Frequently asked questions (FAQ)
1) Additional funding and investment
I would need to invest in a new machine/construction/plant – where can I find financing?
- Commercial banks or Finnvera (loans and/or guarantees).
- Centers for Economic Development, Transport and Environment (ELY centers) – investment support, consultation and more.
Why does the cash flow vary? Why is there no money in the business bank account?
- Follow-up is insufficient.
- Your business activities are seasonal – follow your monthly sales.
- Customer payment times are too long – require payment in advance, shorten payment times.
- Extend your own payment times for business purchases from your vendors, suppliers, etc.
- Too much capital is tied up in inventory/stock – set targets for turnover, institute a maximum value for the capital tied up.
- Remember to discuss eventual problems with your financiers in time.
- If needed, take out a loan or overdraft credit.
- Regularly compare your various vendors’/suppliers’ services and pricing.
I have lots of work but nothing to show for it – what’s the problem?
- Familiarize yourself with the key figures for your business – discuss with your accountant.
- Monthly follow-up, check your costs.
- Compare with the mean for your sector, for example using statistics from Finnvera or Centers for Economic Development, Transport and Environment (ELY centers), or
www.toimialaonline.fi (Finnish or Swedish only).
- Compare your prices with your competitors’ prices – are they on the right level?
When is the right time to change the form of my business from a Private Entrepreneur to a Limited Liability Company?
- In general this should occur once the business’ tax rate exceeds 30 %.
- When the company welcomes new owners.
- When the risks become too large.
- When your financiers request this.
- When the company’s financial situation has grown so much that you can afford to pay salaries and distribute dividends.
- Discuss the matter with your accountant, taking into account factors such as taxation, accounting, financial statement periods, etc.
- When you seek to increase the credibility of your company.
The products and services are good – but where are the customers?
- Prepare a marketing plan for the next six months.
- Utilize your social network.
- Expand your personal contact network.
- Seek advice from experts within your sector.
- Utilize web-based services and social media (Facebook, Twitter, LinkedIn, etc.).
- Seek customer feedback and use this to develop your marketing.
a. Are your business premises in the right location for attracting customers, where are your competitors located, is your business easy for customers to find, are there parking spaces, visibility, signage (i.e. is the sign for your business easily seen)?
b. Establish whether any repairs or construction are planned for the area immediate to where your premises are located – these can significantly affect your livelihood. Ask the building manager, the municipality/town, municipal/town technical services, etc.
c. To own or rent? Create a budget.
d. Are your goods and/or the cash register optimally placed?
e. Do your logistics run smoothly?
How can I finance product development?
a. Centers for Economic Development, Transport and Environment (ELY centers): 50 % grant for acquisition of expert services or expert services in the form of products.
b. Tekes–the Finnish Funding Agency for Innovation: preparatory funding, 70 % or up to 15 000 Euros.
c. Keksintösäätiö (Foundation for Finnish Inventions): projects/studies/research.
d. Expert services for inventions and/or innovative business ideas, for example Tuoteväylä Product Track (http://tuotevayla.fi/en/product-track-service).
Where can I get help for selling my business, including an evaluation of its market value?
Contact a business advisor at your local enterprise agency (Concordia, for example).
You can also find some basic information at http://www.yrityssuomi.fi/en/omistajanvaihdos.
How much does my turnover need to increase in order for me to be able to employ someone?
As a general rule, you can use estimate this figure by multiplying your turnover by 2,3. This estimate includes all of the wage costs that a new employee will incur (direct and indirect), not just salary.
What will the total wage cost be for an employee, including indirect labor costs?
To help you calculate this figure visit: www.yrityssuomi.fi/en/palvelu/-/palvelu/palkkafi-payroll-calculation-programme .
Are financial subsidies available to cover the wage costs of hiring my first employee?
Various forms of financial support are available from: Centers for Economic Development, Transport and Environment (ELY centers), Employment and Economic Development Offices (TE services) or apprenticeship offices.
How to draw up an employee contract, including period of notice when terminating an employment contract?
We recommend that an employee contract always be in writing and include information on a trial period, the period of notice and a non-compete clause (restricting the former employee’s right to engage in business activities competing with his/her former employer following expiration of the employment contract).
What should I take into consideration before starting an e-commerce business?
- As with any other business, online business operations require careful planning.
- Compare your vendors’/suppliers’ prices and quality; take into account what your ongoing or continuous expenditures will be.
- Do you have sufficient time/interest/knowledge to run an e-commerce business? The majority of such businesses fold due to unprofitability: in other words they are not properly managed. Open 24-hours a day, e-commerce businesses require active input.
- Do you have a product/service that is suitable for e-commerce (price, quality, form) and that can be sold online profitably? Remember to think about your postal or shipping costs as well as how large a selection of products you will offer. A successful online store does not always require a large selection.
- Often, focusing on a niche or niche products will help.
- Who will be in charge of the technical (IT) aspects of maintaining the portal/website for your e-commerce business? Expert help is often the best solution initially, but it is also important to consider who will maintain the portal/website in the long term.
- Who or what is your market? Is it financially viable to expand into the EU or international markets?
- 5 million domestic or 100 million international customers? Generally speaking, different language versions (i.e., translations) of a portal/website are reasonable and a good investment.
I would like to start exporting, whom can I contact for help with this?
Viexpo (www.viexpo.fi/home.html), your local chamber of commerce or even your bank (for advice on monetary transactions).
Where can I get information about matters related to exporting?
The Finnish Tax Administration or Finnish Customs can help you with issues related to VAT or other tax matters. For issues related to the export of food or foodstuffs, contact the Finnish Food Safety Authority Evira (www.evira.fi/portal/en/food/import+and+export/) or your local food control authority (your local health inspector). Various shipping agencies can also help in regard to importing goods, especially in relation to logistics.
How do I draw up a contract?
- Seek expert or qualified legal help when drawing up a contract, including experts within your sector. While oral agreements are possible it is advisable to always insist on a written contract, especially in complicated cases.
- In the construction sector, in addition to business-to business contracts, enter into a contract with the end consumer and clarify the rights and obligations of the various parties.
- In consumer trade, the contract terms should include, at a minimum, the following: price, delivery period, object of sale/purchase, rights and obligations of the various parties, transfer of risk and payment terms.
How can I terminate business operations or an entrepreneurship?
a. Send in the appropriate forms to The Business Information System BIS (Yritys- ja yhteisötietojärjestelmä or YTJ in Finnish: www.ytj.fi/en/index/notifications/notificationsofterminationofbusiness.html). Private Entrepreneurs, form Y6; General Partnership/Limited Partnerships, form Y5; Limited Liability Company, form Y4.
b. Notify your bank, insurance company, tax authorities and eventual other financiers/company investors. Also, as needed, notify your customers and an Employment and Economic Development Office (TE services).
c. Consider whether it is possible to sell your business as a whole or in parts, or sell your business’ assets (tangible personal business property).
Where can I gain more competence by furthering my education?
- Seek opportunities in local educational programs and projects. Contact your local schools and adult education centers.
- Contact the Employment and Economic Development Offices (TE services), Centers for Economic Development, Transport and Environment (ELY centers), your local chamber of commerce, entrepreneurs’ organizations, private actors or apprenticeship offices.
Is VAT refunding or reverse charge possible in relation to export?
When and how can I applying for VAT refunding?
More information can be found on the Finnish Tax Administration website (www.vero.fi/en-US).
Periodic tax obligations and prepayments?
General information in English can be found on the Finnish Tax Administration website (www.vero.fi/en-US/Companies_and_organisations/VAT); forms in Finnish or Swedish.
Why am I being asked to pay supplemental tax?
- You have either paid too little tax or no tax at all.
- Have you recently realized reserves or sold assets?
- Note that tax rates for part-time entrepreneurs (self-employed persons) are determined in relation to various other sources of income.
How are periodic prepayments determined? How can I adjust the prepayments?
For the first and second operational years of a newly established business, prepayments are calculated based on the income estimate that you submit. Following this period calculations are index adjusted and based on data derived from the accounting period that has closed last or from your latest tax return.
How can I seek a patent or trademark or otherwise protect my product/idea?
- It is worthwhile to examine the various projects and services that Keksintösäätiö (the Foundation for Finnish Inventions) organizes and offers. For example, they can help you evaluate the value of a new invention, concept, etc.
- Seek advice from various private actors in your sector.
- More information can be found on the Finnish Patent and Registration Office website (www.prh.fi/en/index.html).
How do I best increase awareness for my product/service?
a. Define who your customers are and group them into market segments.
b. Use social media and set up a website for your business.
c. Consider print media or direct marketing, or print media advertising.
d. Personal sales and marketing – utilize your personal network.
e. Inform your most important business partners and customer groups.
f. Remember to inform your repeat business (“old”) customers and update and use your customer register.
g. Try to get newspaper or other media press coverage for your product/service.
h. Try to work cooperatively and get support in the form of marketing via your business partners.
I am self-employed, can I receive an allowance for work-related travel costs?
The criteria and allowance amounts for work-related travel costs are determined per kilometer and vary: depending on the sector you work in, whether you use a means of transport personally owned by yourself, and more. Remember to always maintain a log of your work-related travel (including kilometers traveled and method of transport) and seek more detailed information from your local tax authority office.
Is it possible to invoice my customers for work-related travel costs?
This is possible, but note that it will be considered taxable income and should therefore include VAT (for example 0,43 €/km +24 %).
Where can I find information about various permits?
- Examples of the permits needed for various sectors can be found on the Enterprise Finland website (http://www.yrityssuomi.fi/en/luvat)
What does an optimal inventory/stock balance look like? Why is this important?
- Set targets for inventory/stock turnover and a maximum value for the capital tied up, monitor continuously.
- Find out what the standard inventory/stock turnover rate is for your sector.
- Follow suppliers’/vendors’ invoice payment terms and compare prices and quality.
- Keep track of eventual losses.
- Critically assess vendors’/suppliers’ prices and quality and do not place too much emphasis on any eventual discounts: always take the “bigger picture” into consideration.
- Set up an internal inventory alert (a low inventory alert, for example) for your most important products.
Is investing in a franchise a good investment?
- Seek expert advice when reviewing the terms offered by a franchise. Speak to existing and former owners who have run the franchise in an equivalently sized town/area.