Starting a business in Finland is a straightforward process — provided that the right information and decisions are ready before registration begins. Founders frequently discover mid-process that a document or decision is missing, stalling the process for a week or more.

Post-registration decisions — the VAT reporting period, employer register membership, and fiscal year — are equally important and will shape the company's operations for years. This guide covers all of them — not just the registration form.

Sole proprietorship or limited company — which is right for you?

In Finland, the two most common business forms are Toiminimi (sole proprietorship) and Osakeyhtiö (limited company). They differ fundamentally in legal status, taxation, liability, and administrative requirements.

Toiminimi vs Osakeyhtiö

Comparison Toiminimi Osakeyhtiö
Personal liability Contracts, debts, and taxes are all in your own name. If the business runs into debt, that debt is ultimately yours, and creditors can come after your personal assets (home, savings). Contracts, debts, and taxes are in the company's name, not the shareholder's. In the worst case, the shareholder loses only the capital invested; personal assets remain protected.
Taxation In most cases, all profit is taxed as earned income at progressive rates (personal income tax marginal rate, up to approximately 50%+). Company profit is taxed at a flat 20% corporate rate; shareholders can draw income from the company as salary or dividends.
Share capital No start-up capital required. Minimum share capital €0.
Setup process Completed by filling in a simple online form. Requires a memorandum of association, articles of association, and a board.
Hiring employees Can hire employees; employer obligations are the same as for a limited company. Can hire employees; employer obligations are the same.
Partners & financing No share structure — partners or investors cannot join through shareholding. Partners or investors can be brought in through share transfers.
Annual reporting Personal tax return plus bookkeeping. A formal annual financial statement is only needed once the business grows much larger — and is never filed with PRH. Financial statements must always be prepared and filed with the Tax Administration and PRH, and both a board meeting and a shareholders' meeting must be held each year.

When does an Osakeyhtiö pay off?

From a tax perspective, a limited company typically starts to be the cheaper option once annual profit exceeds roughly €30,000–40,000. Below that, a sole proprietorship is usually simpler and lighter to administer, and it suits simple, low-risk solo work such as consulting, translation or tutoring. The exact threshold depends on how much you withdraw from the company: the more profit you leave in, the sooner the limited company wins.

Rule of thumb With a sole proprietorship, all profit is taxed as progressive earned income (top marginal rate around 50%+). With a limited company, profit is taxed at the flat 20% corporate rate, and funds can be drawn flexibly as salary and as more lightly taxed dividends (8% of the company's net assets, of which 25% is taxable capital income). Profit left in the company grows its net assets and is not taxed until withdrawn.

The sole proprietorship's advantages are lighter administration and the 5% entrepreneur deduction, which automatically reduces taxable income. On the other hand, the YEL minimum working income (about €9,423/year in 2026) is a fixed cost even at low earnings. A limited company carries a heavier administrative load: double-entry bookkeeping, an annual financial statement, and a possible audit (mandatory if at least two of the following are exceeded in two consecutive years: balance sheet over €100,000, turnover over €200,000, more than 3 persons).

A limited company is worth choosing especially when one of the following applies:

  • Annual profit durably exceeds roughly €30,000–40,000
  • The business carries significant liability risks (e.g. restaurants, construction, import/export) you do not want to bear personally
  • You need external financing or investors
  • You want to optimise taxation by splitting income between salary and dividends
  • A second owner joins and a clear share structure is needed

Information you need before registering

Before logging in to the YTJ service, ensure the following information is ready:

1 Company name — three options

Prepare three name options in order of preference. If your first choice is already taken, PRH automatically moves on to the next one. Check availability in advance using the PRH name search.

The name must contain the form indicator ("Oy" or "osakeyhtiö") and follow Finnish grammar.

2 Domicile and line of business

Domicile (kotipaikka) is the municipality where the company operates. Only the municipality name (e.g., Helsinki, Espoo, Tampere) is entered in the articles of association — not a street address.

The company address is a separate item — when filing with YTJ, the founder provides an actual postal address (office, business premises, or virtual address) for official correspondence from the Tax Administration, PRH, and other authorities. This address is also visible in the public trade register.

Line of business (toimiala) is written in prose in the articles of association, plus you select a numeric TOL 2025 industry code for the registration notification.

3 Shareholders and shares

For each shareholder you need: full name, personal identity code (or date of birth for non-Finnish residents), address, and the number of shares subscribed. The minimum share capital for a private limited company is €0.

Shareholder register (osakasluettelo) From the moment the company is founded, the board must maintain a shareholder register (osakasluettelo) that records each shareholder's name, address, number of shares, and date of acquisition. The register does not need to be submitted to PRH, but the company must keep it on file. We recommend creating it immediately when the memorandum of association is signed — you will need it later for share transactions, financing rounds, or audits.
4 Board members and company governance

There are two valid board compositions:

  • one regular member and one deputy member, or
  • three or more regular members (no deputy needed)

For each member you need name, personal identity code, home municipality, and role.

Deputy member (varajäsen)

Only when a regular member is unable to act does the deputy step in at board meetings and exercise voting rights. The deputy does not take part in day-to-day decisions, but carries the same legal responsibility as a regular member. In one- or two-member boards the deputy is mandatory, so that decision-making does not stall when a single person is unavailable.

Chairman (puheenjohtaja)

If the board has two or more regular members, they must elect a chairman from among themselves. A one-person board (one regular + one deputy) does not need a chairman.

Signing authority (nimenkirjoitusoikeus)

Under the Finnish Companies Act, signing authority by default belongs to all board members jointly — meaning a contract signed in the company's name requires signatures from all board members. The articles of association can specify a different arrangement, for example: "the chairman alone, or two board members jointly". If a CEO is appointed, they are typically also granted signing authority. Signing authority arrangements can be set at registration.

CEO (toimitusjohtaja)

A limited company (Osakeyhtiö) is not required to appoint a CEO unless the articles of association say so. If one is appointed, the CEO handles day-to-day management under the board's supervision. The CEO does not need to be a board member — in small companies, the same person often serves as both CEO and chairman, but legally these are two separate roles.

ETA residence requirement At least one regular board member (and the CEO, if one is appointed) must have permanent residence in the ETA area (European Economic Area). "Permanent residence" here means actually living in an ETA country — it is not about holding a permanent residence permit or EU citizenship. A regular Finnish residence permit (oleskelulupa) combined with actual residence in Finland suffices. Only if all members live outside the ETA do you need a PRH exemption.
5 Fiscal year — a bigger decision than it looks

The fiscal year (tilikausi) is the 12-month period for which the company's financial statements are prepared. The most common choice is the calendar year (1 January – 31 December).

  • Calendar year (1.1.–31.12.) — simplest option, works for most companies

Your first fiscal year can be just a few months long, or longer than 12 months, but no longer than 18 months. For example: if you found your company in September and choose the calendar year, you can extend the first fiscal year all the way to 31 December of the following year (about 16 months) — giving yourself more time to accumulate revenue before the first financial statements are due.

Why does this matter? The fiscal year determines every subsequent deadline:

EventDeadline
Financial statements completedWithin 4 months of fiscal year end
Annual general meeting (AGM)Within 6 months of fiscal year end
Financial statements filed with PRHWithin 8 months of fiscal year end
Note The fiscal year can be amended after registration, but this requires a separate notification and may cause an unusually long or short transition period.

Founding documents

Memorandum of association (perustamissopimus)

The founding document of the company, signed by all shareholders. It lists the shareholders, their share subscriptions, and the board members. YTJ's guided founding package generates the memorandum automatically — you do not need to draft it separately.

Articles of association (yhtiöjärjestys)

The company's "constitution". A minimum set of articles needs only: the company name, domicile, and line of business. The standard template works for most companies — customise it only if you need special provisions (e.g. a redemption or consent clause).

Three-month deadline The registration notice must be filed within three months of signing the memorandum of association — otherwise the founding lapses entirely and must be restarted.

VAT reporting period: monthly, quarterly, or annual?

In 2026, VAT registration is mandatory when turnover exceeds €20,000 per year. Below that threshold you can register voluntarily — and this often makes sense, because it lets you deduct the VAT on your purchases.

Reporting period by turnover

Turnover
Under €30,000
Year / Quarter / Month
All three allowed
Any reporting period is permitted for small turnovers.
Turnover
€30,000 – 100,000
Quarter / Month
Two options
Choose quarterly or monthly reporting.
Turnover
Over €100,000
Month
Only option
Only monthly reporting is permitted.
Timing The VAT return and payment are both due by the 12th of the second month following the end of the reporting period. Example: January's VAT is due by 12 March.
EU cross-border transactions If your company has intra-EU sales or purchases with other member states, or non-EU trade (import/export), the reporting period must be monthly regardless of turnover.

Employer register — do you need it?

When is registration mandatory?

Your company must join the employer register if either of the following applies:

  • You regularly pay wages to two or more employees
  • You regularly pay wages to one permanent employee plus at least one temporary or short-term employee
  • You pay wages to at least six employees at the same time, even if the employment relationships are temporary

Employer obligations in practice

ObligationWhen
TyEL insurance (employee pension)Before the first wage payment
Accident insurance (tapaturmavakuutus)Before the first working day
Unemployment insurance (työttömyysvakuutus)Billed by the Employment Fund (Työllisyysrahasto) based on payroll
Incomes Register noticeWithin 5 days of each wage payment
YEL insurance (entrepreneur's own pension)Within 6 months of starting business activities
Occupational healthcare (työterveyshuolto)Must be arranged for employees without delay
Mandatory employer obligations TyEL insurance — statutory employee pension insurance. Every employee whose wage exceeds the statutory minimum requires TyEL coverage. The premium is split between employer (roughly 2/3) and employee (roughly 1/3). You must sign a contract with a pension insurance company (e.g. Varma, Elo, Ilmarinen) before the first wage payment.

Occupational healthcare (työterveyshuolto) — the employer must arrange preventive occupational healthcare for all employees. This is a legal obligation, not a benefit. In practice it means a contract with a provider such as Terveystalo or Mehiläinen. Kela reimburses part of the cost.
Note Salary calculation, employer reporting, and insurance involve multiple systems — the Tax Administration (Verohallinto), the Incomes Register (Tulorekisteri), the pension insurer (eläkevakuutusyhtiö), and occupational healthcare (työterveyshuolto) — each with its own reporting schedule.

Schedule: from founding to operations

The chart below shows how the different phases typically progress on average, and how they overlap. In practice, many things happen in parallel — for example, insurance applications can run while your bank account is still being processed.

Documents
YTJ → Business ID
Bank account
Accounting & Suomi.fi
Insurance
Permits

Dashed line = varies by industry or individual case. Bank account opening can take longer for foreign founders.

5 most common mistakes when founding a limited company

Missing the three-month deadline — The registration notification must be filed within three months of signing the memorandum of association. After this period, the founding lapses and the process must be restarted.
Choosing the wrong VAT reporting period — The reporting period is set by annual turnover (under €30,000: any; €30,000–100,000: quarterly or monthly; over €100,000: monthly only). On top of that, cross-border sales or purchases with other EU countries require monthly reporting regardless of turnover — a rule that is easy to overlook.
Not filing the employer-register zero report — Once registered as a regular employer, a filing must be submitted every month, including months in which no wages are paid.
No Suomi.fi authorisation — Without a Suomi.fi authorisation, an accounting firm cannot act on the company's behalf in dealings with tax authorities and other public bodies.
Applying for starttiraha too late — Apply for starttiraha and get the decision before any tax registration; once you register for tax or otherwise start operating, you are treated as having already begun business activity.

Notes for international entrepreneurs

Personal identity code (henkilötunnus)

You'll need a Finnish personal identity code, or at minimum a date of birth. Apply through the Digital and Population Data Services Agency (DVV).

ETA residence requirement

At least one regular board member must have permanent residence in the ETA area. A regular Finnish residence permit combined with actually living in Finland is enough — no permanent residence permit or EU citizenship required.

Bank account considerations

Opening a Finnish business bank account typically takes longer for founders without a long Finnish track record — budget 2–4 weeks and prepare identification, the company's extract, and beneficial owner information in advance.

Language support

An accounting firm that can work in English saves weeks of time dealing with Finnish-only documentation and authorities, and prevents misunderstandings in official correspondence.

Employer obligations

Hiring employees triggers TyEL pension insurance, accident insurance, occupational healthcare, and monthly Incomes Register reporting. Professional support from the start saves effort and prevents costly mistakes.

Finnish legal terms

You'll meet many Finnish terms along the way: Y-tunnus (business ID), yhtiöjärjestys (articles of association), perustamissopimus (memorandum), kotipaikka (domicile), tilikausi (fiscal year). Knowing them makes forms far easier to navigate.

Frequently asked questions

YEL is mandatory if you own more than 30% of the company's shares (or more than 50% of the voting rights) and work in the company. Ownership alone is not enough — if you are purely an investor and do not take part in operations, YEL does not apply. Note also that your YEL working income is not the same thing as your salary: it is an estimate of the value of your work contribution, and it determines your pension accrual, sickness allowance, and parental allowance. Setting it too low saves costs today but significantly weakens your safety net. We recommend that new entrepreneurs take advantage of the 22% starter discount (valid for 48 months), but do not set the working income to the bare minimum without thinking it through.
The law does not require a shareholders' agreement, but it is practically essential as soon as there are two or more shareholders. The articles of association are a public document that does not cover everything — for example work obligations, non-compete clauses, buyback prices for shares, or exit terms. A shareholders' agreement typically defines: what happens if one shareholder wants to sell, how disputes are resolved, who decides on operational matters, and how profits are distributed. Without an agreement, 50/50 ownership can lead to deadlock where neither shareholder can make decisions. Strong recommendation: draft the agreement before founding, while everyone is still on the same side of the table.
Usually yes, but it depends on your customer base. If you mostly sell to businesses (B2B), voluntary VAT registration is almost always worthwhile: your clients deduct the VAT in their own tax filings, so it is not an additional cost to them — and you get to deduct VAT on all your own purchases (equipment, software, office space). If on the other hand your customers are consumers (B2C, e.g. a hair salon), VAT raises your price by 25.5% and the customer cannot deduct it — in that case, staying unregistered lets you price more competitively. Note: the small-business VAT relief scheme (alarajahuojennus) was abolished from the start of 2025, so staying below the threshold no longer brings a tax benefit.
Under anti-money-laundering law, every limited company must declare to the trade register the natural persons who own more than 25% of the shares or voting rights, or who otherwise exercise effective control. If no such person exists (e.g. ownership is widely distributed), that is reported separately. The declaration is made via YTJ — forgetting it does not stop the company from operating, but PRH will send reminders. In practice, banks and financial institutions also ask for beneficial-owner details when you open an account, so it's useful to have the information ready from the beginning.
Yes — starttiraha is granted to the entrepreneur personally, not to the company, so a founder of an Osakeyhtiö can receive it too. Critical rule: the decision must be in place before VAT registration. The TE Office interprets "starting a business" strictly: YTJ registration, the first invoice, or even launching a website or starting active marketing on social media can count as having already started. In practice this means the starttiraha application should be pending before the memorandum of association is signed. For current criteria and application instructions, see TE-palvelut: starttiraha.
Yes. Converting a sole proprietorship (Toiminimi) into a limited company can be tax-neutral if the conditions of the Income Tax Act (§ 24) are met: the assets and liabilities of the previous business transfer at their existing book values, the sole trader subscribes all the shares of the new company, and the business continues substantially the same. Note, however, that the sole proprietorship's Y-tunnus (business ID) never transfers to the new company — the limited company always receives a new Y-tunnus. Time the change to the fiscal year-end for the cleanest bookkeeping transition, and review it in advance with an accounting firm or tax adviser so that the conditions for a tax-neutral conversion are met and the tax benefits are preserved.
Dividend from an unlisted limited company is taxed based on the company's net assets (assets minus liabilities), in three tiers. When the dividend is at most 8% of the shares' mathematical value and no more than €150,000 per year, 25% of it is taxable capital income and 75% is tax-free (an effective rate of roughly 7.5–8.5%). Within that 8% limit, the portion exceeding €150,000 is 85% taxable capital income and 15% tax-free. If the dividend exceeds 8% of the mathematical value, 75% of the excess is taxed as earned (progressive) income and 25% is tax-free. This light dividend taxation is one of the main reasons a limited company becomes attractive as profit grows.
The company form has a major effect on how a business can be sold or passed to the next generation. Selling a limited company is legally cleaner: the deal can be structured as a share sale or a business (asset) sale. A sole proprietorship cannot be sold as a whole — in practice, the business operations and individual assets are sold separately. In a succession (sukupolvenvaihdos), a limited company offers significant tax relief: under the relief, the business assets are valued at only 40% of their comparison value, and shares can be gifted in phases over several years to optimise taxation. If you plan to sell the business in the future, the limited-company form is almost always preferable — careful exit planning is worth starting at least 2–3 years before the intended sale.

Information and documents needed to register

Company basics
3 name options
Domicile (municipality)
Company address
Line of business + TOL 2025 code
Fiscal year start and end date
Personal details
Shareholders: name, personal ID/DOB, address, shares
Board members: name, personal ID, city, role
Founding documents
Memorandum of association
Articles of association
Shareholder register
Registration decisions
VAT reporting period
Employer register
Signing authority arrangement
CEO appointment
Tax registrations
Prepayment register
VAT register
Employer register
Beneficial owners declaration
After registration
Bank account
Accounting firm + Suomi.fi authorisation
Insurance (YEL / TyEL / accident)
Industry-specific permits

Article updated June 2026. Information based on official guidance from PRH, the Finnish Tax Administration, and the Suomi.fi service.