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[ESTABLISHING A BUSINESS ENTITY IN FINLAND]
ESTABLISHING A BUSINESS ENTITY IN FINLAND
TYPES OF BUSINESS ENTITIES AVAILABLE IN FINLAND The most common forms of business entities in Finland are a limited liability company, a general or a limited partnership, and a co- operative. It is also possible to run a business as a branch of a foreign enterprise. Other entities such as associations and foundations also exist, but such entities operate typically on a non- profit basis and are not discussed in this overview. A private person may also operate as a private trader. Matters to consider when choosing a particular business entity type in Finland are, for instance, the taxation, differences in responsibilities and decision-making, operational flexibility, number of people establishing the business, the need for capital and its availability, continuity of operations, attitude of finance providers, profit sharing and covering losses. Certain commercial activities in Finland are subject to a license; these include the serving of alcohol, debt collection and security guard business. Licenses are also needed in certain industries, such as banking, insurance, investment activities and fund management. LIMITED LIABILITY COMPANY The present Limited Liability Companies Act (624/2006) (the “Companies Act), which entered into force in 2006, introduced a very modern and flexible company law that allows the rules of the company to be efficiently tailored through the articles of association. Limited liability company (Ltd) can be organized either as a private or public company (Plc). Starting from July 2019, minimum capital requirement was abolished and nowadays a private limited liability company can be established without any share capital, which makes the process quite straightforward.
However, the minimum capital requirement regarding a public company is EUR 80,000. The shares of a public limited company may be listed and traded on the stock markets. Limited liability company may be established by at least one person or organization. The shareholders use the decision-making power and, perhaps the most important feature is, that the shareholders are not personally liable for the obligations of the company. A limited liability company is the most common type of business entity in Finland, and it is the recommended form of business when there are several owners and/or when the business is intended to be large scale. PRIVATE TRADER One of the most popular business types nationally is the private tradership, which is the simplest company form and quite easy to establish. Operating as a private trader means that the person establishing the business shall carry out the business operations alone or together with his/her spouse. The private trader is registered only in the name of one person, even when a couple would set up and operate the business together. The registration of a private trader is more of a notification to the authorities that the person shall operate as an entrepreneur. The private trader is an option suited for business operations where there is no need for big investments or capital, such as a carpenter, freelance journalist, massage therapist or photographer etc. PARTNERSHIPS There are two types of partnerships; a general partnership and a limited partnership. To establish a partnership there must be at least two partners, generally natural people but a partner can also be a legal entity (business). The partners invest a contribution in the
ILN Corporate Group – Establishing a Business Entity Series
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