What is Light Entrepreneurship?

Table of Contents

1. Introduction: What is Light Entrepreneurship?
2. Advantages of Light Entrepreneurship
3. Challenges of Light Entrepreneurship
4. Who is Light Entrepreneurship Suitable For?
5. How to Start as a Light Entrepreneur?
6. Taxation for Light Entrepreneurs
7. Unemployment Benefits and Insurance for Light Entrepreneurs
8. Comparison of Invoicing Services
9. Light Entrepreneurship vs. Traditional Entrepreneurship
10. Experiences of Light Entrepreneurship
11. Summary and Tips for Aspiring Light Entrepreneurs

1. Introduction: What is Light Entrepreneurship?

Light entrepreneurship is a modern form of work that falls between traditional entrepreneurship and salaried employment. It offers a flexible way to try entrepreneurship without significant financial risks or administrative burdens.

What is light entrepreneurship in practice? A light entrepreneur works in an entrepreneurial manner but uses an invoicing service to handle administrative tasks such as invoicing, bookkeeping, and official notifications. This allows them to focus on their work and business development without the bureaucratic burden of entrepreneurship.

Light entrepreneurship is particularly popular among:

• Freelancers
• Part-time entrepreneurs
• Individuals who want to try entrepreneurship with minimal risk
• Those looking for additional income alongside their salaried job

It is important to note that light entrepreneur is not an official term, but a marketing concept used by invoicing services. Legally, a light entrepreneur is either an employee or an entrepreneur, depending on the nature and circumstances of the work.

2. Advantages of Light Entrepreneurship

Light entrepreneurship offers many advantages compared to traditional entrepreneurship:

1. Low entry barrier: Becoming a light entrepreneur is quick and easy, requiring no initial capital or business establishment.
2. Minimal financial risk: With virtually no fixed costs, the financial risk is minimal.
3. Reduced administrative burden: The invoicing service handles bookkeeping, taxation, and other administrative tasks.
4. Flexibility: You can work when you want and combine light entrepreneurship with other work or studies.
5. Easy to test a business idea: You can test the viability of your business idea without committing to long-term entrepreneurship.
6. No need for your own business ID: You can operate under the invoicing service’s business ID.
7. Insurance coverage: Many invoicing services offer insurance as part of their service.

3. Challenges of Light Entrepreneurship

While light entrepreneurship offers many benefits, it also comes with challenges:

1. Service fees: Most invoicing services charge a significant portion (6-8%) of your income as a service fee, reducing the amount you take home.
2. Limited tax deductions: As a light entrepreneur, you cannot make all the same deductions as a traditional entrepreneur.
3. Irregular income: As with entrepreneurship in general, income can vary from month to month.
4. Operational limitations: Not all business activities are suitable for light entrepreneurship; for example, selling products can be challenging.
5. Entrepreneurial skills development: Despite the reduced administrative burden, many entrepreneurial skills still need to be learned.

4. Who is Light Entrepreneurship Suitable For?

Light entrepreneurship is particularly suitable for:

1. Freelancers and self-employed individuals: Such as graphic designers, writers, photographers, and consultants.
2. Part-time entrepreneurs: Those who want to try entrepreneurship alongside a salaried job.
3. Aspiring entrepreneurs: Individuals who want to test their business idea before officially starting a business.
4. Seasonal workers: For example, those doing gardening in the summer or snow removal in the winter.
5. Retirees: Individuals who want to do occasional work alongside their pension.
6. Students: Those working alongside their studies who want to invoice their work flexibly.

5. How to Start as a Light Entrepreneur?

Becoming a light entrepreneur is simple:

1. Choose an invoicing service: Compare different service providers and choose the one that suits you best.
2. Register with the service: Fill in the required information and accept the service terms.
3. Do the work: Complete the agreed work for your clients.
4. Invoice: Use the invoicing service’s software to bill your clients.
5. Receive payment: The invoicing service pays you once your client has paid the invoice.

6. Taxation for Light Entrepreneurs

Taxation for light entrepreneurs largely follows the principles of employee taxation:

1. Withholding tax: The invoicing service automatically withholds taxes according to your tax card.
2. Earned income taxation: The income of a light entrepreneur is taxed as earned income.
3. Tax deduction rights: You can deduct work-related expenses in your personal taxation.
4. VAT obligation: If you invoice through the invoicing service without a business ID, the invoice must always include VAT. If you invoice with your own business ID, you can be exempt from VAT if your annual turnover is less than 15,000 euros.
5. Tax deductions: Some work-related expenses can be deducted in taxation, but the possibilities are more limited than for traditional entrepreneurs.

It is important to remember that the income received as a light entrepreneur is combined with other earned income, which may affect the overall tax rate.

7. Unemployment Benefits and Insurance for Light Entrepreneurs

Unemployment benefits and insurance for light entrepreneurs are complex topics:

1. Unemployment Benefits: The status of a light entrepreneur regarding unemployment benefits depends on the nature and amount of work. A full-time light entrepreneur may be considered an entrepreneur, which affects unemployment benefits. Always check the conditions directly with the authorities.
2. Accident Insurance: Many invoicing services offer accident insurance as part of their service.
3. Liability Insurance: Some invoicing services also offer liability insurance as part of their service.
4. YEL Insurance: If the work is full-time and continuous, you may need YEL (self-employed persons’ pension) insurance.

8. Comparison of Invoicing Services

There are several invoicing services for light entrepreneurs in Finland. It’s important to understand that most invoicing services include mandatory insurance fees in their pricing. Some services advertise a service fee of 5-7%, but the actual fee might be 7% and may only decrease after invoicing tens or hundreds of thousands of euros.

For example, Eezy: “6% when your invoicing total exceeds €50,000.”

Here is a comparison of the most well-known invoicing services:

1. Ukko.fi

   • One of the most popular and oldest invoicing services
   • Service fee: 8% (includes 3% mandatory insurance fee)
   • Also offers a service with a business ID

2. OP Kevytyrittäjä

   • Offers both services with and without a business ID
   • Service fee: 5%
   • No insurance included
   • Only chat customer service

3. Eezy

   • Service fee: 7% (includes insurance)
   • EezyPay payment transfer software (€14.90/month and 1.5% additional fee, totaling 8.5%)
   • Online course platform (€14.90/month and 1.5% additional fee, totaling 8.5%)

4. Omapaja

   • Service fee: 7% (includes 3% mandatory insurance fee)
   • Also offers a service with a business ID

5. Free-laskutus

   • Service fee: 6.5% (includes 2.5% mandatory insurance fee)
   • Directs those needing a service with a business ID to Talenom’s services

Compare the services carefully and choose the one that best suits your needs.

9. Light Entrepreneurship vs. Traditional Entrepreneurship

Light entrepreneurship and traditional entrepreneurship differ in many ways:

1. Startup Costs: Light entrepreneurship has no startup costs, unlike starting a business.
2. Administrative Burden: As a light entrepreneur, you avoid many administrative tasks.
3. Taxation: Taxation for light entrepreneurs is simpler, but the deduction possibilities are more limited.
4. Risks: Light entrepreneurship involves fewer financial risks.
5. Growth and Expansion: Traditional entrepreneurship offers better opportunities for business growth.
6. Image: Some clients may perceive traditional businesses as more credible.
7. Freedom and Responsibility: Traditional entrepreneurship offers more freedom but also more responsibility.

10. Experiences of Light Entrepreneurship

Experiences of light entrepreneurship vary widely among individuals and industries. Here are some common themes:

Positive Experiences

1. Quick and Easy Start Many light entrepreneurs report that starting was effortless and fast. The invoicing service handles registration, taxes, and other administrative tasks, allowing the light entrepreneur to focus directly on the work without significant bureaucracy.

2. Flexibility and Freedom Light entrepreneurs enjoy the freedom to choose their own working hours and locations. This enables a better work-life balance, which is a significant advantage compared to traditional salaried work for many.

3. Low Barrier to Entrepreneurship Light entrepreneurship is an excellent way to test entrepreneurship without significant financial risk. Many light entrepreneurs have discovered a new career path and later transitioned to full-time entrepreneurship through this model.

4. Networking Opportunities Light entrepreneurship offers good opportunities to create new contacts and clients. Many light entrepreneurs have found new partners and clients through networking.

5. Focus on Core Competence As a light entrepreneur, you can focus on your core competence while the invoicing service handles all administrative matters. This is especially beneficial for those who want to use their time efficiently and productively.

Negative Experiences

1. Lower Net Income if the Invoicing Service Charges Monthly or Minimum Fees Many light entrepreneurs have found that the fees charged by the invoicing service significantly eat into their earnings. Even if the percentage fee is small, minimum fees or monthly invoicing can make small invoices financially unviable.

2. Regulated Work Light entrepreneurship involves restrictions on invoicing for regulated work. This has caused disappointment, particularly for those working in sectors like taxi services, where licensing is common.

3. Unsuitability for Product Sales Light entrepreneurship is poorly suited for selling products, which has limited business opportunities for some light entrepreneurs. Running an online store through an invoicing service is often not economically viable.

4. No Startup Grants Light entrepreneurs without a business ID are not eligible for startup grants, which has been a disappointment for many new entrepreneurs. This limits the possibilities for financial support in the early stages of the business.

11. Summary and Tips for Aspiring Light Entrepreneurs

Light entrepreneurship offers a flexible and low-risk way to try entrepreneurship without significant financial commitments. It is an excellent option for freelancers, part-time entrepreneurs, and individuals who want to test their business ideas before starting an official company.

Light entrepreneurship allows you to focus on your core competencies while the invoicing service handles administrative tasks such as invoicing, taxation, and bookkeeping. This frees up time and energy for doing the actual work and developing the business.

Tips for Aspiring Light Entrepreneurs

1. Choose the Right Invoicing Service: Compare the prices and services of different invoicing services. Pay attention to service fees and especially mandatory additional fees. Also, consider invoice processing times and salary payment times.

2. Keep Track of Your Income and Expenses: Although the invoicing service handles bookkeeping, it’s essential to keep accurate records of your income and expenses. This helps you monitor the profitability of your business.

3. Utilize Networks: Networking is crucial for light entrepreneurs. Use social media, attend industry events and seminars, and be active in local entrepreneur communities. New contacts can bring new customers and collaboration opportunities.

4. Take Care of Your Well-being: Light entrepreneurship can be flexible but may also bring challenges in time and stress management. Remember to take care of your well-being and balance work and free time.

5. Develop Your Skills: Invest in yourself and your skills. Attend courses and training that help you develop your skills and stay up to date with industry trends and requirements.

6. Plan for the Future: Light entrepreneurship can be the first step towards broader entrepreneurship. Plan your future and think about how you can grow and develop your business in the long term.

Light entrepreneurship can be a rewarding and flexible way to work, as long as you plan and prepare carefully. It offers the opportunity to test your business idea with minimal risk and without significant investments, making it an attractive option for many.