Freelancing in Finland

The ultimate resource for transitioning to freelancing for software developers 👩‍💻🇫🇮

• Introduction
  • What problem will you face without this guide?
  • How can this guide solve the problem?
• Preparation - what to do before you establish your company
  • Know how to handle your upcoming new immigration status
  • Network with freelance brokers and organizations
  • Wait until you find a project you like
  • Apply for startup grant
  • Quit your job
  • Establish your company
• Foundation - what to do after you establish your company
  • Apply for general housing allowance
  • Open a business bank account
  • Find an accountant
  • Buy social security insurance YEL
  • Understand your new personal taxation situation
  • Consider buying corporate liability insurance
  • Consider joining a union
  • Consider joining an unemployment fund
  • Consider buying health insurance
  • Consider selling your personal work-related tools to your company
• Operation - what to do to run your company
  • Offer yourself benefits that you like
  • Send your invoices carefully
  • Take out money from your company in the most tax optimal way
  • Ensure that your obligations are fulfilled continuously
  • References
• Contributors
• Now that you're here...

Introduction

What problem will you face without this guide?

Losing an estimated 200 hours figuring out how to do everything by your own. I know this because that's how much I had to spend myself.

In Finland, there are many extensive guides by authorities which have precise information about everything you need to know. The problem is, however, that the target audience of those guides are the general population and out of every 100 pages, maybe 10 pages are relevant to your situation.

For myself, I had questions like:

• How to get freelance projects without any network of my own?
• What you need to do before you establish your company to be eligible for government grants?
• When you setup your company, what are your recurring obligations?

Figuring those questions out was tiring and very time consuming.

How can this guide solve the problem?

By narrowing down the target audience to the person reading this guide on Github, you wouldn't lose the time I lost.

You are the target audience of this guide if:

• You are already living in Finland for more than 3 months
• You are already working as a software developer
• You want to work as an independent freelance software developer
• You want to establish a limited liability company to offer your freelance services through it

This guide is under MIT license which means use it at your own risk, I'm not a lawyer and no statement here should be thought of as legal advice.

Preparation - what to do before you establish your company

Know how to handle your upcoming new immigration status

Source of truth: Finnish Immigration Service

What is it? Once you start working as a self-employed person, you may need to apply for a different type of residence permit.

If you're a Finnish citizen, this is not applicable to you.

If you're a EU citizen, as the target audience of this guide is people who are already living in Finland for more than 3 months, given that you have already registered your right of residence, you don't need to apply for another permit.

If you're a non-EU citizen, depending on your current permit, you may need to apply for another permit.

• If you have a permanent residence permit, you don't need to apply for another permit.
• If you have a permit of type A or B, you can establish your limited liability company without applying for a new residence permit. This is because under the Aliens Act, an entrepreneur who operates such companies is considered an employee.

Network with freelance brokers and organizations

What is it? To find a project that you like, there are companies that can help you with that. Most require a meeting before they let you in their network. It's always a relaxed meeting, though, as you will be partners who will help each other.

How does it work? They find you a project. They add around 5-20% to your hourly rate. You invoice them. They invoice the end client.

What happens in the meeting?

• They ask if you know their company and depending on that, they introduce you accordingly.
• They ask about your story.
• They ask if there's an industry that you particularly like/dislike to work in.
• They ask about your hourly rate.
• You can ask about their principles and priorities for the possible partnership with you.
• You can ask if they offer any other services than finding a project.
• You can ask about their terms of payment, i.e. how many days until they pay your sales invoice.
• You can ask if there are any restrictions in place if you take a project from them in the form of NDAs or non-competition.

What about hourly rate? In Helsinki, if we put aside particular situations in which the client has become dependent on a single point of failure developer, or other extraordinary situations, in an average project with an average client with an average developer, I've heard companies charging their clients between 90-130€ per hour depending on the strength of their brand, the experience of the developers in the team, and the particular relationship with that client. In extraordinary situations, I've heard of 150-200€ per hour.

However, the ranges above are for direct company-to-client sales. If you get connected to a client using an intermediary broker company, the ranges will be cut by 5-20%, which would be their cut of the hourly rate. This means that, with one intermediary company, you're looking at 65-105€ per hour in non-extraordinary situations.

List of brokers:

• Apply for Talented membership to get into their projects, events and Slack community.
• Fika ☕️ with Tentimes and get into their Slack.
• Fika ☕️ with Finitec and get into their network.
• Fika ☕️ with Siili One and get into their network.
• Register a profile with EWork Group to be able to apply to their projects.
• Drop Toughbyte a line.
• Look into Harnham contract positions in nordics.

List of aggregate sites:

• Create a job search alert on LinkedIn with:
  • Your location
  • Your most important skill (Python, for example)
  • Job type as Contract
• Create a profile on Nordgigs which aggregates freelance projects across Nordic countries and email you on a match with your skill tags.
• Check the Hub for freelance job types.

List of organizations you can introduce yourself to:

• Business Finland is a governmental organization whose main purpose is to help Finnish companies. A lot of those companies are startups who need software developers. By introducing yourself and your services to a Business Finland advisor, they may be able to connect you with potential startups.

• NewCo Helsinki is a governmental organization which is focused on helping companies in Helsinki:

  When problems come up, we are here to help you right away. Please contact us at startup@hel.fi and stop by!

  NewCo Helsinki advisors see many startups in Helsinki who would need software developers. By visiting them and introducing yourself, they might be able to connect you with potential Helsinki startups.

Wait until you find a project you like

What is it? Finding a freelance project is like finding a job. A lot has to be in order for you to find the right project.

It took me ~6 months from the time I got into the networks to find my first project that I liked. I've heard of couple of weeks from my peers too. It really varies, patience is necessary.

Steps:

• Once you find the right project, check the terms and conditions of the contract and run it by a lawyer if you have that available to you either through a union or elsewhere.
• If you're planning to apply for startup grant, before you sign any contract, ask them to give you two weeks so that you can apply for startup grant and receive a decision. Even though the official estimation is 2 weeks, decision comes much faster in reality (2-4 working days). Once you receive the decision, you can proceed.
• As you don't have a company yet, and you need to accept the contract, you can sign it as a temporary solution under your own name.
• The contract will be between a natural person (you) and a legal entity (the client's company or the freelance broker's company).
• You will sign a new contract once you establish your company. It will be between a legal entity (your company) and another legal entity (the client's company or the freelance broker's company).
• Your company would be selling freelance services by sending its representative (you).

Apply for startup grant

Source of truth: TE-services startup grant page

What is it? Startup grant is a program to support you to become an entrepreneur. You will receive the monthly payment for a total of 6 months (if you apply once) or a total of 12 months (if you apply for extension as well).

How much? ~700€ per month, as personal income. If your income tax is 25%, for example, you will get ~525€.

Steps for first application:

• You will be disqualified from startup grant if you have already established your company or started full-time entrepreneurship.

• You need a business plan and certain financial calculations as an attachment to your application. You can use My Enterprise Finland and complete the steps for Business plan to draw up your business plan which includes all necessary financial calculations as well.

• Once you have your business plan ready, as an optional step, you can send an email with your business plan attached to the Enterprise Agency in your city and ask them for an appointment with a Business Advisor. In Helsinki, NewCo Helsinki is the Enterprise Agency to go to. Although it is not mandatory to go to this appointment for getting startup grant, the Business Advisor has seen hundreds of business plans and can guide you to correct your mistakes in the business plan and therefore increase your chances for a successful application.

• You need an updated Resumé as an attachment to your application.

• You need a tax debt certificate as an attachment to your application.

• In your business plan, you have specified how much own funding you have available to you. You need to provide a proof of your claimed own funding as an attachment to your application. This proof doesn't have to be official. I personally printed a pdf from my netbank account overview and that was enough for a successful application.

• The amount of own funding available to you, no matter how high, does not influence the decision of TE-services negatively. In addition, when applying for startup grant payments later once startup grant is granted, the salary you've taken from your own company does not affect the payment application negatively either.

• Apply for startup grant electronically (only available in Finnish) and you will get an electronic decision within 2 weeks (official estimation). Official decision letter should arrive by post soon after the decision is served (~1 week).

Steps for application extension:

• Apply five months after the starting date of previous grant but also before it expires.

• You need a short explanation of how the business has started.

• You need a short explanation of why the extension is being applied for.

• You need a summary report of your business actions during the startup grant period and plans for the near future.

• You need an income statement, self-made or verified by an accountant, of a 5-month-period, as an attachment to your application.

• You need a balance sheet, self-made or verified by an accountant, of a 5-month-period, as an attachment to your application.

• To determine whether to award the grant extension:

  • TE-services will consider whether the business has started more or less according to the original business plan.
  • TE-services will consider whether the already acquired income is enough to support the entrepreneur.

• Apply for the grant extension electronically (only available in Finnish) and you will get an electronic decision within 2-4 weeks. Official decision letter should arrive by post soon after the decision is served (~1 week).

Quit your job

What is it? The positive decision to your startup grant is on the condition that you will quit your job and become a full-time entrepreneur.

Steps:

• Terminology: employee and self-employed are two different terms and they cannot be used interchangeably.
• As an employee, deliver your binding resignation in written form to your employer.
• After that, and from the first day of your startup grant decision, you are self-employed.

Establish your company

Source of truth: Business Information System

What is it? You need to establish a limited liability company (Oy) to be able to offer your freelance services and protect your personal assets from a legal perspective.

This limited liability is such an extremely important concept that I encourage you to watch Khan Academy video on corporations and limited liability to become fully aware of its implications.

TL;DR of video: Working under your own name as a private trader (toiminimi) gives you unlimited liability and all your personal assets like your home, car, and personal savings are up for grabs if worst happens. In case of a limited liability company, the liability is limited and the company can declare bankruptcy if worst happens, and your personal assets are immune from the liability of the company.

How much? ~275€ for online registration. It's a business cost. Later, when your company is registered and accounting and bank account are setup, you can claim this ~275€ back from the company as you paid this money from your personal bank account even though it was a business cost.

What is the role of Business Information System?

• What Finnish Digital Agency (Digi- ja väestötietovirasto) is to you, Business Information System (ytj) is to your company.
• This means that in the same manner that you came to life, in the eye of Finnish authorities, by getting a personal ID (henkilötunnus) from Finnish Digital Agency, your company will come to life by getting a company ID (Y-tunnus) from Business Information System.
• Similarly, in the same way that you update your personal information like your address after you move apartments in Finnish Digital Agency, you'll update your company's information in Business Information System if there are changes.
• Business Information System is also the single place in which you can communicate with and join/exit various registries by Tax Administration (Vero) and Finnish Patent and Registration Office (PRH).
  • Tax Administration maintains:
    • Prepayment register (Ennakkoperintärekisteri), which allows your company to take care of its own taxes.
    • VAT register (Arvonlisäverovelvollisuus), which allows your company to report VAT related matters.
    • Employer register (Työnantajarekisteri), which allows your company to report employee-related matters.
  • Finnish Patent and Registration Office maintains:
    • Trade register (Kaupparekisteri), which stores your company's information.

Steps:

• Choose a company name.

  • Search for your chosen name in Name Checking Service for Companies
  • If no exact match or very-similar names were found for your chosen name, then probably it will be accepted in the application process.
  • You will be given 3 fields for company name, so prepare 2 backup names as well in case your primary name cannot be registered.

• Choose your main line of business.

  • Source of truth: Statistics Finland
  • Required by Tax Administration.
  • For freelancing, you can choose any from [Information and communication > Computer programming, consultancy and related activities] that you feel is most relevant.
  • 62010 Computer programming activities is common as several freelancing agencies like Futurice and Reaktor have chosen that, so you can go with that as well.

• Get another person's consent to be your Deputy Member of the Board of Directors.

  • According to Limited Liability Companies Act in Chapter 6, Section 8.1:

    There shall be between one and five regular Members of the Board of Directors, unless it is otherwise provided in the Articles of Association. If there are fewer than three Members, there shall be at least one Deputy Member of the Board of Directors.

  • This means that, for your company to be legally compliant, it must have a Deputy Member of the Board of Directors when you are going to be the only regular member of Board of Directors as the CEO.

  • Once you get the person's consent, get his/her personal ID (henkilötunnus) as you'll need it for establishing the company.

• Decide the registries you'd like your company to be part of:

  • Trade register ✅, as the company cannot come into life without it.
  • Prepayment register ✅, as without it, other companies have to withhold taxes on the amounts they pay you.
  • VAT register ✅, as you can start deducting VAT from things or services you purchase for your main line of business. For example, if you buy a laptop for 2,000€, you'll get ~500€ back (VAT 24%).
  • Employer register ❌, because you don't need it if you're not employing anyone else. The fact that you're employing yourself is irrelevant as you're considered self-employed, not an employee. You can join later, once and if you start employing others.

• Establish your company online by filing a startup notification at Business Information System (only available in Finnish)

  • Do not add your email, phone number, or any other information in the public information section of the startup notification application. This would prevent scammers calling you and selling you a "service", in which you might say "Ok, yes, that's fine" to get rid of them, and they'd start sending you invoices which you have to jump over dozens of obstacles to remove yourself from the so called "service" they offered you. They can do that because in Finland, verbal agreement is as binding as writing, which the scammers take advantage of inappropriately.
  • You can also give power of attorney in Business Information System to an accountant so that they can establish the company on your behalf.

Foundation - what to do after you establish your company

Apply for general housing allowance

Source of truth: Kela general housing allowance page

What is it? General housing allowance supports you with housing costs. Based on Suomi.fi:

As an entrepreneur, you are entitled to the general housing allowance under the same conditions as anyone else.

How much? Based on the simplified assumption that your only source of personal income is startup grant and you don't live with another person in the same household, general housing allowance is ~410€ per month, tax free, for a studio in Helsinki. You can use source of truth calculator for exact figures.

What counts as a self-employed person's income from Kela's perspective?

• Your company:
  • is a legal entity with a business ID (Y-tunnus)
  • can act like a natural person from the perspective of law
  • pays taxes on its profits in the form of corporate taxation, 20%, once a year
• You:
  • are a natural person with a personal ID (Henkilötunnus)
  • are a natural person from the perspective of law
  • pay taxes on your income in the form of personal taxation, at progressive rates, whenever you receive income
• For the purpose of answering what counts as a self-employed person's income from Kela's perspective, your company's income is irrelevant.
• Your income is relevant. If you have YEL:
  • Your YEL income is counted as your income, nothing else.
  • You do not need to apply for general housing allowance review unless you change your YEL income.
• If you don't have YEL:
  • All your income (salary, benefits, dividends, etc) counts as your income.
  • You need to apply for general housing allowance review if your income increases by 400€ per month.

Steps:

• Apply for general housing allowance electronically (only available in Finnish).
• Mention in application that you have received a positive decision to your startup grant application and you have quit your job.
• Attach your startup grant official decision letter which has come via post to the application.
• Attach your employment certificate which mentions the final date of your employment to the application.
• If you don't have the attachments ready, you can still attach them to the application for ~10 days after sending the application.
• You will receive a decision in ~3 weeks (official estimation).

Open a business bank account

What is it? A business account for your company's business activities.

How much? ~40€ per month. Base prices might start from ~10€ but in business accounts, unlike personal accounts, almost anything that happens in the eco-system of your business will cost you something and will drive the total cost to around ~40€. Revolut for Business and some other foreign fintech companies also provide free alternatives, which may be suitable if you only have a few transactions a month.

Comparison of services:

	English service	Possibility to open account online	Phone customer service
Nordea	✅	✅	✅
OP	✅	No (1)	?
Holvi	✅	✅	No (2)
Revolut for Business	✅	✅	No (3)

1. OP corporate account for limited liability companies have to be opened by an appointment

   If you're another bank's customer or have another type of company, please book an appointment for opening an OP corporate account.

2. Holvi phone support is for what Holvi considers urgent, which is mainly fraud-related activities, during weekdays. All other inquiries have to be submitted electronically.

   Our phone support is available from Monday - Friday 10-16 Finnish time (GMT +2) for urgent matters only: lost or stolen cards or if you suspect suspicious activities related to your account.

3. Revolut for Business provides customer service through an online chat instead. There is a phone number for closing a lost or stolen card.

Steps:

• Open a business account in your desired bank.
• Once your business account is setup, you can give a 1000€ loan from your personal account to your company so that you can immediately start paying business costs from your business account.
• Later when your client pays your first sales invoice, you can return the 1000€ loan to your personal bank account.

Find an accountant

What is it? Having an accountant is not mandatory by law. However, as the CEO of your company, the ultimate and final responsibility for correctness of your books and all your company's tax obligations is on you, and when the law comes to you in the form of random tax audits carried out by Tax Administration, having had a good accountant who have corrected your mistakes and fulfilled your company's tax obligations on time, every month, could prevent potential complications with Tax Administration.

How much? Varies. Accountants will either charge you hourly or a fixed price, which is based on their estimation of how much time they'll spend per month on your business. A freelancing company for the target audience of this guide with no other activities will take at least an hour or two of their time, and if we take a 75€/hour rate, you should expect to pay at least 75-150€ per month.

List of accountants who offer English services as well:

• eAccounting Finland -> Jonne Anttila
• Tili Sydwest
• KT Kirjanpito Outi & Viivu speak English and specialize in micro businesses
• Valjas
• Lemontree offers English services even though their website is only in Finnish
• I don't know any other. Do you know? Please send a pull request 💯

Steps:

• Contact your accountant in mind:
  • Explain that your business is about IT freelancing
  • Tell if you have a client already, or expecting one soon
  • Mention your estimated amount of business activity and purchases
  • Mention your bank account provider
• Accountant will take it from there.

Buy social security insurance YEL

Source of truth: ETK Finnish Center for Pensions

What is it? YEL is a mandatory social security insurance for self-employed persons. The official name of "Self-Employed Person’s Pensions Act" is misleading, as YEL doesn't determine your pension only but your entire social security benefits.

What is YEL income and YEL contribution?

• YEL income:
  • Has absolutely nothing to do with your real world income (salary, benefits, dividends, etc).
  • Is how much coverage in social security you would like to have.
  • You have the freedom to choose between ~8000€ up to ~180,000€ per year.
• YEL contribution:
  • Is how much you pay for your coverage.
  • Is ~19% of your YEL income, which means you pay ~125€ up to ~2820€ per month as a business cost.

Minimum YEL	Maximum YEL

* Taken from Varma.fi YEL calculator

Steps:

• You have 6 months from starting self-employment to buy YEL.

  • If, however, your company has not had income equal to minimum YEL income, i.e. ~8000€, you do not need to buy YEL yet.
  • When your company gets income above the level of minimum YEL income, you'll have to buy YEL within the 6 months mentioned above.
  • Even though you have 6 months to buy YEL, if e.g. you had to buy YEL from the 3rd month because that's when your company had more than ~8000€ of income, even if you buy YEL at the 5th month, you'll have to select the starting date of YEL to be from the 3rd month as that's the date when you were obligated to buy YEL anyway.

• Buy YEL from an YEL insurance provider:

  • elo
  • varma
  • ilmarinen
  • veritas

• I don't know if any provider is better than the other. Do you know which one is the best? Please send a pull request 💯

Understand your new personal taxation situation

Source of truth: Tax Administration

What is it? As a self-employed person, your payslip is going to be different than what you used to have as an employee and practically speaking, you only pay income tax and nothing else.

How is the payslip for an employee? Imagine a basic example, in which an employee receives 1,000€ salary, and her/his tax card says their tax is 20%.

From the employee's perspective:

1. They have to pay 20% of 1,000€ as income tax => 200€
2. They have to pay 7.15% of 1,000€ as TyEL pension insurance contribution => 71,5€
3. They have to pay 1.25% of 1,000€ as unemployment insurance contribution => 12,5€
4. They get the rest which is 716€.

From the employer's perspective:

1. The employer has to pay 16.95% of 1,000€ as Employee's pension insurance contribution => 169,5€
2. The employer has to pay 0.45% of 1,000€ as Employer’s unemployment insurance contribution => 4,5€
3. The employer has to pay 0.70% of 1,000€ as Occupational accident and disease insurance contribution => 7€
4. The employer has to pay 0.07% of 1,000€ as Group life insurance contribution => 0,7€
5. The employer has to pay 1.34% of 1,000€ as Employers’ health insurance contribution => 13,4€

The employer will pay all taxes above which is ~479€ to Tax Administration.

How is the payslip for a self-employed? Imagine a basic example, in which a self-employed person receives 1,000€ salary from their own company, and her/his tax card says their tax is 20%.

From the self-employed's perspective:

1. They have to pay 20% of 1,000€ as income tax => 200€
2. They get the rest which is 800€.

From the company's perspective:

1. The company has to pay 1.34% of 1,000€ as Employers’ health insurance contribution => 13,4€

The company will pay all taxes above which is ~213€ to Tax Administration.

What's the practical conclusion? Because Employers’ health insurance contribution is such a small percentage, in the rest of this guide, I will intentionally assume that the self-employed people only pay income tax and nothing else.

Consider buying corporate liability insurance

What is it? An insurance to cover the potential damages you may cause to your client while freelancing. For example, if you drop the production database and it would take 5 hours to recover from that mistake, and your client claims 100,000€ in damages for those 5 hours, corporate liability insurance may cover it.

When is it necessary? Even though it's not mandatory by law, it may be mandatory by the contract you'll sign with freelance brokers or the client itself.

How much? Insurance companies decide the price based on a number of factors including but not limited to your main line of business and your estimated annual revenue. I have received offers from ~200€ up to ~500€ per year from different insurance providers.

Corporate liability insurance providers:

• if corporate liability insurance
  • Insurance offer available in Finnish, Swedish, and English.
  • Online service available in Finnish, Swedish, and English.
• OP corporate liability insurance
  • Insurance offer available in Finnish and Swedish.
  • Online service available in Finnish and Swedish.
• Lähitapiola corporate liability insurance
  • Insurance offer available in ?
  • Online service available in ?

I don't know if any provider is better than the other. Do you know which one is the best? Please send a pull request 💯

Consider joining a union

What is it? A union is an organization which can offer its members certain services at a much lower price and lobby the interests of its members with relevant authorities.

How much? ~165€ per year.

When is it necessary? Given the union membership fee, and the 200€ average hourly rate of lawyers in Finland, if you have 2-4 questions about running your business per year, the membership fee will pay itself back.

For example, I had a question about corporate law, and wanted to know what happens if my Deputy Member of the Board of Directors leaves the company. I called the union and within 5 minutes, I was talking with a lawyer who knew about corporate law and got my answer.

In addition to that, unions negotiate the self-employed interests. For example, from July 2019, you no longer have to put 2500€ initial capital into the company when establishing a limited liability company. This has been one of the points from Business Legislation agenda of Suomen Yrittäjät union, among other points.

Unions:

• Suomen Yrittäjät - Finnish Entrepreneurs
• Kauppakamari - Finland chamber of commerce
  • Helsinki chamber of commerce

I don't know if there are other unions or which one is better than the other. Do you know which one is the best? Please send a pull request 💯

Consider joining an unemployment fund

Source of truth: Kela unemployment page and Unemployment Fund for the self-employed

What is it? There are two types of unemployment benefits:

1. Basic unemployment allowance, which is paid by Kela and the amount is the same for everyone, ~700€ per month.
2. Earnings-related unemployment allowance, which is paid by unemployment funds and the amount for the self-employed people depends on their YEL income.

You can only apply for earnings-related unemployment allowance if you're part of an unemployment fund.

How much? Depends on your YEL income. Unemployment law enforces a higher minimum YEL income if you wish to be part of an unemployment fund. The minimum is ~13,000€ YEL income, and with that, membership fee is ~155€ per year.

When is it necessary? If you wish to get earnings-related unemployment allowance in case of unemployment.

Note that receiving any kind of unemployment allowance requires permanent closure of your company and registering as a job-seeker to be a full-time employee again, among other things.

* Taken from SYT

Steps:

• According to Federation of Unemployment Funds in Finland (TYJ), there's only one unemployment fund for the self-employed.
• Join Unemployment Fund for the self-employed.

Consider buying health insurance

Source of truth: Ministry of Social Affairs and Health

What is it? As a self-employed person, you are not legally obligated to buy occupational healthcare for yourself. Therefore, when you fall ill and the issue is not urgent, you can go to public health stations or private. To partially or fully cover the medical costs, you may want to buy an appropriate health insurance.

How do public and private compare?

• In public:
  • You cannot go to any public health station, you should go to the health station assigned to you.
  • You cannot book a doctor's appointment online.
  • You cannot jump the [Nurse -> Doctor -> Specialist] rule.
  • You will not pay more than ~700€ per year for medical costs or ~600€ per year for medicine as there are laws protecting you from that.
• In private:
  • You can go to any private health station you wish.
  • You can book your appointments online and usually get a doctor's appointment either the same day or day-after.
  • There's no rule preventing you from seeing an specialist straight away.
  • It's expensive.

When is it necessary? If you wish to go to private for non-urgent issues and you'd like the health insurance to cover it.

Comparison of health insurance providers:

	No need to fill health declaration form	No need to have occupational healthcare agreement from a service provider (~500€ per year)	No need to apply for reimbursements yourself	Price per year + Deductible	Anything else?
OP - Basic	✅	❌	✅	?	Need accident insurance (~200€ per year)
OP - Comprehensive	✅	❌	✅	?	Need accident insurance (~200€ per year)
OP - Extra	✅	✅	✅	~350€ + 100€	Need accident insurance (~200€ per year)
OP - Super	✅	✅	✅	~1800€	Need accident insurance (~200€ per year)
If	❌	?	?	?

I don't know if there are other health insurance providers or which one is better than the other. Do you know which one is the best? Please send a pull request 💯

Steps:

• Contact the insurance provider you chose and get a quote for your specific health insurance package.
• Be ready to answer basic questions about your business like your estimated annual revenue, your YEL income, main line of business and many more.

Consider selling your personal work-related tools to your company

Source of truth: Tax Administration

What is it? When you were an employee, your employer gave you work-related tools like laptop, phone, desk and a chair to do your work. Now, your company (legal entity) can buy from you (natural person) work-related tools in a similar fashion.

When is it useful? If you didn't have work-related tools when you started your company, you would have bought them from company's money as business costs. Now, by selling what you already have to the company, it's as if you're retroactively turning what used to be a personal cost into a business cost.

How much? Their current fair market value. If you bought an iPhone for 1000€ two years ago, and you sell it to your company for 500€ because in most 2nd hand stores you see that the market price is ~500€ nowadays, that's a fair market value. If you sell it for 950€, tax administration might consider that a disguised dividend to the owner.

Steps:

• List all work-related items you'd like to sell to your company.
• Take a picture of the item and its receipt if you still have it to prove the item actually exists as an attachment to the invoice you'll be sending to your company.
• Take a picture of a 2nd hand store advertisement for an item similar to yours to prove that you were in the ballpark of their fair market value as an attachment to the invoice you'll be sending to your company.
• Create a contract which includes the followings as an attachment to the invoice you'll be sending to your company:
  • Who is buying
  • Who is selling
  • What is being sold and their fair market value price
  • Signature, place, and date
• Send an invoice to your company with all attachments above.

Operation - what to do to run your company

Offer yourself benefits that you like

Source of truth: Tax Administration

What is it? You can offer yourself all the benefits employees have access to as a self-employed person. Up to the tax-free limits, it'll be only a business cost.

	Tax-free limit	Edenred card service commission	Smartum card service commission	ePassi service commission
Lunch benefit 🥗	~50€ per month	2.6% of the balance loaded	1.5% of the balance loaded	1.5% of the balance loaded
Sport and cultural benefit 🎭	400€ per year	5.2% of the balance loaded	5% of the balance loaded	4% of the balance loaded
Commuting benefit 🚌	(0 to 300€) and (751€ to 3500€) per year	4% of the balance loaded	5% of the balance loaded	3% of the balance loaded

• Phone benefit: you can pay your phone bill from company if you offer it as a 20€-phone-benefit every month to yourself. Phone bills are business cost when you only and only use it for business and not in your personal life. If you'd like to use a single subscription for both personal and business, you must offer it as a 20€-phone-benefit.
• Internet subscription: your company can provide you an internet subscription for your home office. The subscription is not taxed if it is for work use. You can use it for personal use as well, but entertainment services should not be attached to the subscription, or the benefit will be taxable.
• Massage benefit not recommended for the target audience of this guide: there's a possibility that the Tax Administration would consider massage benefit in a one-person company a disguised dividend to the owner.

Can you offer yourself only benefits? Yes you can, but you must take a big enough salary to cover the income tax of the benefits you're offering yourself.

For example, let's say in March, you paid your phone bill from company and therefore you must offer yourself a 20€-phone-benefit. You want no additional salary and your tax rate is 10%.

10% of 20€-phone-benefit is 2€. This means that you must take a big enough salary in March to cover this 2€ tax that you have to pay. Therefore, in March, your salary must be 2.22€. When you deduct your 10% tax from 2.22€ salary, 2€ is left, which will cover the 2€ tax that you have to pay for 20€-phone-benefit.

Should you offer yourself benefits above the tax-free limit? You can but it will be similar to taking salary in case of a self-employed person.

As seen in understanding your new personal taxation situation, the self-employed only pay income tax on their income and nothing else. So if you offer yourself 1000€ salary and your tax rate is 20%, you get 800€. If you offer yourself 1000€ as benefit, you will also get 800€.

Who ensures that you do not go above the tax-free limit? Your company, the legal entity, must ensure that its owner, you as the natural person, is not offered benefits above the tax-free limits, because if you are offered, it must be reported and taxed. This is important, because you as the representative of the company can order even 10,000€ of Sport and cultural benefit, but if you go ahead and use it all within that calendar year, you must report it and pay tax on the 9600€ part.

Send your invoices carefully

If you're invoicing a Finnish company:

• You must add 24% VAT to the total amount you're charging them for your services.

If you're invoicing a EU company:

• You must add 24% VAT to the total amount you're charging them for your services.
• You can, however, use reverse-charge mechanism and not add VAT. To do it:
  • You must state the EU company's VAT ID in your invoice.
  • You must ensure that your EU company's VAT is valid by checking it in VIES
  • You must mention the VAT rate and exactly how much VAT is to be accounted for by the EU company for VAT purposes and the fact that this responsibility is left for the EU company.
  • You must mention the exact reverse-charge mechanism words in your invoice.
  • reverse-charge mechanism works in the other way around too. In some checkout pages, the seller asks for your VAT ID to remove the VAT amount from your purchase invoice. Without this mechanism, the seller could not do that.

If you're invoicing a non-EU company:

• You do not need to add VAT.

Take out money from your company in the most tax optimal way

What is it? Taking money from the company in the most tax optimal way is a million-dollar question. Only a team of competent accountants and competent lawyers specializing in coporate tax law could answer that question. This guide could not be reasonably expected to be of much help to answer that question, as the circumstances for every company are specific. However, an overview of fundamentals can be illustrated.

What are the fundamentals in taxation of income in a limited liability company?

* Taken from Finnish Enterprise Agencies guide to becoming an Entrepreneur in Finland - 2019

Ensure that your obligations are fulfilled continuously

Tax administration office (Vero):

• Pay your corporate income tax early using prepayment register, non-recurring obligation: you can pay your corporate income tax before the company financial year ends, if you want. That way, you won't have to pay interest if the financial year has ended and you had paid way too little corporate income tax during the financial year.
• Send VAT reports, recurring obligation: strictly speaking, as the owner of the company, you are responsible to ensure that VAT reports are done every month, not your accountant. Practically, your accountant assumes responsibility for it and will do it herself/himself, but remember that if your accountant fails to do so, you yourself are responsible. Therefore, check before the deadlines if the VAT reports have been done.
• Consider monthly bookkeeping, recurring activity: accountants prefer to do it monthly. There's no legal obligation to do it monthly, however.
• Submit financial statement and corporate income tax return, recurring obligation: after the financial year ends, within 4 months you must submit a financial statement and corporate income tax return. Your accountant can do this for you.
• Share the receipts with your accountant, recurring obligation: Primarily because Tax Administration must know what the purchase was for and whether it was related to your main line of business, although it would also allow you to get the VAT back on eligible purchases.

Business Information System (ytj):

• File notification of changes to company information, non-recurring obligation: any changes to company information has to be notified to Business Information System. For example, if your company's address changes, file a notification of change.

TE-services:

• Apply for startup grant payment, recurring obligation: you must apply for startup grant payment retroactively within 2 months after the month you're applying for. For example, if you're applying for the month of March, you have until end of May to apply.

References

Guides:

• Suomi.fi
• Finnish Enterprise Agencies guide to becoming an Entrepreneur in Finland - 2020
• Capital taxation of individuals in Finland - 2015

Governmental organizations to provide support for you:

• NewCo Helsinki
• International House Helsinki

Contributors

Thanks goes to these wonderful people (emoji key):

Anders Nylund 📖	Ville Halminen 📖	Onni Hakala 📖	Dom Padden 📖	Jyri-Petteri Paloposki 📖	Tuomas Jomppanen 📖	Timo Salomäki 📖
Ville Immonen 📖	Oleg Podsechin 📖	Alex Fomushkin 📖

This project follows the all-contributors specification. Contributions of any kind welcome!

Now that you're here...

I can tell you that I wrote this guide with both selfish and selfless reasons.

• Selfish reasons:

  • I wanted to make money. I didn't know how exactly to monetize this guide or other things that could come out of it 😄, and there were multiple suggestions by friends and colleagues but in the end it didn't receive widespread attention and that's ok, live and learn 📚

  • I wanted to increase my visibility in the freelancing network as a Python developer 🐍 and with that, I would have the leverage to charge higher hourly rates 💶 =>

  • Later in my life, I want to launch my own products but because I'm an underdog on Twitter 😁, I was hoping to get more Twitter followers so that my best friends wouldn't be the only ones liking my later-in-life Producthunt launch posts 😅 =>

• Selfless reasons:

  • Software developers and the community are extremely generous and having been mostly taking, I wanted to give back as well.
  • From the bottom of my heart, I wanted to help you start your freelance journey and that this guide would save you the headache of having to read so many pages of different guides to do things correctly and in the right order.
  • I like it that when you have your own company, the profits generated get distributed more proportionally to those involved compared to being an employee, and so I was hoping by providing some exact figures on revenues and costs, I'd inspire you to take a bigger risk and be proportionally compensated for it.