Finland is an appealing destination for entrepreneurs due to its robust economy, highly skilled workforce, and supportive startup ecosystem. If you’re considering starting a business in Finland, you’ll need to navigate a few legal and administrative steps. This guide will walk you through the process, from choosing your business structure to registering your company.

1. Choose Your Business Structure

The first step is to decide on the most suitable business structure. The main types of business entities in Finland are:

• Private Entrepreneur (Toiminimi): Ideal for solo entrepreneurs, freelancers, or consultants. It’s simple to set up, but the owner is personally liable for business debts.
• Limited Liability Company (Osakeyhtiö, Oy): A popular choice for small to medium-sized businesses. The company’s liability is limited to its capital, making it a safer option for entrepreneurs.
• General Partnership (Avoin yhtiö): Suitable for businesses run by two or more people, with partners sharing equal responsibility.
• Limited Partnership (Kommandiittiyhtiö): Involves at least one general partner with unlimited liability and one silent partner whose liability is limited.
• Public Limited Company (Julkinen osakeyhtiö, Oyj): Used for larger companies with shares traded publicly. This structure has stricter requirements.
• Co-operative (Osuuskunta): Best for businesses owned and managed by multiple individuals, such as co-operatives offering services or products.

Choose a structure based on your business goals, liability considerations, and growth plans.

2. Draft a Business Plan

A solid business plan is essential for guiding your company’s development and securing funding. It should include:

• Business idea and objectives: Clearly outline what your business does and its goals.
• Market analysis: Research your target market, competitors, and industry trends.
• Financial projections: Provide estimates of revenue, expenses, and profitability for at least the first three years.
• Marketing strategy: Explain how you will attract and retain customers.
• Operational plan: Describe how your business will run, including staffing, suppliers, and logistics.

Finland’s business environment is competitive, so a comprehensive plan will help differentiate your business and attract investors or loans.

3. Register Your Company Name

Before formally registering your business, you need to choose and register a company name. The name must be unique and not already in use by another company in Finland. You can check the availability of a business name on the Finnish Patent and Registration Office (PRH) website.

Make sure the name reflects your business’s nature and adheres to Finland’s naming guidelines. It should not include misleading terms or suggest an activity unrelated to your business.

4. Register the Business with the Authorities

The official registration of your business will depend on the type of entity you choose. Here are the general steps:

• Register with the Finnish Patent and Registration Office (PRH): Submit the required forms and pay the registration fee.
• Register for VAT (Value Added Tax): If your annual turnover exceeds €15,000, you must register for VAT. This can be done via the PRH or Finnish Tax Administration (Vero).
• Employer Register: If you plan to hire employees, register with the Employer Register.
• Prepayment Register: This is necessary for businesses that will be invoicing customers. Registering ensures that your clients do not need to withhold tax from your payments.

The registration process can take a few days to several weeks, depending on the business type.

5. Open a Business Bank Account

Once your business is registered, you will need a separate bank account for your company. This helps keep personal and business finances separate, which is essential for accounting and tax purposes. Most Finnish banks require:

• Proof of registration: Your business registration documents.
• Identification: A valid ID or passport.
• Board meeting minutes (for limited companies): This applies if you are setting up a limited liability company (Oy).

Choose a bank that provides suitable services for your business needs, such as online banking and payment solutions.

6. Secure Financing and Funding

Finland offers various funding options for new businesses, including government grants, loans, and private investment. Here are some potential sources:

• Finnvera: A government-owned financing company providing loans and guarantees for startups.
• Business Finland: Offers grants and loans for research, development, and innovation projects.
• Angel investors and venture capital firms: Private investment can provide the capital needed to scale your business.
• Bank loans: Traditional loans can be used for equipment purchases, working capital, or expansion.

Ensure you have a clear financing plan in place, as investors and lenders will want to see how their money will be used.

7. Understand Finnish Taxation

Navigating the Finnish tax system is a crucial part of running a business. Key taxes to be aware of include:

• Corporate income tax: The corporate tax rate in Finland is 20%.
• Value Added Tax (VAT): Standard VAT is 24%, but reduced rates apply to certain goods and services.
• Employer contributions: If you hire employees, you must pay social security and pension contributions.

Register with the Finnish Tax Administration (Vero) for the relevant taxes and ensure you stay compliant with tax obligations.

8. Use Accounting Software to Manage Your Finances

Keeping track of your finances is essential for maintaining compliance with Finnish accounting regulations and making informed business decisions. Accounting software can streamline this process, making it easier to:

• Track income and expenses: Automated tracking helps you stay on top of cash flow.
• Generate invoices: Professional invoicing features ensure prompt payments from clients.
• Prepare for tax filings: Simplifies VAT reporting and other tax obligations.
• Integrate with banking: Connects to your business bank account for easy reconciliation.
• Monitor financial performance: Provides insights through financial reports and dashboards.

Popular accounting software in Finland is SimplBooks. SimplBooks offer localised features that comply with Finnish tax laws, and it supports multiple languages, including English. Choose software that fits your business size and needs, ensuring it can grow with your company.

9. Comply with Employment Laws

If you plan to hire staff, be aware of Finland’s employment regulations, which are known for being employee-friendly. Key considerations include:

• Employment contracts: Must be written and comply with Finnish labour laws.
• Working hours and overtime: Regulated by law to ensure work-life balance.
• Social security contributions: Employers are required to contribute to employees’ social security and pension funds.
• Health and safety standards: Ensure the workplace meets legal requirements.

It’s advisable to consult with an employment lawyer or HR specialist to ensure compliance.

10. Consider Business Insurance

Although not always mandatory, business insurance is highly recommended. Types of insurance you may need include:

• General liability insurance: Covers potential claims against your business.
• Property insurance: Protects your business assets.
• Professional liability insurance: For businesses providing advice or services.
• Employee insurance: If you have staff, you must provide statutory workers’ compensation insurance.

Consult with an insurance broker to determine the right coverage for your business.

11. Start Marketing Your Business

Finally, it’s time to market your business. Leverage both traditional and digital marketing strategies to attract customers:

• Build a website: Essential for most businesses in the digital age.
• Social media marketing: Utilise platforms like Facebook, Instagram, or LinkedIn.
• Network locally: Join local business networks, attend events, or participate in trade fairs.
• Online advertising: Consider Google Ads or social media ads to reach a wider audience.

A good marketing plan will help establish your brand and drive growth.

Conclusion

Starting a business in Finland involves several key steps, from choosing the right business structure to complying with tax and employment regulations. Incorporating accounting software into your financial management will save you time and help ensure compliance with local laws. With a supportive startup ecosystem and numerous funding options, Finland offers a promising environment for entrepreneurs. Follow this guide to set up your business smoothly and focus on building a successful venture in the heart of the Nordics.

Good luck on your entrepreneurial journey!