Determining which company type is the best depends on few different things:
a) No. of Founders
b) Taxation
c) Credibility
d) Liabilities
e) Investors
a, c, d, e are often reason to favor the opening of the limited liability company (Oy). If there is more than one owner then Oy is in the most of the cases the best option. It is not the only option though. If the company is start-up and looking for investors, then Oy is the pretty much the only sensible option. Additionally, Oy gives credibility to the company.
For one man company, often the administrative costs of the limited liability company might be a little bit higher than private trader. However, then it comes to question, what is the profit of the company. If the business is making more profit than the owner needs to take as salary, in the most of the cases, it is tax-wise better to have Oy. Oy pays 20% CIT while private trader’s profit is taxed as part of the personal income tax (which is progressive in Finland and can be even 50% in the top rates). So there can be potentially big saving in taxes.
Management, Auditor, Subscribed capital
You can start a limited liability company even alone in Finland. Meaning that you would be both CEO and Board member of the company. However, in that case you the company must have at least one deputy board member. At least one of the founders must have residence in the EMU area.
There is no obligation to appoint an auditor for a corporation where no more than one of the following conditions were met in both the last completed financial year and the financial year immediately preceding it:
1) the balance sheet total exceeds EUR 100,000;
2) the net sales or comparable revenue exceeds EUR 200,000; or
3) the average number of employees exceeds three.
Since 1st July 2019 the minimum subscribed capital is zero euros. So no subscribed capital is required. However, this does not mean that it would be in all cases smart to have zero subscribed capital.
Finnish Patent and Registration Office
Registration can be done online if a) all the management have Finnish social security number and b) the company does not have any subscribed capital. If CEO or one of the board members to do not have Finnish social security number, then it is needed to file the paper forms.
Online registration is available only in Finnish and Swedish.
Currently registration Oy costs 240 euros online and 380 euros with the paper form.
Read more from Finnish Patent and Registration Office’s website:
https://www.prh.fi/en/kaupparekisteri/yrityksen_perustaminen/osakeyhtio.html
We will gladly assist you with the opening of the limited liability company
In case you need help with the starting the company, do not hesitate to contact us:
Jonne Anttila
jonne.anttila(at)eaccounting.fi
+358 (0)45 6743350
Jonne Anttila, MSc., is founder and CEO of eAccounting Finland Oy.