Business registration

Business operations begin with company registration.

Competition for the attention of new entrepreneurs has intensified.
Service providers want to engage new businesses with their services right from the start. In recent years, several platforms have been established that allow sole traders to register their business quickly and free of charge.

The Finnish Tax Administration has also responded to this challenge. Today, it offers private entrepreneurs a free online registration option through the MyTax (OmaVero) service. Just a few years ago, the only way to register a business was by filling out a paper form. Now, registration can be completed through several different channels – although paper forms are still available.

So, what does this mean in practice?

Company registration in the Trade Register

Limited liability companies, cooperatives, limited partnerships and general partnerships must be entered in the Finnish Trade Register when starting business operations. Most sole traders (“toiminimi”, Tmi) also file a start-up notification with the Trade Register. Registration is subject to a fee, and once registered, your company name receives legal name protection. More information on Intellectual property rights (link).

Limited liability companies (Oy) and sole traders can file their start-up/registration electronically, while other legal forms (limited partnership, general partnership and cooperative) can only be registered using paper forms. A limited liability company or a sole trader can still be registered on paper as well, but the online filing is cheaper and you receive the Business ID (Y-tunnus) immediately. Note that electronic registration for limited liability companies is not always available; see the Finnish Patent and Registration Office (PRH) website for details on filing start-up notifications for limited liability companies and sole traders. There is also a short YouTube video on how to register a sole trader in the Trade Register.

Electronic Trade Register filings are submitted via YTJ.fi (the Business Information System). In addition to Trade Register registration, a new entrepreneur/company must also notify the Finnish Tax Administration of the start of business operations. You can join the Tax Administration’s registers at the same time as company registration or later. Registrations are most often submitted via YTJ.fi, but they can also be made in the MyTax (OmaVero) service. The Tax Administration’s registers are the Prepayment Register, the VAT Register, and the Employer Register. Registration with the Tax Administration is free of charge.

YTJ is the joint Business Information System of the Finnish Patent and Registration Office (PRH) and the Finnish Tax Administration. Typical Trade Register fees in 2020 were EUR 60 (sole trader) and EUR 275 (limited liability company). See PRH for the current fee schedule.

Tips:

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Other business registration options (sole proprietorship)

A sole trader (toiminimi) can also submit a start-up notification through certain other services. In this case, the business is not registered in the Finnish Trade Register at all – instead, only the Finnish Tax Administration is notified of the start of business activities.

A free Business ID (Y-tunnus) can be obtained via the MyTax (OmaVero) service or by using paper forms available on the YTJ.fi website. The Finnish Enterprise Agencies (Uusyrityskeskus) across Finland provide free assistance with filling out these applications. When registering through paper forms or the OmaVero service, a sole trader can decide whether or not to register with the Tax Administration’s registers. This can be beneficial, for example, if the company’s annual turnover remains below €10,000, as VAT registration is not mandatory in that case.

When registered only with the Tax Administration, the company receives a Business ID but cannot be given a separate company name. The business name will automatically be the entrepreneur’s personal name – for example, Yrjö Ylermi Yrittäjä.

In addition, free business registration is available through services such as OP Kevytyrittäjä. In these cases, the business receives a Business ID and is typically registered in both the VAT Register and the Prepayment Register, regardless of turnover. If the business is profitable, VAT and income taxes are paid monthly. At the end of the year, VAT is reconciled: if the annual turnover does not exceed the VAT threshold, all VAT payments made are refunded. Income tax is paid according to the entrepreneur’s personal tax rate.

Regardless of the registration method, the entrepreneur may later choose to register a unique business name. This is done through the Finnish Trade Register, and the fee is the same as when registering a new sole proprietorship (€60).

The free registration options described above apply only to sole traders (tmi), not to other company forms. However, all companies with a Business ID are subject to bookkeeping obligations, regardless of the service used.

Note: Entrepreneurial activity can also be carried out as a light entrepreneur (kevytyrittäjä) without a Business ID, for example through Ukko.fi or Eezy.fi. In this case, the “entrepreneur” is not registered with the Trade Register or the Tax Administration’s registers. Bookkeeping obligations do not apply, although keeping financial records may still be useful. Possible tax deductions are handled in the individual’s personal taxation.

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Tax Administration registers for businesses

Businesses and entrepreneurs usually register with the Prepayment Register, even though it is not mandatory. Being listed in the register is considered a sign of reliability. The Finnish Tax Administration may refuse entry to the register if a company has significantly neglected tax payments, reporting obligations, bookkeeping duties, or other tax-related responsibilities. A company may also be denied entry if its management has outstanding neglects in other companies they manage.

The purpose of the Prepayment Register is to show that the seller is responsible for paying their own advance taxes. In practice, this means that when purchasing any service (such as a haircut or roof renovation), the buyer should check if the provider is in the register. If the provider is not, the buyer must withhold tax from the payment and remit it directly to the Tax Administration.

👉 Read more on the Tax Administration website: Prepayment Register and Wages and Fees.

Companies must register with the VAT Register if their turnover (sales excluding VAT) exceeds €10,000 within a 12-month period. In many cases, it is wise to register even if the threshold is not exceeded – especially if the company makes significant purchases in the early stages (for example within the EU). Input VAT from purchases can be deducted from output VAT on sales, meaning VAT is effectively only paid on profits.

The Tax Administration also offers a VAT relief scheme if the company’s annual turnover remains below €30,000. VAT is only payable in full once turnover reaches €30,000. The standard VAT rate in Finland is 24%, with reduced rates of 14%, 10%, and 0%.

👉 Read more about VAT registration on the Tax Administration website.

Businesses must register with the Employer Register if they regularly pay wages to two or more employees.

👉 Read more about the Employer Register on the Tax Administration website.

When starting a business, it is also necessary to create Suomi.fi e-IDs and grant authorizations to your accounting office for managing tax matters. In addition, it is recommended to notify Posti of the company’s new contact details.

Create Suomi.fi e-IDs for your company

Notify Posti of your company’s new address

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Text by Merja Lehtonen, Business Developer