
association, follow your association’s Terms and conditions for the MyTax service. The due date for
collective agreement. If you are not a paying wages payments is the 12th (or the following
member, follow the universally applicable Minimum wage is defined by the weekday) of the month following the
collective agreement in your industry. universally applicable collective wage payment month. You can authorise
Find out through Finlex (WWW.FINLEX. agreement in the industry. If there is your accounting firm to file the reports
FI/EN) whether your company’s main none, the wages must be considered and to pay the employer contributions on
industry has a universally applicable normal for the industry and reasonable your behalf.
collective agreement. If your industry when considering the demands of the job.
does not have a universally applicable The law does not regulate a minimum Arrange occupational health
collective agreement, the minimum wage. One indicator of a minimum wage care
conditions are defined by law. is a salary that fulfils the employment You are obligated to arrange
conditions of an employee, which you can preventative occupational healthcare for
Staff leasing as an option check on the Kela website (WWW.KELA. your contractual employees. In addition,
You can also find employees through a FI/WEB/EN). you can arrange healthcare provided by a
staff leasing company. In this case, the The wages must be paid to the general practitioner.

76 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Recruitment process
WITH THE EMPLOYEE WITH AUTHORITIES

BEFORE HIRING BEFORE HIRING

• Consider the employee you need: define • Register at the Tax Administration
the criteria for the open position, along Employer Register: this is obligatory
with the necessary skills and experience if your company becomes a regular
• Decide on the form and duration of employer and you have at least two
employment: fixed-term or open-ended? permanent or six temporary employees
Are there grounds for a fixed term? during a calendar year
Part-time or full-time? • Take out a statutory insurance against
• Advertise the position or utilise other occupational accidents and diseases, as
channels well as a group life insurance before the
• Organise job interviews first day of employment
• Choose an employee • Make a written contract and strategy for
• Draw up an employment contract occupational healthcare with a public or
private provider
AT THE START OF THE EMPLOYMENT • Organise a record of working hours
• Familiarise the employee with their tasks
AT THE START OF THE EMPLOYMENT
The Employ with Competence Service, • Take out an employees’ statutory
offered by the TE services, offers employment pension insurance (TyEL)
free-of-charge guidance for hiring and before paying wages or reporting
acting as an employer. employees’ income at the Incomes
Register

Important to remember: The Incomes Register

The Incomes Register is a national salaries of your employees and employer when the wages or compensation are
online database that collects contributions. The service generates available to the income earner. On the
information about wages, pensions and archives payslips and other earnings report, you must also report
and benefits to be used by the Tax accounting documents. In the service, benefits, commissions, remunerations,
Administration, pensions and other you can choose to have the program as well as taxable and tax-exempt cost
insurance companies and other automatically send information about remunerations paid to the employee.
authorities requiring this information. employer contributions to the Income On the separate reports, you will
As an employer, you are obligated to Register. You can file the reports online report the total amount of employer
report wages and other payments that through the Incomes Register service, or health insurance contributions that you
you have made in the Incomes Register. in special cases, on a printed from. have paid. If you are in the Employer
You can authorise an accounting You will be filing two kinds of reports Register, i.e. a regular employer, you
company to take care of the reports. to the Incomes Register: earnings must also file a separate report for the
Many payroll software will allow you payment reports and employer’s separate months that you have not paid any
to file the reports directly, and this reports. An earnings payment report is wages. In such cases, you will report
requires authentication. You can also filed separately for each employee. You that you have not paid any wages. At the
take advantage of the free PALKKA.FI must file the report no later than five latest a separate report must be filed on
payroll program for small businesses. days after the payment date. the fifth day of the month following the
In the service, you can calculate the The payment date is the date wage payment month.

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 77

 Safety is
The employment
a common
contract
concern. must include
at least
the following
information
• the domicile or business
location of the employer and
the employee
• the date of commencement
of the work
• the duration of the fixed-
term employment contract
and justification for the
employment contract being a
fixed-term one
• the trial period
Kela will pay the employer workplace. The employee must be • the place where the work
compensation for the necessary and provided with sufficient information is performed or, if the
reasonable costs of occupational about hazards and risks at the employee has no primary
healthcare. The compensation must be workplace. You should take into account fixed workplace, an
applied for within six months of the end the employee’s professional skills and explanation of the principles
of the company’s financial period. work experience. according to which the
For your employees, occupational Different industries have their own employee will work at various
healthcare is free-of-charge. The safety and health regulations which locations
Occupational Health Care Act is applied must be observed. Make sure that the • the employee’s principal
to work conducted in Finland that is Occupational Safety and Health Act as duties
regulated by the Occupational Safety well as other relevant regulations are • the collective agreement
and Health Act. easily available. applicable to the work (even
According to the law, occupational when such agreement is not
Record all working hours safety and health must be developed applied)
You must record all working hours and and maintained in a collaboration • the grounds for the
compensation paid for them for each between the employer and employees. determination of the pay or
employee in the record of working hours. The responsibility is assumed by the other remuneration, as well
Additional hours, overtime, emergency occupational safety and health manager. as the pay period
work and Sunday work must be recorded You can assume this position yourself or • working hours
separately. There are various types of appoint another person to this position. • the annual holiday
browser-based software for employers In a working community of at least ten • the period of notice or the
for monitoring working hours, and employees, an occupational safety and grounds for its determination
many of them are also suitable for small health representative and two deputy
companies. representatives must be appointed to
The record of working hours must represent the employees. Managerial staff
be presented to the occupational safety can have their own representative, and
and health inspector and employee limited personnel groups can have their
representative upon request. An own occupational safety ombudsman. A
employee or a person authorised by them working community of at least 20 people notifications are the responsibility of the
is entitled to a written statement about must have an occupational safety and occupational safety and health manager.
entries that have been made about them health committee. Make a notification online at WWW.
in the record of working hours and the You must notify The Centre for TTKREKISTERI.FI.
shift roster. Occupational Safety’s personnel register You can find more information about
of your company’s contact information, occupational safety and health as well
Occupational safety and people appointed to safety and health as working hours and other topics
health requires cooperation positions, their contact information online at the Occupational Safety and
You are obligated to take care of your and date of birth, as well as your Health Administration’s service: WWW.
employees’ safety and health at the occupational healthcare provider. The TYOSUOJELU.FI/WEB/EN

78 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Indirect staff costs (in 2021)
Salary Percentage of contributions
Payment percentage Terms withheld from salary Payment method
The pension insurance
For salaried employees aged 7.15% (for employees under
24.8% when the employer company sends insurance
The Employees’ 17–68, employees’ pension the age of 53 or over the
pays no more than contribution invoices to the
Pension Insurance insurance must be deducted, if age of 62) or 8.65% (for
TyEL €2,125,500 in wages and employer based on the data
they are paid a salary of more than employees between the ages
salaries in a year. submitted to the Incomes
€61.37 a month. of 53 and 62).
Register.

0.50% when the employer

pays no more than The Unemployment
For salaried employees
€2,169,000 in wages and Insurance Fund sends
The unemployment between the ages of 17 and 64, the 1.40% (collected, if
salaries in a year. The contribution invoices to
insurance unemployment insurance must the employee is between
contribution insurance contribution is the employer based on
deducted if the yearly salary paid the ages of 17 and 64).
1.90% of that part of the the data submitted to
to them exceeds €1,300.
wages and salaries that the Incomes Register.
exceeds this.

Concerns employers who pay

The occupational more than €1,300 in wages The insurance company
accidents, injuries
0.70% on average. and salaries in a calendar year. sends contribution
and diseases
insurance premium Must be taken before the invoices to the employer.
employment.

With certain exceptions, it applies

to all employees in employment
relationships governed by the The insurance company
The group life
0.06% on average. Employees Pensions Act. The sends contribution
insurance premium
insurance must be deducted in invoices to the employer.
connection with the statutory
workers’ compensation insurance.

The employer or
Paid for employees between
1.53% of all the wages and bookkeeper submits a
The employer’s the ages 16 and 67 when they
salaries paid under the declaration of the amount
health insurance are insured under the Health
Health Insurance Act. once a month to the
Insurance Act in Finland.
Incomes Register.

The employee’s Is included in the withheld

health insurance tax. No need to pay or
contribution subtract separately.

Pay subsidy
There are
If you hire an unemployed jobseeker, paying a wage in accordance with an
you are eligible to receive a pay applicable collective agreement. If no statutory
obligations
subsidy to cover some of the pay applicable collective agreement exists, a
costs. The granting of the pay prevalent and reasonable wage must be
subsidy is a discretionary support
that the Employment and Economic
paid. The pay subsidy must not distort
competition. related to the
Development Office ( T E Office)
can grant when the jobseeker’s
The pay subsidy can cover up to
50% of the payroll costs. In 2021 the payment of
unemployment is caused by the lack
of professional competence. The
maximum is €1,400 a month. When
reporting a vacancy to the TE Office,
salaries.
amount and duration of the subsidy will you can include information about
depend on the length of the individual’s whether you are also willing to hire a
unemployment period. You can hire person who is eligible for a pay subsidy. You can find more information
without any justification a jobseeker The employment relationship for which about the pay subsidy from the TE
who has been unemployed for 12 the subsidy is intended cannot start Services’ website: WWW.TE - PALVELUT/
months as a fixed-term employee. before a written decision on granting TE/EN > For employers/entrepreneurs
The employer must commit to the subsidy has been made. > Find an employee > Pay subsidy

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 79

 Responsibility benefits all
Responsibility affects all business operations. By taking social, financial
and environmental responsibility seriously in your business, you meet
customers’ expectations.

All business operations affect the surrounding community. The agenda lists 17 development
environment in one way or another, A company’s social well-being goals that have been created to
as well as the surrounding society. stems from the entrepreneur and erase extreme poverty and promote
The goal is to minimise the adverse the personnel. Take care of your prosperity in an environmentally
affects and operate as sustainably employees and help maintain a sustainable way. Every entrepreneur
as possible for the environment and sense of meaningfulness in their can find appropriate themes for their
society. It would be wise to think work, preferably better than the business in the agenda.
about responsibility even before actual legally requirements. Well- More information: WWW.YK ­
starting a business and making any managed finances enable the LIITTO.FI > English
larger investment decisions. company’s sustainable future.
Check regulations
Three points of view Sustainable development Legislation and rulings include
Corporate responsibility is often Responsibility is not an extra burden several regulations that are binding
divided into three categories: but a part of the daily processes on businesses and industries.
environmental responsibility, of viable business operations. It They represent the minimal
social responsibility and financial creates savings in expenses and the level that does not present any
responsibility. Environmental customers are more likely to commit competitive advantage. A truly
responsibility is only one aspect of to your business. Responsibility will responsible business evaluates
being responsible in your business become an even more prominent its operations continuously and
operations. Being financially behaviour-guiding trend for strives for improvement voluntarily.
responsible includes taking care businesses and consumers in the Responsible solutions are not sought
of bills and payments on time in future. to fulfill regulatory requirements but
accordance with regulations and The United Nations has compiled for the sake of the environment and
legislation, while social responsibility the aspects of responsible operations society.
covers all the social good that in their Sustainable Development
your business can give back to the action plan known as Agenda 2030.

Recognise the relevant

There is an almost unlimited free) electricity, energy-efficient
number of things that can be done equipment, and an efficient use
for the environment, but every of space from the point of view
company has its limited resources. of heating are concrete ways to
It is important to focus on things reduce the environmental burden.
that make the most powerful In certain lines of business, the
impact in your operations and for producer responsibility concerns in the spirit of the circular economy.
the environment. The relevant b oth packaging and was te Ecolabels, systems and certificates
options depend on the line of management, so the manufacturer are an unbiased proof that the
business the company represents should think about the product’s operations are environmentally
and what the company offers. lifecycle and the time when the friendly.
Generally speaking, it is a product is no longer in use. More information:
good idea to monitor at least the You should strive to minimize WWW. YMPARISTO.FI/EN - US,
company’s energy consumption. the amount of waste and the WWW. RINKIIN.FI/EN > For
The use of green (i.e. emission- recycling of unnecessary materials companies, WWW.KIERRATYS.INFO

80 RUNNING A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Open communication is key
Communicating about responsibility is an integral
part of a company’s operations regardless of
the company’s size. Take the initiative to sharing
your responsibility principles with customers and
Keep equality
stakeholders – as no one else will do it for you. in mind
Accessibility of services is
Transparency of operations is important products is a growing mega trend that a part of corporate social
in all business and industries. During currently offers competitive advantage responsibility. Not everyone
the era of social media, the meaning of for pioneers. In the future, it is possible has equal possibilities to access
transparency has only been accentuated that requests for quotes and work orders digital services or physical
as abuse of power and human mistakes will be conditional on such things as the premises due to a disability or
are easily made visible to public size of the company’s carbon footprint illness. A well-chosen location
audiences. Be honest and open. It is better and reducing the negative impact of benefits the environment as
to acknowledge shortcomings yourself operations. well: when the premises can be
rather than push them aside for others Because many fields operate in reached by public transport or
to manage. It allows you to communicate networks and subcontracting chains a bicycle, traffic emissions are
how you plan to develop your business. nowadays, it is particularly important reduced.
Environmental responsibility is often to ensure that every link in that chain is Find more information about
approached cautiously for the fear of operating responsibly. It is well within accessibility:
‘greenwashing’, i.e. making the company your right to express responsibility- WWW.SAAVUTETTAVUUS ­
sound greener than it actually is. related requests to your customers and VAATIMUKSET.FI
However, too much caution can become collaborators. This way they will also be
a disadvantage. You can and you should encouraged to develop their operations.
actively communicate about genuine
actions of responsibility.
You should actively
Responsibility is a
competitive advantage communicate about genuine
actions of responsibility.
Customers’ appreciation for
environmentally aware and responsible

Terminology guide
Various terms are used when talking responsibility, meaning the owners should familiarise
about responsibility, and their meanings integration of environmental, social themselves for example with the
might seem imprecise from time to time. and financial responsibility into the Finland Chamber of Commerce’s
Memorise these at the very least! You company’s operations and culture. Climate commitment and the
can get free support and sparring for • Agenda 2030 is the United Nations’ Commitment2050 run by Finland’s
example from different local initiatives plan of action for sustainable Prime Minister’s Office.
in recognising the needs of your development which is used as • Environmental management
operations and planning what actions to a foundation or reference for systems, i.e. labels and certificates,
take regarding responsibility. many responsibility actions and are usually granted by authorities
• ESG stands for Environmental, programmes. or an expert in environmental
Social, Governance. It is used • Environmental commitments affairs. The most well known in
to refer to responsibility and are voluntary services that Finland are the Swan ecolabel,
sustainable development in a broad businesses can offer to make the ISO 14001 system, WWF’s
way. their responsibility visible. Green Office, and the EcoCompass
• CR or CSR (Corporate Social Commitments also have a positive certificate that is owned by the
Responsibility) refers to the impact on communicating Finnish Association for Nature
whole spectrum of corporate responsibility. Small business Conservation.

UUSYRIT YSKESKUS.FI/IN - ENGLISH RUNNING A BUSINESS 81

 Business development

An entrepreneur found her

calling in elderly home care
Taija Tetri-Kivikangas wanted to offer unhurried The healthcare industry is strictly
and preventive homecare for the elderly. In regulated by authorities. The entrepreneur
must inform the municipality about their
the beginning, she worked alone as a private intention to offer social services as well as
trader. Now she runs a limited liability company deliver their permit application concerning
Terveydelle Oy that employs 12 people. their upcoming health services to the
Regional State Administrative Agency.
“The public supervision is exceptional
text TIINA SAARI photo MARKKU PAJUNEN compared to any other field of business.”
According to Jukka, the growth of

T
a homecare business depends on the
aija from Hyvinkää decided entrepreneur’s skill to market their services.
to become an entrepreneur in “Taija has done great work and she
2017. She was on educational has been able to communicate about it to
leave from her job as a nurse others.”
when she established her With the growth of her business, she
enterprise as a private trader called realised that her company should have a
Kotiterveydenhoito Tetri. During an growth strategy. She wanted to be able to
evening jog, she delivered brochures to control her business’ growth herself.
mail boxes and made visits to senior “I wanted to maintain the same level
citizen’s clubs. of service quality and give a sense of there
“I found my working calling with the being no need for haste.”
elderly.” Home care must be preventive In February 2019, Taija changed from
and stimulating for the clients. a private trader into a limited liability
Taija comes from a family of company named Terveydelle Oy. Before
entrepreneurs. She applied for start-up making the change, she calculated with
money and contacted YritysVoimala, her Jukka how the change would affect her
local Enterprise Agency. taxation. However, Taija was not prepared
“I just started from somewhere and for the time the change in the enterprise
wanted to see where it would take me. I’m form would take, which was months.
an impulsive optimist.” “I had to re-apply and pay for my permits
The customer base grew rapidly. After again.”
Growth requires six months, Taija had to either hire an
employee or say no to new customers. She Time for growth
a strategy. applied for a pay subsidy and was able to Terveydelle Oy offers far more than just
hire an employee. homecare. The nurses take walks with
“The start-up money and pay subsidy the clients and play games to keep them
were indispensable, as well as the company. The client’s personal programme
encouragement from the business advisor. might include memory games and exercise.
I was given advice but also tough questions Taija has 12 employees at the moment,
to think about.” eight of which are employed full-time. The
company employs a public health nurse
Exceptional supervision and an elderly care professional, as well as
Business Advisor Jukka Pötry, who works nurses and practical nurses.
for YritysVoimala, the Enterprise Agency Taija has tried to hire employees
for the Hyvinkää-Riihimäki area, has been from different age groups with varying
in touch with Taija about ten times in the backgrounds and education.
last three years. “My own role has changed dramatically.
“For a healthcare professional, the Instead of working with the clients, I’m
bureaucracy related to running a business managing my staff and doing administration
might seem challenging. For me, however, work. This has been a time of growth for me
it is a field of expertise.” as well.”

82 BUSINESS DEVELOPMENT UUSYRIT YSKESKUS.FI/IN - ENGLISH

“We can visit a strawberry
farm or an art exhibition
with the client,” Taija Tetri-
Kivikangas says. Business
Advisor Jukka Pötry has
supported the company
during its growth.

From entrepreneur
to manager

• The willingness to develop,

acquire information and learn
new things is most important.
• You need determination to
bring your vision to life.
• Plan for the future, both long
and short term.
• Change the plans when
necessary.

UUSYRIT YSKESKUS.FI/IN - ENGLISH BUSINESS DEVELOPMENT 83

 Support for business
development
After the enterprise has been established, its varied The enterprise itself must always
provide at least half of the development
lifecycle begins. Public support and help is on offer for project’s funding. The project investments
various situations along the way. It can be in the form can be supported with 10 to 35 percent of
of financing, consultation, expertise or networks. You the expenses that were used as a basis
for granting the funding contribution,
can also seek help from experts for project planning. depending on the size and location of the
enterprise in question. The contribution
must be applied for before the start of the
project. You can get support in preparing
Boost and growth the funding contribution application
Your enterprise might need a boost at from the Enterprise Agency or from your
some point to reform its operations, municipal business services. The experts
induce growth or spread its wings into at the ELY Centre can also provide
international markets. The ELY Centres assistance in researching your funding
can support businesses in their all- options.
round development with a contribution You can also get a supported analysis
to the funding of development projects. and consultation service through the ELY
This can be used to develop existing Centre. In this service, an experienced
operations or create entirely new kind of business management consult will help
The Finnish business for the enterprise. you with your needs. You can choose
You can apply for funding for an expert that suits your needs from a
Enterprise development of an SME or for selection of consultants that are offered

Agencies help investments in SMEs, when you want to by the ELY Centre. Usually the enterprise
significantly invest in restructuring or is expected to have been established for at

you find the growth. The funding can also be used to

improve internationalisation and export
least one financial period and employs at
least the entrepreneur and one employee.

best funding efforts and possibilities, or to induce

growth by developing new products,
The service is also suitable for private
traders, and there are no limitations

channels in services or production methods. The

goal can be to reach new markets or
on the line of business the enterprise
represents.
your area. map out new business opportunities.
The project can be run to improve
More information: WWW.ELY -
KESKUS.FI/EN > Business and industry
growth, technology, internationalisation,
productivity and business expertise. Support for local businesses
From the point of view of business
subsidies meant for businesses located in
rural areas, 95% of Finland’s surface area
is considered rural. You can apply for a
business subsidy intended for rural area
businesses, even if your business is not
tied to agriculture. Business investments
are supported in this way to increase
business activity, employment and
vitality in the countryside. The purpose
is to utilise local expertise and know-how
to benefit the company’s own area.

84 BUSINESS DEVELOPMENT UUSYRIT YSKESKUS.FI/IN - ENGLISH

Don’t stay
alone.
Make a good decision and become
a member. As our member you get,
amongst other benefits, access to a
free national advice line, practical help
with entrepeneurship and access to
nationwide networks. The Federation
of Finnish Enterprises lobbies for small
and medium-sized enterprises on a
local, regional and national level.

Y R I T TA J AT. F I / L I I T Y
 A business subsidy for rural area More information: WWW.ELY - and the available collateral, among
businesses can be applied for from an KESKUS.FI/EN > Business and other things. Finnvera is also there
ELY Centre or from a local Leader industry to help their customers with the
Group. There are 54 Leader Groups in assistance from turnaround experts.
Finland that grant funding for rural Financing and working More information: WWW.FINNVERA.
areas and micro business projects. capital FI/ENG > Growth
Local Leader Groups make the funding You can apply for Finnvera’s financing
decisions regarding their area’s for acquisitions and investments for Toward an international
businesses or associations. The subsidy your enterprise and an increased success story
is funded by the EU, the government need for working capital. Finnvera is a When you are creating an international
and the municipalities. Depending on specialised financing company owned success story or need assistance
the project in question, the subsidy can by the State of Finland which offers in identifying opportunities in the
cover 20 to 90 percent of the expenses. loans, domestic guarantees and export markets, Business Finland is there to
You can get detailed information about credit guarantees. help you. Business Finland is a public
funding, including percentages, from They grant financing for SMEs even organisation that offers innovation
your area’s contact person. The projects without securing collateral. The charge funding and internationalisation
to be funded must be in line with the of financing depends on an evaluation services and promotes investments and
area’s development strategy targets. performed on the applicant’s business travel to Finland.

You can apply

for financing
for growth,
development and
experimental
projects.

86 BUSINESS DEVELOPMENT UUSYRIT YSKESKUS.FI/IN - ENGLISH

 The organisation’s expert and financing well as offering solutions to problems in
services are meant for enterprises product development.
that reach bold business growth and
reorganization for international markets.
Investing time and money into
developing the know-how of your
Find
You can apply for funding for innovations,
service development and market research
company is an investment in your
company’s competitiveness. You can
the business
among other purposes. Funding can be complete vocational upper secondary level services in
granted either as a loan or a subsidy. The qualifications targeted to entrepreneurs
service includes support in filling out the such as Further Vocational Qualification your area
application. for Entrepreneurs or a Further Vocational
In addition to Business Finland, Qualification in Business Management The Finnish Enterprise Agencies
Finnish Industry Investment Ltd also and Leadership. network
offers capital to companies that are able WWW.UUSYRITYSKESKUS.FI/
and willing to grow, as well as business Capital injections IN - ENGLISH
know-how and international networks to Business angels and other capital
boost the company’s growth efforts. investors might be willing to invest in SEKES – the Association of
Finnfund is a development financier your company. In return, the investors Finnish Development Companies
that builds a sustainable world by expect a share of the company and a WWW.SEKES.FI/EN
investing in responsible and profitable dividend income. The investors often
businesses in developing countries. bring business know-how, practical Association of Finnish
Finnpartnership is a business experience, market knowledge and Municipalities
partnership programme financed by useful networks to the table in addition WWW.LOCALFINLAND.FI
the Ministry for Foreign Affairs of to financing.
Finland and is managed by Finnfund, They are usually interested
which offers free services. It aims to in businesses that aim for rapid
generate positive development impacts international growth through operations
by promoting business between Finland that are scalable. In practice, investors
and developing countries. share the business risk by investing
money into the business in return for
Product development and a share of the business. They usually
know-how sell their share in three to seven years. return, the investors acquire shares,
The services of the Finnish Patent and You can look for a capital investor or a bonds or benefits, or are able to make
Registration Office can be used for business angel through Pääomasijoittajat preorders. On occasion, investments
various stages in product development. ry or the Finnish Business Angels are made as donations. Crowdfunding
Familiarising yourself with well-known Network (FiBAN), for example. is often organised through a funding
solutions can help you find new product In crowdfunding, investments platform operated by a crowdfunding
development ideas and help you adjust come from larger groups of people intermediary, and the funding is sourced
to changing competition situations, as instead of individual investors. In by campaigning to potential investors.

The Team Finland network helps

your company to go global
Team Finland is a network of public Experts offer advice on
operators that offers internationalisation
services. It brings together all public internationalisation.
internationalisation services. The
network provides businesses with a
smooth service chain, ranging from In addition, Team Finland organisations They promote international business
advice services to funding. offer a wide range of financing services operations. The service package includes
The network’s experts offer help in from aid and grants to loans and industry-specific meetings, networking
planning internationalisation efforts guarantees. with key business organisations and
and tackling practical problems. Team Finnish companies at various stages political actors, as well as visibility and
Finland provides information about the of internationalisation can participate advice.
global markets and their opportunities. in Team Finland’s delegation visits.

UUSYRIT YSKESKUS.FI/IN - ENGLISH BUSINESS DEVELOPMENT 87

 Networks provide
opportunities
Networking entails meeting new people and getting to know them and
their skillset. At its best, networking can offer versatile support for your
business. Networking can bring you new customers, subcontractors and
ideas.

Networking is practically vital for An active participation in the as recreational activities for their
businesses. Competition is a part network’s activities can increase your members. You can find a sparring
of business life in all industries, so company’s brand conspicuousness partner in a business mentor.
companies need to evolve constantly and enable collaboration between
to achieve success. Networking can different organisations. Sometimes Active participation
provide collaboration partners, the goal of networking might pays off
subcontractors, ideas and new be new innovations, other times It is useful to follow different
customers. However, it requires increased productivity and cost- development organisations and
time, commitment and trust most efficiency, or perhaps gathering of associations that could be of interest
of all. new information or formation of an to your company in social media.
export ring. Remember to take the initiative.
Partners for many Networks provide ample Increasing numbers of networks can
occasions opportunities for skill development be found in LinkedIn for example, or
Municipalities, counties, educational and collaboration. You might in other social media communities.
establishments, Enterprise get new perspectives, solutions, Networks share experiences,
Agencies, development companies information and skills, when you best practices and new information
and associations coordinate different know the right people. Internships, amongst members. Finding the
kinds of ecosystems, clusters and theses and research within the right contacts can accelerate
groups that bring companies network can also provide a path your company’s development and
and actors together in networks. forward. provide the needed peer support.
Networks can also offer In their networks, entrepreneurs
courses, joint development can share ideas and thoughts that
projects, workshops, seminars and would feel foreign to people that are
educational visits. For a developing not company-owners themselves.
company, chambers of commerce, A network that is collaborative,
entrepreneur associations and coordinated and well-run can create
business organisations might also wide and versatile entities. It is hard
become useful partners. In addition to know beforehand what benefits a
to advisory services, running particular network will bring. It can
events and providing contacts, only be discovered by participating,
associations and organisations often being open and trusting, and by
act as advocacies for enterprises committing to collaboration.
in society, organise courses and The value of networking skills
offer membership benefits, as well is emphasised at various stages of
a company’s lifecycle. Networking
is always based on the principle of
exchange. The more a company is
The more you give to the network, willing to give to the network, the
more the company will make use of
the more you will benefit. its opportunities.

88 BUSINESS DEVELOPMENT UUSYRIT YSKESKUS.FI/IN - ENGLISH

 The Finnish Enterprise Agencies’ network
– support for entrepreneurs
• AKY – Akavalaiset yrittäjät WWW.AKY.FI
• Ammattiliitto Pro WWW.PROLIITTO.FI/EN
• Elinkeinoelämän keskusliitto WWW.EK.FI/EN
• Fennia-konserni WWW.FENNIA.FI/FENNIA - GROUP
• Ipriq Oy (Tavaramerkki.fi) WWW.TAVARAMERKKI.FI
• Isolta Oy WWW.ISOLTA.FI/EN
• Kasvu Open Oy WWW.KASVUOPEN.FI
• Kaupan liitto ry WWW.KAUPPA.FI/EN
• Keskinäinen työeläkevakuutusyhtiö Varma WWW.VARMA.FI/EN
• Keskisuomalainen Oyj MEKS WWW.MEKS.FI
• KK-Verve Oy WWW.VERVE.FI/IN - ENGLISH
• Kone Oyj WWW.KONE.COM/EN
• Kumppania Oy WWW.KUMPPANIA.FI
• Kuntaliitto WWW.LOCALFINLAND.FI
• Lakiasiaintoimisto Juutilainen & Co Oy WWW.JLAW.FI Networks share
• LähiTapiola Keskinäinen Vakuutusyhtiö WWW.LAHITAPIOLA.FI
• MTK WWW.MTK.FI/FI/WEB/EN experiences, best
practices and new
• Musiikkiluvat Oy WWW.MUSIIKKILUVAT.FI/EN
• Nordea Pankki Suomi Oyj WWW.NORDEA.FI/EN
•
•
Nuori Yrittäjyys ry WWW.NUORIYRITTAJYYS.FI/EN
Oma Säästöpankki Oyj WWW.OMASP.FI/EN information.
• Omapaja Oy WWW.OMAPAJA.FI
• OP Kevytyrittäjä WWW.OP - KEVYTYRITTAJA.FI
• OP WWW.OP.FI/CORPORATE - CUSTOMERS
• Osuustoimintakeskus Pellervo WWW.PELLERVO.FI/EN
• Palta ry WWW.PALTA.FI/EN
• Patentti- ja rekisterihallitus WWW.PRH.FI/EN
• Pinja Group Oy WWW.PINJA.COM/EN
• Pulse 247 Oy MyCashflow WWW.MYCASHFLOW.COM
• Rakennusteollisuus ry WWW.RAKENNUSTEOLLISUUS.FI/ENGLISH
• Redland Oy WWW.REDLAND.AGENCY
• SLP Group Oy (Ukko.fi) WWW.UKKO.FI/EN
• Startup Refugees WWW.STARTUPREFUGEES.COM
• Suomen Ekonomit ry WWW.EKONOMIT.FI/EN
• Suomen Elinkeino- ja Kehitysyhtiöt SEKES ry WWW.SEKES.FI/EN
• Suomen Franchising-Yhdistys ry WWW.FRANCHISING.FI
• Suomen Laatuyhdistys ry WWW.LAATUKESKUS.FI/EN
• Suomen Metsäyhdistys ry WWW.SMY.FI/EN
• Suomen Sopimustieto Oy WWW.SOPIMUSTIETO.FI
• Suomen Yrittäjänaiset ry WWW.YRITTAJANAISET.FI/EN
• Suomen Yrittäjät WWW.YRITTAJAT.FI/EN
• Suomen Yrityskaupat Oy WWW.YRITYSKAUPAT.NET/EN
• Suomen Yrityskummit ry WWW.YRITYSKUMMIT.FI/FI/IN - ENGLISH
• SuPer ry WWW.SUPERLIITTO.FI/IN - ENGLISH
• Taloushallintoliitto WWW.TALOUSHALLINTOLIITTO.FI
• Taloustutka Oy WWW.TALOUSTUTKA.FI
• Tekniikan Akateemisten liitto TEK WWW.TEK.FI/EN
• Turvallisuus- ja kemikaalivirasto Tukes WWW.TUKES.FI/EN
• Visma Solutions Oy WWW.VISMASOLUTIONS.COM
• Wihuri Oy Aarnio Metro-tukku WWW.EMETRO.FI
• Yhteinen Toimialaliitto ry WWW.YTL.FI
• Yrittäjäkassa WWW.YRITTAJAKASSA.FI
• Yrityspörssi Oy WWW.YRITYSPÖRSSI.FI

UUSYRIT YSKESKUS.FI/IN - ENGLISH BUSINESS DEVELOPMENT 89

 Closing down a business

Making a bold start

by acquiring a company
Toni Kammonen wanted to acquire a company According to Katja, taking over a business
that was up and running and to start a new life as that is up and running is usually a more secure
option than establishing a new one. The
an entrepreneur. Along with working as a CEO, enterprise has already a tested business idea
Toni has studied the cleaning service industry. and its own clientele. This is a good starting
The company he acquired, Pirkon Puhdistus, point for further developing the enterprise.
Soon after this, a business broker offered
already had competent personnel. Toni a company in the property management
services sector. Negotiations for the sale
text TIINA SAARI photo TIMO HARTIKAINEN lasted for months, but they failed due to

W
differences of opinion.
hen Ton i f rom Toni started searching again and he found
Rantasalmi was 43 the company Pirkon Puhdistus (Pirkko’s
years old, he quit his Cleaning Services) through the Yrityspörssi
regular job that he had website. The enterprise is situated in Joroinen,
for 17 years. He wanted near to Rantasalmi. Toni and his wife, who
to test his wings. works as a practical nurse, had a meeting
He had developed a dream of becoming with the founder of Pirkon Puhdistus and the
an entrepreneur while working in the representative of the work’s management.
metal sector and agricultural machinery. “It was mutual love at first sight for both
Toni was sure that he wanted to become an parties.”
entrepreneur by acquiring an enterprise. The Enterprise Agency assisted Toni
He knew that entrepreneurs are constantly in making profitability calculations and
retiring and that there is much demand for preparing for the change of ownership.
successors. “I received lots of support from Katja and
“I didn’t want to start from a scratch at Juhani for the decision-making.”
this age. I wanted a company where somebody
had laid the groundwork.” It takes some courage to take
Toni sought advise from the Business the leap
Advisors Katja Remes and Juhani Acquisitions should not be rushed. First, you
Rouvinen at Itä-Savon Uusyrityskeskus in should determine the financial situation of the
Savonlinna. enterprise you are about to acquire. According
First, they mapped together the skills Toni to Juhani, the value of the company can be
The enterprise had and the sectors he was interested in. Toni largely determined by using the financial
did not want to continue working in the metal statements for the last three years and the
had already sector anymore. latest planned balance sheet.

a tested “I found that the property management “Will there be demand for the services and
services sector would be the most convenient products of the company in the future?” If the

business idea. alternative for me.”

Juhani saw from Toni’s eyes and
answer is yes, you should proceed with the
acquisition.
attitude that he really wanted to become an In April 2020, Toni bought the share
entrepreneur. capital of Pirkon Puhdistus along with its
“If Toni does not have the right attitude employees and superiors. He and his wife
for making it, then no one has!” started apprenticeship training in the cleaning
service industry. Toni likes his new life as an
Arranging financing entrepreneur, and things have started out well.
The first thing Juhani asks from aspiring “Thanks to my competent employees,
entrepreneurs is how large an amount self- starting out in this sector I was not familiar
financing they would be able to arrange. with has not been too hard.”
“If your self-financing amount is for Toni encourages those who are considering
example €50,000, you can by an enterprise becoming an entrepreneur to just take action.
with a value of approximately €200,000 by “You just need some courage and tolerance
using supplementary funding.” for risks!”

90 CLOSING DOWN A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

According to Toni
Kammonen (left), a good
work atmosphere is a
particularly important
factor. Otherwise the
employee turnover would
be high, as the cleaning
services industry is low-
paid. Business Advisor
Juhani Rouvinen noticed
immediately the right
attitude.

You can find

a company here

• On the following websites:

WWW.YRITYSPÖRSSI.FI,
WWW.FIRMAKAUPPA.FI,
WWW.SUOMENYRITYSMYYNTI.FI
/ENGLISH,
WWW.YRITYSKAUPAT.NET/EN
• The media in your region, the
Enterprise Agency,
Business Development
companies or the municipal
economic development offices
• You can also directly contact
an enterprise that interests you!

UUSYRIT YSKESKUS.FI/IN - ENGLISH CLOSING DOWN A BUSINESS 91

 Time to transfer
your business?
Sometimes it is necessary to divest a company for one reason or another.
Acquisition is a natural part of the life-cycle of a company. Make sure that
your company always remains saleable.

There are many reasons for terminating core or do they wander in some aspects? case, the buyer will not be interested
business activities: retirement, your The buyer making the acquisition in them. Therefore, you should always
family situation, your financial situation, is always focused on the future. The consider carefully before making such
your own ability to run the business, buyer considers the different business an investment.
moving abroad or simply the desire to opportunities your company can provide You might have drawn too little salary
enter a new phase in your career. When him or her. What kind of growth and or your company might have rented a
you are sure that you want to sell the profits can (s)he attain by buying your property owned by a shareholder for a
company, you can start thinking about company? If you are planning on selling rate that differs from the market rates.
the practical things. Note that it might the company, you should nonetheless Make sure to check these items in the
take years to implement the acquisition - not stop developing your business and income statement as well, and to adjust
or at least several months. investing. You should rather develop them if needed. It is only after these
constantly. corrections are made that the actual
What are you selling? Keep the documents of your company profitability of your company (i.e. what
The business transfer or the partial well arranged, so that you can easily find the buyer is interested to know) can be
acquisition may boost the growth of your the financial statements for the previous found out.
company, if you can no longer fully focus years, agreements and other important
on the activities or develop them yourself documents. For the sale situation, you How to find a buyer?
anymore. can assemble the information into a With regards to family enterprises, the
First, make first sure that you know sales binder, where you can find the successor is usually somebody from the
what you are selling. You can sell information quickly if needed. immediate circle. Possibly one of the
• the entire operating enterprise Ask an expert to help you determine enterprise’s employees who is not part of
(share transaction) your enterprise’s financial value. Also the family might be interested in taking
• a part of the enterprise (requires view the situation from the point-of- over the business activities.
dividing up the company) view of the potential buyer. Although
• exclusively the business operations the traditions and emotional values
• a part of the business operations. that have become part of the company
might be very important to you, they do
Always ready for not have the same significance to the
an acquisition buyer. Be realistic: the buyer is more
As regards buying decisions, the first interested in what the expected returns
impression usually counts. Think about are going to be in the future than in past
what your enterprise looks like from the transactions.
outsider’s point of view. Are the external
appearance, the logo and website of your Adjust the accounting figures
company appealing? Is your enterprise’s Follow your company’s key figures
name such that the buyer can continue regularly. Compare them to those of
the activities under the same name? other companies in your sector i.e. your
If the name of your company contains competitors.
your family name, e.g. Peltiseppä T. You should clear the balance sheet
Aaltonen Oy (Tinsmith T.Aaltonen Ltd), of everything that is excessive. Your
selling it might be harder compared to a company might have invested its
business with a more general name, e.g. capital in movable assets or residences
Peltiseppäpojat Oy (Tinsmith boys Ltd). that are not in any way related to your
Are your business activities clear at their actual business operations. If this is the

92 CLOSING DOWN A BUSINESS UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Most companies are, however, situation and the administration of the
transferred to an external buyer. In company. Due diligence permits the
such cases, it is important that you buyer to see what kind of opportunities
get communications right. You should the acquisition might provide to his
openly express your intention to sell your or her business activities. It might It might even
company: it is hard to sell an enterprise also affect the purchase price and the
if the potential buyers do not know that contract terms of the sale. take years to
conclude the
it is for sale. The buyer will need time to arrange
You can reach potential external financing. When financing has been
buyers for example by placing a sale
advertisement online or in a newspaper.
ensured and you have accepted the final
bid, it is time to implement the deal. You acquisition.
You can also assign a business broker should ask, for example, a legal expert
who will directly approach potential for assistance, so that the contract is
buyers on your behalf. Are you unsure drawn up correctly.
about how your clients or partners Make sure you also meet your
will react to your intention to sell the liabilities after signing the agreements. to a lawful share. The remaining part
business? You can also place the sale Make sure that any existing customers of the estate may be willed for example
advertisement anonymously, so that and employees you might have commit to a single child who will continue the
your name or company are not revealed. themselves to the new owner. Do not activities of the enterprise.
Moreover, the Enterprise Agency has forget to pass over tacit knowledge When a generational change takes
expertise in company transfers. and be prepared to work together with place, the successor is considered to
Companies that can be sold or the new owner and, in the background, be a new entrepreneur just like he or
bought: WWW.YRITYSPÖRSSI.FI, help him or her for 1-2 years. Lastly, you she would be if the company had been
WWW.FIRMAKAUPPA.FI, should be able to let go - the company is founded in another way. The Enterprise
WWW.YRITYSKAUPAT.NET/EN not yours anymore. Agency provides free advice and sparring
for generational handovers as well.
Due diligence and sales Handing over the company A change of ownership in a family
Did you find a suitable potential buyer? to the next generation business often provokes strong feelings.
When you have concluded the non- If you are handing over a family business These should be discussed openly
disclosure agreement, the preliminary to the next generation and you have with all the parties. The generational
contract and the letter of intent, the several children, you should take into handover is successful if the transferor,
buyer will perform due diligence, that is account the position of all the heirs. the successor and the company are doing
to say he or she will check the financial Each direct heir has at least the right well afterwards.

Terminating business activities

Closing down a business does not Trade Register. The notification accounting records have to be
mean failure. Entrepreneurship can can be made by filling in the kept and stored for 6-10 years and
be just a phase in life after which electronic form in the WWW.YTJ. the contracts for 3 years as of the
something else will follow on later. FI/EN service. The notification of termination of the activities.
When you are considering termination is free of charge for Yo u s h o u l d i n fo r m yo u r
termination, think once again firms and partnerships. Dissolving a customers, your partners and other
whether your company or business limited company can cost as much stakeholders about the termination
activities might have value for as several hundreds euros. in good time. It may occur that
somebody else. In this case selling one of them would be interested
might be a more reasonable option Meet your liabilities in buying your enterprise, which
than termination. You can also Before making the notification would mean that you do not need
leave your company dormant for of termination you have to meet to close down your business.
the time being. This is the cheapest certain liabilities: you have to pay As an entrepreneur, you can
and easiest alternative, if you think the company’s debts, sell its assets receive unemployment security,
you will continue your business and terminate its contracts. Also when you have comple tely
activities in the future. make sure to discuss taxation with terminated your entrepreneurial
Te r m i n a t i o n o f b u s i n e s s your accountant, because taxes activity, or when you are no longer
activities must be notified to The may become due even after the employed by the enterprise. Ask
Finnish Tax Administration and termination date. Note that the about this from your TE-office.

UUSYRIT YSKESKUS.FI/IN - ENGLISH CLOSING DOWN A BUSINESS 93

 Business dictionary
ACCOUNTS LEDGER refers to that part BUDGET is a company’s plan of action transactions and financial transactions
of the accounts where the transactions in euros. It is to be completed during a are recorded based on their date of
of the company are listed. The most specific period of time. In the budget, payment. Cash-basis accounting does
commonly used account ledgers are the the profit and cost targets are presented not include accounts receivable or
sales ledger and purchase ledger. They numerically, in euros, for instance. accounts payable.
are used for payment control.
BUSINESS ACTIVITY refers to CASH FLOW refers to money that comes
ACCRUAL-BASIS ACCOUNTING means independent, systematic and continuous into the company when it sells goods or
that in addition to the items processed activity that involves risks and that is services and money that goes out of the
in the cash-basis accounting, receivable practiced in order to make a profit. company. Other monetary income, such
and payable items are recorded, even as investments, loans and dividends, are
if no invoices have been sent or no BUSINESS ANGEL This is an individual also included in the cash flow.
payments have been made. In monthly who invests his/her own money in growth
bookkeeping, the performance principle enterprises. COMPETITION The company is rarely
can be applied to selected expense items the sole actor in the market. Other
only, but in financial statements, the BUSINESS IDEA A business’s operations companies also compete for the same
performance principle must be applied are based on a business idea, which is a demand. In order to differentiate a
to the entire financial statement. For description of the benefit of a product company from its competitors, various
example, in day-to-day bookkeeping, or service, its marketing and the line of means can be used such as location,
labour costs and social security costs can business, along with how the idea will be products, quality, price and availability.
be reported based on the actual work commercialised. Economic competition is regulated by
performed, even though the payment competition legislation. See also “Direct
is transferred to the following month. In BUSINESS PLAN This is a written plan and indirect competition”.
accrual-basis accounting, in addition to of the implementation of the business
the items processed in the cash-basis idea in practice. It includes an assessment COST An expense or part of an expense
accounting, receivable and payable items of the factors affecting profitability as allocated to a certain period, most often
are recorded, even if no invoices have well as estimates of sales, investment to a financial period.
been sent or no payments have been requirements and sources of finance.
made. CROWDFUNDING is a practice
BUSINESS-TO-BUSINESS means of collecting funding for projects
BALANCE is the difference between between businesses. For example, a from people, organisations, and
the debit and credit accounts of a marketing campaign may be directed at entrepreneurial activity. In order to reach
company. The balance of the payable just businesses, i.e. business-to-business. the funding target, funds are usually
and receivables states the amount of collected as small sums from a large
receivables or payables in the account CAPITAL Money or assets (property number of people.
and the bank statement shows the given as a capital contribution) that
amount of cash in the account or the the entrepreneur or another investor CUSTOMS CLEARANCE This is when
credit used for the credit account. transfers to a business. Capital can be goods are imported or exported, and
divided into shareholders’ equity and the associated tax-related administrative
BALANCE SHEET This is a statement liabilities. In addition to the equity procedures. Customs clearance is taken
concerning the company’s accounts and that has been invested in the business, care of by the customs authority
forms part the financial statements of a shareholders’ equity comprises capital (WWW.TULLI.FI/EN > Businesses).
business. It shows the assets and debts of that has accumulated from operational
the business at a certain point in time. In income or valuation of the balance DEGREE OF SOLVENCY The more equity
the balance sheet, the assets owned by sheet assets at a value higher than the an enterprise has in relation to its loan
the business are listed under the Assets acquisition cost. Liabilities comprise debt, the more solvent the enterprise.
heading (debit) while the shareholders’ capital which an external party has
equity and the business’s debts are invested in the business and which must DEPRECIATION The acquisition costs of
listed under the Liabilities heading be paid back. Depending on the terms fixed assets subject to wear and tear (such
(credit), as well as the accumulation of the loan, a subordinated loan may be as buildings and equipment) are entered
of appropriations and mandatory considered as either equity or liabilities. on the balance sheet (i.e. activated) as
provisions. assets and deducted in accounting as
CAPITAL INCOME The unearned income depreciations during the commodity’s
BANKRUPTCY is where the operations of a natural person refers to proceeds depreciable lifetime.
of a business end and all distrainable from property, capital gains and other
assets are converted into cash to pay income that can be considered to have DIRECT AND INDIRECT COMPETITION
debts that have arisen from the business’s accrued from company assets, such as Direct competition means that another
operations. Bankruptcy proceedings may income from interest, rent, profit on sales, business is competing openly with your
be initiated by the debtor or the creditor. and dividends from listed companies. business and offering the same products
Part of the business income of a private and services. Indirect competition means
BOOKKEEPING shows the business’s entrepreneur, a partner share of the that another business is offering different
degree of performance, solvency and business in-come of a general or limited products and services from your business,
liquidity. partnership, and the dividends paid but they can also fulfill the same needs.
by a limited liability company can be For example, a pizzeria will compete
BREAK-EVEN POINT means the considered capital income. indirectly with a fast-food outlet selling
theoretical level of net sales where the hamburgers but directly with another
business has a zero result, i.e. it makes no CASH-BASIS ACCOUNTING In cash- pizzeria.
profit and no loss. basis accounting, the company’s

94 DICTIONARY UUSYRIT YSKESKUS.FI/IN - ENGLISH

 DISTANCE SELLING In distance selling, a self-employed person and a private statement. The profit and loss statement
the buyer has no possibility to view the trader must be a calendar year unless shows the net income for the financial
product before the sale takes place. (s)he prepares a financial statement and period (profit or loss).
Distance selling includes, for instance, applies double entry bookkeeping.
mail order, telesales, and e-commerce. INCOMES REGISTER is a national
FINANCIAL STATEMENTS cover a database that all employers must use
DUE DATE is, for example, the last date of financial period. They show the financial to declare the salaries they have paid.
payment on an invoice. result of the business and its financial SUOMI.FI identifications and, when acting
position at the end of the financial period. on behalf on another person, SUOMI.FI
EARNED INCOME For example, a It includes the income statement and the authorisation are used in the electronic
salary, a pension and benefits (such as a balance sheet for the financial period as Incomes Register service. The service uses
study grant, child home care allowance well as notes and the list of books and personal banking credentials or Mobile ID
or an unemployment allowance). The records. It must be prepared at the close for authentication.
taxation for earned income in Finland is of each financial period. The financial
progressive, i.e. the tax rate increases as statements must be audited by an auditor INCORPOREAL RIGHTS protect
the income increases. The tax paid on if the company falls under the scope of immaterial rights, such as technology,
your earned income includes the state the audit obligation law or if the company design, trademarks and other
tax, the municipal tax and the church tax voluntarily wishes to perform an audit. characteristics.
(if any). Depending on the municipality,
the municipal tax rate is between 16.50% FIXED COSTS, I.E. ONCOSTS are INDIRECT PERSONNEL COSTS are
and 23.50%. The church tax rate varies the costs of a business that are not statutory payments, in addition to the
between 1 and 2.2%. dependent on the level of production gross salaries payable to employees,
over a short time period and instead that a business must make to the Finnish
E-COMMERCE is commerce conducted remain constant. Fixed costs include, Tax Administration, to pension and
via the internet. Purchases by consumers amongst other things, the rental of accident insurance companies, and the
are governed by the provisions on premises, monthly wages and salaries, Employment Fund. Indirect personnel
distance selling; it is worth while bookkeeping and costs arising from the costs include social security, employee
examining them carefully before use of machines. pension insurance, worker’s compensation
establishing an online store. insurance, unemployment insurance and
FORM OF ENTERPRISE The forms of group life assurance contributions.
E-INVOICE The term e-invoice is enterprise that can be registered in
generally used to describe an electronic Finland are a private trader (firm), general
invoice (see “Electronic invoice”). partnership, limited partnership, limited
company and a cooperative, as well as
ELECTRONIC INVOICE Only invoices the less common forms, public limited
in electric and structured form that company and Societas Europaea.
are sent from one invoicing system to
another are considered to be electronic GDPR (General Data Protection
invoices. For example, a PDF invoice sent Regulation) is a regulation concerning
by e-mail is not an electronic invoice. personal data processing that also applies
Traders and businesses have the right to to companies. Entrepreneurs should
receive electronic invoices from other study it carefully. WWW.TIETOSUOJA.
businesses, if they request it. The Finnish FI/EN
Electronic Invoicing Act does not apply
to businesses with a turnover less than GOODS include consumer non-durables
€10,000 or businesses that only sell to (e.g. bread, milk and other products that
consumers. Legislation requires public are used directly) and consumer durables
administration to accept electronic (e.g. for example, washing machines and
invoices - the Finnish State only accepts televisions whose operating life is long).
electronic invoices. Consumer goods or new capital goods are
produced with the help of capital goods.
EMPLOYEES’ PENSION INSURANCE Capital goods include, for example, raw
(TYEL INSURANCE) is obtained from materials, machines and fuel.
pension insurance companies.
GROSS PRICE The total price without any
FINANCE Starting up a new business discounts and including tax. Value-added
always requires money. Finance may tax is also included in the gross price, if
include the entrepreneur’s own money, the sale is subject to value-added tax.
operational income, loans or state
subsidies. GUARANTEE means that another person
(the guarantor) promises to pay the debts
FINANCIAL PERIOD is a period of of another person to the creditor in cases
time (usually 12 months) for which the where the debtor is not able to pay the
company’s results (= profit or loss) debts.
are calculated. In some (exceptional)
circumstances, the business’s financial INCOME STATEMENT is part of a
period may be shorter or longer than 12 company’s financial statements. The
months (but not more than 18 months), other parts are the balance sheet, notes
due to operations being commenced or and a list of the accounting books and
terminated or the date of the financial materials. The profit and loss statement
statements being changed (Finnish presents the profits and losses of
Accounting Act). The financial period of the financial period as a subtraction

UUSYRIT YSKESKUS.FI/IN - ENGLISH DICTIONARY 95

 INTEREST is income, presented as a LINE OF BUSINESS This indicates what NET SALES OR TURNOVER refers to
percentage, that is charged for use of kind of business operations an enterprise the proceeds (without VAT) a company
money given as a loan. As a borrower engages in, for example, catering activities receives from its business, such as from
and payer, it is worth choosing as low or retailing of textiles. the sales of services or goods, during
an interest rate as possible, while as a a specific period of time, such as a
depositor, it is worth searching for as LIQUIDITY means the ability of the month or a year. Variable and fixed costs
high an interest rate as possible for your business to meet payments when they caused by sales are not deducted when
money. A fixed interest rate stays the become due. calculating the turnover, but offered
same for the whole loan period, but a discounts are deducted.
variable interest rate is linked to the LOGO This is the registered or
reference rate of interest so that it is established symbol for a business, NOTES are a mandatory part of a
reviewed at specific time intervals. The through which customers distinguish the company’s financial statements where
reference rate of interest may be, for enterprise from its competitors. the figures on the income statement or
example, the Euribor rate. The Euribor balance sheet are supplemented with
is a reference rate of interest that is MANAGING DIRECTOR or CHIEF verbal information to provide a correct
published daily and that the banks use EXECUTIVE OFFICER (CEO) This person view of the company’s operations and
when they offer unsecured loans to manages the day-to-day administration financial status during the period under
other banks on the euro money market. of an enterprise in accordance with the review.
In practice, the Euribor is the interest directions and regulations given by the
rate used when a bank receives loans Board of Directors. (S)he is responsible OFFER This is a binding proposal made
from other banks, and the bank then for ensuring that the accounting is in to another party (vendor or purchaser)
lends these funds to others using an accordance with the legislation and that to devise an agreement or deal, with the
interest rate that is higher than the the financial management is organised proposal containing the terms of the
Euribor (Euribor + margin). in a reliable way. The Managing Director deal (such as price and time of delivery).
or CEO must provide the board and its
INVESTMENT is an acquisition or an members with the information that is PENALTY INTEREST ON LATE
expenditure with long-term effects necessary for the board to take care of PAYMENTS The interest payable after
for which the company expects to their duties. the invoice payment date, i.e. the due
receive income during the course of date. This is an additional charge that
several financial periods. An intangible MARGIN refers to the funds available in is levied if the initial sum has not been
investment may be targeted at training, the bank. Also see “Sales margin”. paid on the due date, at the latest.
research, or environmental protection,
among others. Tangible investments may MISSION STATEMENT This is a PREPAYMENT OF TAX can occur when
include machines and equipment. description of the aim of the business’s tax is withheld from an employee
operations, i.e. why the enterprise exists. in accordance with the personal
INVOICE-BASED ACCOUNTING In The business idea is an operational plan withholding rate shown on the tax card,
invoice-based accounting, invoices which that explains how the mission statement or it may be an advance payment made
have arrived or been sent are recorded will be implemented in practice. on receipt of an advance-tax bill.
in addition to the items included in
payments-based accounting, even if they NET CASH FLOW FROM OPERATIONS PROFITABILITY A business is profitable
have not been paid yet. In such a case, This refers to the income receivable from when the difference between the
the bookkeeping must include trade day-to-day business that is used to cover business income and expenses is
receivables and accounts payable. the expenses of the enterprise. positive, i.e. the company makes a profit.

NET OPERATING PROFIT is an item PROPERTY GIVEN AS A CAPITAL

on the profit and loss account that is CONTRIBUTION means assets put
calculated by deducting variable costs, into a business as a non-monetary
fixed costs and depreciation and write- investment. Property given as a capital
downs from net sales. Net operating contribution may only be those assets
profit is the profit on the business’s that have a financial value to the
operations before distribution of profits. enterprise. A commitment to perform
The distribution of profit here mean work for the enterprise can not be
interests, taxes and dividends. regarded as property given as a capital
contribution.
NET PRICE The price of a product from
which all discounts have been deducted. RETAILER This is an importer of goods
Refers to the price without value-added or a business that handles the retail
tax. In the domain of value-added tax, sales of products from industrial
“net price” refers to a price without value- enterprises.
added tax.
SALES MARGIN The sales margin is
NET PROFIT (result of the financial the quantity of money that the vendor
period) is the company’s result after has left when the direct (variable) costs
taxes but before appropriations and relating to creating the product or
extraordinary items. In other words, it is service have been deducted from the
the company’s net sales minus variable price paid by the customer. The sales
costs, fixed costs, depreciation, write- margin does not take account of the
downs, interest costs and taxes. (indirect) fixed costs of the business.
The lower the sales margin percentage,
the higher the net sales required by
the enterprise to make their operations
profitable.

96 DICTIONARY UUSYRIT YSKESKUS.FI/IN - ENGLISH

 SECURITY By obtaining security, lenders how you should act. For example,
try to ensure that they will receive the statutory insurances are compulsory for
balance owed to them. An example is everyone.
a two- or three-month security deposit
paid on the lease of premises. Securities STREAMLINING means the
can be divided into real securities and reorganization of an enterprise. When
personal guarantees. A real security a business is streamlined, costs are cut
relates to an object-specific liability for back, for example, by reducing the labour
debts where specific property has been force, trying to increase earnings, and
entered as assets. A specific asset is improving the flow of capital. Corporate
assigned to cover the debt. A personal restructuring is a measure sanctioned
guarantee means that a specific person by a court of law, through which the
becomes liable for the debt of another. operations of a legal person who is
overburdened by debts are reorganized.
SEGMENT This is a part of a specific
entity. For example, customers can SUBCONTRACTING is work procured
be grouped into different segments from an independent manufacturer or
according to age, education and income supplier outside the business.
level. By using segments, services or
products marketing can be focused on TAX DEDUCTED AT SOURCE is a
a specific customer group, and thus a deduction of tax made from a salary or
competitive advantage can be gained. work remuneration. Tax that is withheld
from salaries must be declared by the
SELF-EMPLOYED PERSON is an employer in the Incomes Register (WWW.
entrepreneur who operates in his/her VERO.FI/EN/INCOMES - REGISTER) and
profession without a fixed workplace and paid to the Tax Administration. The tax
without external manpower. withheld in advance from dividends and
interest is reported in the MyTax service.
SELF-EMPLOYED PERSONS’ PENSION
INSURANCE (YEL insurance) is a TERMS OF PAYMENT establish in an
mandatory form of pension insurance agreement when and how the sales price
for entrepreneurs, according to which an is paid to the vendor.
old-age pension is paid to entrepreneurs,
as well as sickness benefit from the TERMS OF SALE These concern the
Social Insurance Institution of Finland details that need to be arranged for a
(Kela), and maternity, special maternity deal, such as price, quality and time of
and paternity allowances and parental delivery.
benefit or rehabilitation allowance.
The entrepreneur’s YEL insurance TRADER Traders can be divided into self-
contribution is based on his/her YEL employed people and traders with a fixed
earned income. workplace.

SHARE This is a part of a limited TRADER WITH A FIXED WORKPLACE

company’s share capital. The This is an entrepreneur who has a fixed
shareholders own a certain number workplace or who employs other staff.
of shares, i.e. a part of the business.
They have voting rights in the company UNEMPLOYMENT BENEFIT Unemployed
according to their ownership, and they jobseekers can be paid unemployment VARIABLE OR DIRECT COSTS are costs
can receive a dividend consistent with assistance, a basic daily allowance or an arising from purchased materials and
their shareholding, i.e. compensation unemployment-fund, earnings-linked, services that depend on the product or
for the capital invested by them in the daily allowance by the Social Insurance service sold. Direct costs of a product
company. Institution of Finland (Kela). include all the costs that occur when the
product is manufactured or bought.
SHAREHOLDERS’ AGREEMENT UNEMPLOYMENT FUND This pays its
is a contract concluded between unemployed members an earnings- WARRANTY During the warranty period,
shareholders that /establishes the rules linked daily allowance. This means the seller is liable for any defects or flaws
for the management of the company and that the size of the daily allowance in the goods. Generally, the vendor gives
ownership of its shares. depends on the previous salary earned. the customer a new product in place of
Joining an unemployment fund is the faulty one or returns the amount paid
SME means small- or medium-sized voluntary. In Finland, there are separate for the product to the customer. Warranty
enterprises. unemployment funds for employees and is not statutory, providing warranty is a
entrepreneurs. The unemployment fund voluntary benefit.
START-UP MONEY is discretionary for entrepreneurs is the Unemployment
support for new full-time entrepreneurs. Fund for Finnish Entrepreneurs WORKING CAPITAL A business needs
This support can be applied for through (WWW.YRITTAJAKASSA.FI). working capital, because expenses
the Employment and Economic usually occur before income. The
Development Office. The application VALUE ADDED TAX (VAT) is a tax on working capital must be enough to
must be made before commencement of consumption which the consumer pays cover the difference. Usually, current
the new business’s operations. to a business as part of the price for a receivables and current assets minus
product or service. The VAT is paid by current liabilities (excluding loan
STATUTORY There is legislation that the business to the Finnish Central Tax repayments for the next financial period)
relates to specific matters and explains Administration. are processed as working capital.

UUSYRIT YSKESKUS.FI/IN - ENGLISH DICTIONARY 97

 Checklist for new entrepreneurs
Business plan Financial transactions
• Written business plan • Opening an account
• Necessary calculations • Payment terminal
• Invoice templates
Profitability
• Fixed costs Accounting
• Variable costs • Single-entry bookkeeping
• Personal income • Double-entry bookkeeping
• Gross margin percentage • Buy the service e.g. from an accounting agency
• Critical profitability point (= sales volume to cover unless you are a professional accountant
all costs, but the company does not generate any
profit or loss) Taxation
• Registration in the VAT register
Identifying the market • Registration in the Prepayment register
• Demand • Applying for prepayment taxation
• Competition and competitors
• Price level Insurances
• Uniqueness of the products/services compared to • YEL: Basis for the entrepreneur’s social security
competitors • Accident insurance (not mandatory but
• Advertising recommended)
• Liability insurance/legal expenses insurance
Start-up grant • Property insurance
• Start-up grant application to the Employment and • Other insurances
Economic Development Office • Ask for offers from several insurance companies
• Tax debt certificate
• Business plan and calculations Unemployment security
• The statement procedure for the Enterprise Agency • Transfer from an employees’ unemployment fund to
the unemployment fund for entrepreneurs as soon
Financing as possible after starting entrepreneurial activities
• Capital requirements (investments/working capital) (at least within three months from the start).
• Self-financing • The Unemployment Fund for Finnish Entrepreneurs
• Bank, Finnvera, other external investor (WWW.YRITTAJAKASSA.FI)
• Support opportunities
• Guarantees Personnel
• Registration as an employer in the employer register
Agreements • Obligations (collective agreements, Employment
• Memorandums of association (mandatory) Contracts Act, Working Hours Act, Annual Holidays
• Other agreements relating to the establishment (e.g. Act, etc.)
shareholders’ agreement, membership agreement); • Costs for the company (salaries + indirect personnel
• Other necessary agreements (lease for business costs)
premises, delivery agreements, leasing agreement, • Possibilities for a pay subsidy
employment contracts)
• Always read the agreements before signing and make Expert meetings
sure that you know what you are committing your • Bank
company to • Insurance company
• Accounting firm
Registration to the Trade Register • Marketing
• Not before you have the start-up grant decision • Others
• Any share capital of the limited liability company must
be paid into the company’s account before registration Entrepreneur’s support network
• Your own networks
Licences • Various entrepreneurial networks
• Disclosure/registration obligation • Entrepreneur associations and business associations
• Subject to authorisation • See the network of the Finnish Enterprise Agencies
on page 89
Business premises
• Lease or ownership
• Location, location and, once more, location
• Suitability and possible official inspections of
the premises

98 UUSYRIT YSKESKUS.FI/IN - ENGLISH

 Thoughts on entrepreneurship

You should build a brand for the company, because people As regards the company’s finances, I am not very good
always like to hear interesting stories. It is a part of planning at planning ahead. I am a spontaneous person who does
business activities, not a separate project or elaborate things on a whim. I have been learning to become more
marketing. What it comes down to is that the brand should systematic in my planning with the help of the company
be implemented uniformly in all the company’s activities. Lahden Seudun Kehitys LADEC Oy. I also have an
A company cannot say one thing and do another. accountant who guides me and gives me advice.

MIKKO KYLE JASMIINA KOLEHMAINEN

Lahden Seudun Kehitys LADEC Oy Puine Oy

Creating a business plan is rarely one of I do a lot of multi-professional cooperation with case
the core competencies of a beginning management services for elderly people and with
entrepreneur. Entrepreneurs should ask medical clinics. I am a member of the Federation of
for advice from the Enterprise Agency in Finnish Enterprises, and its local division Hyvinkään
their region – also after founding the Yrittäjät (Entrepreneurs of Hyvinkää) and of the
company. Always feel free to contact us! Entrepreneur Section of The Union of Health and Social
The entrepreneur can use the large amount Care Professionals in Finland (Tehy). I have received
of information we have for free. legal advice from the trade union and I have met other
entrepreneurs at the Entrepreneur Gala.

JUKKA PÖTRY TAIJA TETRI-KIVIKANGAS

YritysVoimala Oy Terveydelle Oy

Not all the companies that are for sale can I want to be good at cleaning as well as working as
be found on public websites. You should ask a CEO. As an entrepreneur in the cleaning services
local actors, Enterprise Agencies and municipal sector, I experience that things are under my control
economic development offices. Especially - when cleaning, I get to see the concrete results of
large enterprises do not search for successors my work. If you do your best, you are more likely to
publicly. receive compliments than criticism.

JUHANI ROUVINEN TONI KAMMONEN

Itä-Savon Uusyrityskeskus ISUYK Pirkon Puhdistus Oy

UUSYRIT YSKESKUS.FI/IN - ENGLISH 99

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