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Company types 10min

For a starting entrepreneur there are five different company types to choose from. In addition to these five, you have the possibility to try out your business as a light entrepreneur without a Business ID. FREE! Light entrepreneur can be a good first step, if establishing a company with a Business ID doesn't feel right for you just yet. Tax authorities have defined a light entrepreneur as a person who is self employed and works business-like without a company. There are some services that confusingly offer light entrepreneurship with Business ID, but a light entrepreneur with Business ID is a traditional entrepreneur.

Virtually there are tens of company types, but most of them are uncommon and impractical, so for simplicity we'll focus on the most common company types. Five most common company types are: Private trader, Limited liability company, General partnership, Limited partnership and Cooperative. By far the most popular ones in Finland are Limited liability company and Private trader, which make up 90 percent of all companies in Finland. You can establish a company using the YTJ's service, the prerequisites and prices differ depending on the company type. Next we'll introduce the five most common company types.

Private trader

Private trader is a partnership and the "lightest" of these company types. This means that technically there is no separate company, but the entrepreneur herself is the company who is in business. In practice Private traders are a one person company and the entrepreneur is responsible for the debts and funds of the company. Marriage partner is the only exception and is able to do business with a shared Trade name. Private traders are commonly called by “Trade name” or "Toiminimi" in Finnish.

Although officially Trade name means the company's name, the name which the company does business with, regardless of the company's type. As a Private trader you are not required to do double-entry booking and financial statements. In our FREE! Entrepreneur service booking is still done double-entry as this broadens the possibilities to analyze the key figures of your trade.

With double-entry booking it's also possible to utilize services from other company types in later stages, so stay tuned! Establishing a Trade name is free and very easy: the declarations to necessary registers will be ready in a month after handing in the paper forms. Although if you have plans to scale up your business and hire employees, you might want to consider Limited liability company as your company type.

Limited liability company

Limited liability company, LLC in short (Oy in Finnish), is a common company type all over the world, where the ownership of the company is divided to transferable shares. Limited liability companies are entirely separate legal entities from their owners. Limited liability companies can either be public (OYJ) or private (Oy). Anyone can purchase Public LLC shares and own a part of the company, when the Private LLC shares are not for public trade.

Establishing a Limited liability company will cost 275 euros with electronic forms and 380 euros with paper forms. In certain cases paper forms are required, for example if your equity capital is more than 0 euros or standard articles of association is not enough for the company. Limited liability companies will suit any industry and for any size of business.

Although if your business is small or you are selling just your own expertise, it might be easier to choose a Private trader as your company type, since a Limited liability company is required to have Double-entry booking and create financial statements within 4 months after the accounting period.

General partnership

General partnership is a company established by two or more partners. First a company agreement is drafted and signed and within 3 months of signing the company has to be registered. In General partnership the partners are accountable for the company's debts and responsibilities and liability will not be limited for just your part of the company. So for example if your partner goes bankrupt, you might be held accountable for the company's debts. Partners can also do business without permission from other partners. So solid trust is required between partners in General partnership company type.

Limited partnership

Limited partnership is a partnership with at least one liable partner and one so-called silent partner. First a very similar company agreement is drafted, than in General partnership. The difference compared to General partnership is just that silent partner, whose liability is limited to the amount invested in the company and who doesn't actually participate in running the company. This in practice means the liable partner will be held responsible for the debts and obligations of the company with all of their assets.

Cooperative

A large part of Finnish population is part of some Cooperative, even though it is a somewhat uncommon company type. The purpose of Cooperative is to conduct business so that its members can benefit from the services the Cooperative offers, and this way support its members economies and livelihoods. Therefore Cooperative is best suited for communal businesses. The decisive authority in Cooperative is the General assembly, but with larger Cooperatives this will be done with elected representatives. The most common Cooperative companies are cooperative banks and cooperative stores.

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