Table of Contents

1. Establishing a Sole Proprietorship - A Simple Guide
2. What Does a Sole Proprietorship Mean?
3. Steps to Establish a Sole Proprietorship
   • 1. Planning
   • 2. Choosing a Name
   • 3. Registration
   • 4. Opening a Business Bank Account
   • 5. Accounting
   • 6. Insurance
   • 7. Marketing and Sales
4. What to Consider?
   • Taxation
   • Liability
   • Solo Entrepreneurship
5. Summary

Establishing a Sole Proprietorship - A Simple Guide

A sole proprietorship, or private trader, is one of the easiest and most popular ways to start a business in Finland. It is especially suitable for solo entrepreneurs and small-scale businesses. This guide will walk you through what is required to establish a sole proprietorship, how it is done, and what considerations you need to keep in mind.

What Does a Sole Proprietorship Mean?

A sole proprietorship is a business form where one person acts as an entrepreneur. The entrepreneur is personally responsible for the company’s debts and obligations. Establishing a sole proprietorship is quick and affordable, allowing for a flexible way to conduct business.

Steps to Establish a Sole Proprietorship

1. Planning

Before you start establishing a sole proprietorship, it is important to plan your business carefully. Think about your business idea, target audience, products or services, and pricing. Also, create a preliminary business plan to help you outline your goals and strategies.

Questions to Consider:

• What is your business idea?
• Who is your target audience?
• What products or services do you offer?
• How will you price your products or services?

2. Choosing a Name

Choose a name for your business. The name should be distinctive and memorable, and it must meet regulatory requirements. You can check the availability of names through the Finnish Patent and Registration Office’s (PRH) name service.

3. Registration

Establishing a sole proprietorship does not require a minimum capital, and it is the easiest business form to maintain. To become a sole proprietor, you can register your business through the Trade Register or OmaVero.

Registration with the Trade Register costs 70 euros in 2024. Registering an auxiliary business name also costs 70 euros per name.

Registering through OmaVero is free. Upon registration, your sole proprietorship will receive its own Business ID.

Depending on your needs, you can register your business in the following registers:

• Prepayment Register: All entrepreneurs must join this register.
• VAT Register: If your annual turnover exceeds 15,000 euros, you must join this register. You can also join voluntarily to benefit from VAT deductions.
• Employer Register: If you hire employees, you must join this register.

4. Opening a Business Bank Account

Open a separate bank account for your business to handle all financial transactions. This simplifies accounting and helps keep business and personal funds separate.

5. Accounting

A sole proprietor must maintain accounting records. You can manage the accounting yourself or outsource it to an accounting firm. Ensure that your accounting is up-to-date and accurate. Keep all business-related receipts and documents according to tax authority guidelines.

6. Insurance

Obtain necessary insurances such as liability insurance, accident insurance, and possibly property insurance. Insurances protect your business and yourself from unexpected risks and damages.

7. Marketing and Sales

Plan a marketing strategy to reach your target audience and boost sales. Utilize various marketing channels such as social media, websites, and traditional advertising.

Tips for Marketing:

• Create a website for your business
• Be active on social media
• Use email marketing
• Participate in fairs and events

What to Consider?

Taxation

A sole proprietor pays income tax on the business’s profits. Additionally, a sole proprietor must pay value-added tax (VAT) if the annual turnover exceeds 15,000 euros. Remember to regularly file tax returns and pay taxes on time.

Liability

A sole proprietor is personally responsible for the business’s debts and obligations. This means that if your business incurs debts, you are required to pay them with your personal assets if the business assets are insufficient.

Solo Entrepreneurship

Operating as a sole proprietor means working alone, which can be both an advantage and a challenge. As a solo entrepreneur, you have full decision-making power but also bear all the responsibility for the business’s operations.

Summary

Establishing a sole proprietorship is a quick and affordable way to start your own business. It offers flexibility and ease but also brings personal responsibility for the business’s debts and obligations. Plan your business carefully, choose an appropriate name, register your business, and keep your accounting up to date. With careful planning and precise financial management, you can achieve success as a sole proprietor.