Starting a business

Starting a business

Starting and running a business is a time-consuming effort – so it’s no wonder if you feel winded sometimes.

We wanted to help you to get on top things by putting together an information package that, hopefully, answers many of the questions that you may have.

Kinno business counseling is free-of-charge and absolutely confidential. Please feel free to contact us with any issue – we’re here to help. We are part of the enterprise agency chain Uusyrityskeskus.

Do you have a business idea?

In that case, let’s schedule an appointment for our start-a-business counseling! In this personal counseling session, we will review the business idea, in detail, together, paying special attention to viability and funding issues.

After the session, you’re in a better position to consider whether it’s a smart move for you to launch a company. As many as 24 expert companies in our area participate in the operations of Uusyrityskeskus and we’re happy to refer you to them, should you require their assistance.

Business idea

Business idea is the engine of a commercial enterprise. Every entrepreneur has one – if only in their head. Write your business idea down. Start by answering three questions: what, to whom and how. ‘What’ means the products and services that the company sells to its customers; ‘to whom’ means the potential customers of the company; ‘how’ explains how the company will produce and deliver its products /services to customers.
The business idea should be clearly different from the competition – or at least sufficiently different. And: from the start, the business idea should be financially sustainable.

Business plan

The most important phase in starting a business is the planning of the actual business operations. Business plan is a written ‘how-to’ about all key areas of running a business.

Since entrepreneurship always involves financial risk, the business plan should be composed with great care – and it should be updated every couple of years.

The business plan organizes and streamlines the planned business activities, with an eye on profitability. The business plan is a must to not only the entrepreneur, but also outside parties, such as funders.

Profitability calculation

A carefully conducted profitability calculation is a critical phase when assessing a would-be company’s chances for success. The entrepreneur is allowed to have his/her head in the clouds at times, but when working on these numbers, one should stay as grounded as possible. All business costs should rather be overestimated than underestimated at this phase.

There are two things at the core of profitability calculation: what are the costs of doing business and how is the company turnover accumulated? Another important point to remember: always keep your own personal finances separate from the company’s.

Accounting

Per Finnish legislation, all business must keep an account of their business activities. This is a good thing, mind you: a capable accountant is the entrepreneur’s best friend. An entrepreneur should know the basics of bookkeeping, but a professional accountant has the latest and the most relevant expertise from the field. When the company’s accounts are managed with a steady hand, the entrepreneur is sure to sleep better.

Be sure to select an accounting agency that has experience from newcomer companies – and take time to build a solid relationship with your accountant.

Funding and grants

A company’s funding comes usually from three sources: entrepreneur’s own finances, loans and potentially grants. Loans are given by banks and specialized financing agency Finnvera which also provides collateral for credit extended by others.

For new, full-time entrepreneurs, the local Employment and Economic Development office (TE office) can grant so-called start money which is 700 EUR per month. In order to qualify for start money, one has to be a full-time entrepreneur with readiness to engage in continuous, viable business. Also, to qualify, one can not start the business before the official decision on start money has been made.

Insurance

There are many insurance policies an entrepreneur may consider. The most significant one of these is the pension insurance for the self-employed (YEL). There are also insurance policies one can take to protect oneself in case of e.g. liability, breaking machinery, sickness or accidents. While YEL takes care of basic pension requirements, entrepreneurs can boost their pension benefits via voluntary pension insurance policies.

The need for insurance varies depending on sector/job description.

Permits

In Finland, everybody is free to practice one’s trade. Still, a permit is required in certain fields due to safety issues relating to society, environment and consumers. In some sectors, one has to notify the authorities upon the start of operations, even if an actual permit is not needed. Permits are granted by municipal/city authorities, regional administrative agencies, municipal environmental authority and other permit officials.

Before starting operations, one should find out, whether a special permit or notification is required (along with meeting other prerequisites, if any). In some cases, you may need various official permits. For example, in running a restaurant you need a hygiene and liquor license and also must notify health inspector, fire department and building authority.

Forms of business and taxation

One should take some time to select a suitable form of business. As the company is getting started, corporate taxation is rarely an issue at first, but it may become one later. When choosing the right form of company, there are various factors to consider, such as the projected day-to-day operations of the company, the number and competences of the partners, the amount of capital and, always, the entrepreneurial risk.

For example, a self-employed creative economy expert may start a proprietorship (toiminimi), since it keeps the role of bureaucracy to a minimum. When revenue starts to pick up, other alternatives may rise.

Rekisteröinti ja perustamisilmoitus

As a rule, all companies must file a notification into the Trade Register maintained by the Finnish Patent and Registration Office. The Finnish Trade Register is a public register that contains information on traders and businesses. With the same notification one can enter into the registers of the taxation authority.

The notification on starting a business must be filed in before business operations kick off, but one can usually start operations while notification is still pending. Business ID (Y-tunnus) can be issued by Finnish Patent and Registration Office or taxation authority as soon as the founding notification has been entered into the corporate and community data system (within two working days of receiving the notification).

Hiring employees

When a company starts to pay salaries regularly, it must make a notification into the Taxation Administration’s employer register using a founding notification form or change notification form (if the company already has a Business ID). Once the company has been entered into the register, the Taxation Authority will send tax account instructions to the company (for paying and reporting withholding tax and social security).

Employers, who employ people on regular basis, must take a separate pension insurance for them. Especially for new entrepreneurs, instead of hiring an employee, it is often more flexible to acquire the needed resources from other companies.

The company’s money and your own money stay separated more easily, if there are separate bank accounts. Contact your bank about starting a business account – and be sure to ask what other services they can provide.

Financial statements

A company’s fiscal year is normally 12 months. When the fiscal year is over, the company must produce financial statements (for big companies, also report of activities). For small companies, an operating statement, a balance sheet and attachments for financial statements are required. All these documents must comply to applicable regulations.

The board and managing director of the company/cooperative, general partners of a partnership or sole trader him/herself approve financial statements and report of activities with their signature. If there is an auditor in the company, he/she will audit the accounts and governance and compose an audit report.

Our service promise on ’Start a business’ counseling

”After having gone through our counseling process, the would-be company has the prerequisites for viable business and the necessary funding. The customer has received relevant information about how to run organized, profitable business. He/she is also aware of the laws and regulations that govern his/her sector of choice.”