There are multiple company types in Finland to choose from when setting up a company. The main ones are; private entrepreneurs, partnerships, co-operatives and limited companies.
Private entrepreneurs (toiminimi)
A private entrepreneur style company is the most simple way to set up a business in Finland. It allows you to get a company ID and invoice customers without much investment or hassle. They are easy to run and require limited amounts of paperwork compared to other business types. They are suitable for small businesses that do not require much travelling, investment or multiple employees.
The possible downside is that any loans taken out to fund the company need to be done in your name, not in the name of the company: if you take out a loan and cannot pay it back, you will have to declare personal bankruptcy.
Partnerships (avoin yhtiö & kommandiittiyhtiö)
Partnership companies work in a similar way to private traders, but they require more than one owner. The owners can be life partners or friends running a hotel or restaurant, for example.
As with private entrepreneur companies, partnerships are easy to run, but all the owners are equally responsible for loans, decisions and contracts. This means that if your business partner does something sketchy behind your back, it can fall on your shoulders too.
Co-operative (osuuskunta)
A co-operative (co-op) is a company that is owned by its members. It is suitable for collaborative entrepreneurship: a group of people who want to be self-employed but don’t want to set up an individual business, for example, a group of massage therapists or artists.
The Board of Directors, selected by the members of the co-op, sets the rules and regulations. The General Meeting/ Board of Representatives (also selected by members), takes care of all administration tasks. The co-op can also employ an accountant to take care of all the member’s finances.
Finland has over 5,000 co-operatives across various business sectors. If you do not want to set up your own co-op, you can join an existing one in your industry.
Limited company (osakeyhtiö)
A limited company is a smart way to organise your business if you want to invest a lot of money, will hire staff and/or if you have a predicted high profit. It is also a good way to minimize risk (you are only responsible for debts up to the amount you invested) and lower your tax: with a limited company you can pay yourself and shareholders dividends which have a lower tax rate than income tax.
You can set up a limited company on your own or with others. If you do it on your own, you need to name one deputy member (this can be a partner, friend etc.). You will also need to invest enough money to cover the initial company costs. The Finnish government offers a few start-up grants that can help you out.
Setting up a limited company involves a lot of paperwork, so it can be wise to get professional advice and a good accountant.
Choosing the type of company you want to set up is only the first step in starting a business. Read our how to set up a business in Finland guide to find out more.