Starting Your Business

Personally owned small business

A personally owned small business is characterized by:

• Only 1 owner
• The owner represents the company
• No employees
• No export or import from countries outside the EU.

Pros
No economic requirements for being allowed to start. No legal requirements when it comes to accounting or making accounts public.

Cons
Owner is personally liable for the business debts (private assets such as your private house, car etc. could be seized to cover the debts). You cannot charge VAT or deduct VAT from purchased items.

Advice
Your turnover must be below 50,000 Dkr. a year, but you still need to pay taxes on your profits. Consider this type of company if this is only a part-time or hobby business where you expect a limited income (such as part-time consultant, lecturer, designer, photographer etc.) or if you have no plans of expanding.

Sole trader

• The entrepreneur is doing business as an individual with the sole trader business. 
• The entrepreneur is responsible of the company’s obligations with one’s own fortune. 
• Your own input is crucial and decision making is flexible. 

Advantages 

Sole trader is the most simple type of business. As a sole trader you’ll be making all the decisions regarding your business by yourself.

Challenges
 As a sole trader you are personally responsible of all the company’s debts and obligations. It means that the creditor is able to reclaim the entrepreneurs personal fortune (for example one’s car or house) if necessary. 

Advice
 If you don’t want to take personal responsibility of your company’s debts, a limited company could be your type of company. Accountant, advocate or the Finnish Enterprise Agencies will give you a hand on which type of business to pick. 

Limited liability company

• Most common type of business in Finland. 
• At least one founder.
• Shareholders are responsible of the company’s debts with the amount of the capital stock invested. 

Advantages 
Shareholders are responsible with the amount of their investment so they are not responsible with their personal fortune.  

Challenges 
Limited company is more heavy on administration than other business entities. The obligations on financial statements are wider than for example with a sole trader.  

Advice
A charter, articles of association and subscriptions of shares are made when the limited company is established. While creating these documents you might want to get some help from an advocate.

In regard to limited liability companies, housing companies and mutual real estate limited companies, the legal requirement for a minimum share capital of 2,500 euros was revoked by virtue of the applicable legislative amendments that entered into force on 1 July 2019.

General partnership

• At least two general partners. 
• General partners are responsible of the company’s obligations with their personal fortune. 

Advantages 
No minimum capital. The capital consists of the investments of the general partners that can be of different amounts and type. A general partner can invest in the company money, goods or just one’s labor input.

Challenges 
The responsibility of the general partners is unlimited and personal. 

Advice
The articles of incorporation can be informal but it should always be made as written agreement. In the articles of incorporation general rules of the company are agreed as well as the responsibilities of the general partners.

Co-operative

• At least one founder.
• A company form owned by its members.
• The members are responsible of the co-operative’s obligations with the amount of co-operative capital. 

Advantages 

The members are responsible of the co-operative’s obligations with the amount of co-operative capital and not with their personal fortune.

Challenges 
Making mutual agreements can be slow if there’s a lot of members.

Advice

The membership count and the capital are not predefined. Co-operative can accept and expel members and the members can resign basically whenever. So in that sense co-operative is very flexible company form.