How to Start a Sole Trader Business in Finland in 2026 – Step-by-Step Guide

Starting a sole trader business is one of the easiest ways to become an entrepreneur in Finland. It is particularly suitable if you want to sell your own expertise, run a business on the side or test a business idea without heavy administration.

In Finland, a sole trader is officially referred to as a private trader (yksityinen elinkeinonharjoittaja) and is commonly known as a toiminimi. In practice, this means that you operate your business either under your own name or under a registered business name. A sole trader business is not a separate legal entity in the same way as a limited liability company: you and your business are legally connected.

In this guide, we explain how to start a sole trader business in Finland, how much it costs, when you need to register for VAT, what YEL insurance means and how to organise your .

How to start a sole trader business in Finland step by step

The table below summarises the most important steps. If you want to get started quickly, follow them in order.

Step	What do you need to do?	Where?	Why is it important?
1. Decide whether a sole trader business suits you	Consider whether you will work alone and whether the business is mainly based on your own expertise or work.	Suomi.fi – Becoming a private entrepreneur	A sole trader is one of the simplest business structures and is particularly suitable for solo entrepreneurs.
2. Check the requirements	Make sure you are a natural person, are not bankrupt and are not subject to restrictions on your legal capacity.	Suomi.fi – Becoming a private entrepreneur	These are part of the official requirements for becoming a private entrepreneur in Finland.
3. Choose a business name	Decide whether you will use your own name or a separate business name.	PRH – Start-up notification for a private trader	A name registered in the Trade Register receives name protection and can make your business look more established.
4. Define your line of business	Write a clear description of what your business does.	Start-up notification	Your line of business tells authorities and customers what kind of business you operate.
5. Submit the start-up notification	Complete the start-up notification for a private trader.	Business Information System / YTJ	You will receive a Finnish Business ID (Y-tunnus) for your business.
6. Decide whether to join the Trade Register	Register your business if registration is required or if you want protection for your business name.	PRH – Private trader registration	A private trader start-up notification to the Trade Register costs €75.
7. Join the Prepayment Register	Apply for registration, especially if you sell services and want to take care of your taxes yourself.	Finnish Tax Administration – Prepayment Register	Your customers can pay your invoices without withholding tax from the payment.
8. Check whether you need VAT registration	Estimate whether your turnover will exceed the VAT threshold or whether voluntary registration makes sense.	Finnish Tax Administration – VAT registration	VAT registration is generally required when turnover exceeds €20,000 in a calendar year.
9. Check whether you need YEL insurance	Estimate the value of your work input and check whether you meet the requirements for YEL insurance.	Finnish Centre for Pensions – YEL insurance	YEL affects your pension and several parts of your social security.
10. Set up invoicing and bookkeeping	Choose a system for creating invoices, storing receipts and tracking income and expenses.		Kletta is designed specifically to make bookkeeping simple for sole traders.

What is a sole trader in Finland?

A sole trader is a business operated by an individual. In Finnish, the official term is yksityinen elinkeinonharjoittaja, while toiminimi is commonly used in everyday language.

As a sole trader, you operate the business on your own responsibility. The business income, expenses, obligations and liabilities are directly connected to you personally. A sole trader therefore does not form a separate legal entity in the same way as a limited liability company.

This makes it a very lightweight business structure. Starting is quick, administration is relatively simple and bookkeeping can often be managed more easily than in a limited liability company.

At the same time, you should understand that you are personally responsible for the business.

Who is a sole trader business suitable for?

A sole trader structure is particularly suitable for entrepreneurs who work alone and whose business is mainly based on their own expertise or work.

It can be a good option if you want to start with relatively low risk, try entrepreneurship alongside another job or sell services directly to customers.

Typical examples include:

hairdressers and barbers
photographers
graphic designers
massage therapists
personal trainers
consultants
content creators
self-employed construction professionals
cleaners
event freelancers
craftspeople
small online retailers

A sole trader business is often a sensible choice when you are starting alone, the business model is relatively straightforward and there are no major financial risks involved.

If the business has several owners, requires significant investments or is intended to raise external investment, a limited liability company may be a better alternative.

Who can become a sole trader in Finland?

You can become a private entrepreneur in Finland if you are a natural person, you are not bankrupt and your legal capacity has not been restricted.

In general, you must also have your permanent place of residence within the European Economic Area. This includes EU countries as well as Norway, Iceland and Liechtenstein. If you live permanently outside the EEA, you generally need permission from the Finnish Patent and Registration Office.

You can find the official requirements in the Suomi.fi guide to becoming a private entrepreneur.

Before starting, you should also check whether your industry requires specific licences or notifications. Not every business activity is regulated, but areas such as food services, healthcare, transport and certain construction activities may involve additional permits or qualifications.

What should you consider before starting?

Technically, starting a sole trader business is straightforward. Before completing the registration, however, it is worth thinking through the basics of your business.

Start with three questions:

What do I sell? Who do I sell it to? Why would someone pay for it?

You do not necessarily need a long business plan. What matters is that you understand your service, your customer and your pricing.

Business idea

Your business idea simply describes what your business does.

It could be photography, massage therapy, consulting, cleaning, an online store or another service based on your own skills.

A good business idea does not need to be complicated. In many cases, the best starting point is something clear and concrete: solving a customer problem in a way they are willing to pay for.

Target audience

Trying to sell to everyone usually makes marketing more difficult.

Think about your most likely customer from the beginning.

Are you selling to consumers or companies? Are your customers local or nationwide? Do they need your service once or repeatedly?

A clear target audience also makes pricing, marketing and sales much easier.

Pricing

New entrepreneurs often price their services too low.

Your price needs to cover much more than the hours you spend directly working with customers. It also needs to leave enough money for taxes, insurance, tools, software, marketing, holidays and your own income.

If you charge by the hour, remember that not every hour you work is billable. Part of your time will be spent on finding customers, communicating, invoicing, bookkeeping and developing your business.

Expenses

Your expenses may be fairly small when you start, but they should still be taken into account.

Typical business expenses can include:

tools and equipment
phone costs
computers
software
websites
marketing
insurance
bookkeeping

Keeping records of these costs from the beginning is important. With Kletta’s receipt scanning and expense tracking, you can save business receipts digitally as soon as the expense occurs.

Start-up notification and Finnish Business ID

A sole trader business is established through a start-up notification. This gives your business its official Finnish Business ID (Y-tunnus).

Your Business ID is used on invoices, contracts, tax matters and when dealing with authorities.

The start-up notification includes information such as:

your personal details
business name
line of business
address
relevant registrations

Depending on your situation, these registrations may include the Trade Register, Prepayment Register, VAT Register and Employer Register.

Unlike a limited liability company, an adult private trader does not need articles of association or similar incorporation documents.

How much does it cost to start a sole trader business?

Starting as a sole trader is inexpensive compared with many other business structures.

The start-up notification for a private trader to the Finnish Trade Register costs €75 in 2026. Registering an auxiliary company name also costs €75 per name.

You can find the current official information on the PRH private trader registration page.

If you do not need to register in the Trade Register, starting the business may involve fewer costs.

Many entrepreneurs still choose to register because Trade Register registration protects the business name and gives the business a more established public identity.

You should also budget for other possible start-up costs, such as:

domain and website
email
tools and equipment
software
marketing
insurance
bookkeeping
possible permits

The good news is that a sole trader business can often be started with a very small budget.

For many entrepreneurs, the essentials are simply a Business ID, a reliable invoicing method, an organised bookkeeping system and a way to store receipts.

Do sole traders have to register with the Trade Register?

Not in every situation.

Under current Finnish rules, Trade Register registration is mandatory for private traders only in certain circumstances. Other private traders can register voluntarily.

You can check the exact requirements from PRH’s official private trader guidance.

Registration is often still a sensible choice because a registered company name receives protection. This means another business cannot generally use an identical or confusingly similar name in the same field.

Registration can also increase credibility with customers, partners and service providers.

If you plan to operate under a separate business name, create a website or build a long-term brand, Trade Register registration is usually worth considering.

The Prepayment Register – why should you join?

The Prepayment Register is particularly important for sole traders selling services.

When your business is registered, your customer can see that you are responsible for paying your own taxes.

In practical terms, this means your customer can normally pay your invoice without withholding tax from the payment.

If you are not registered, the customer may in certain situations be required to withhold tax before paying you.

This is why joining the Prepayment Register is one of the most important registrations for many new sole traders.

When does a sole trader need to register for VAT?

VAT is one of the most important tax issues to understand when starting a business.

In Finland, a business generally does not need to register for VAT if its turnover is no more than €20,000 in both the current and previous calendar year.

If your turnover exceeds the threshold, you must register for VAT.

You can also register voluntarily even if your turnover remains below the threshold. This can sometimes make sense, for example if your business has significant VAT-deductible purchases or most of your customers are companies.

You can find the current rules from the Finnish Tax Administration’s VAT registration guidance.

If you are VAT registered, you generally:

add VAT to VAT-liable sales
report VAT to the Finnish Tax Administration
pay the VAT due
deduct eligible VAT included in business purchases

If you are not VAT registered, you generally do not add VAT to your invoices and cannot deduct VAT on purchases.

Kletta can also automate based on the income and expenses recorded in the app.

Does a sole trader need YEL insurance?

YEL is the statutory pension insurance for self-employed people in Finland.

It is not directly based on your turnover or business profit. Instead, it is based on the estimated value of your own work input, known as your YEL income.

In 2026, YEL insurance is generally mandatory when all the relevant conditions are met, including that your self-employment lasts for at least four months and the annual value of your work input is at least €9,423.09.

YEL income affects more than your future pension. It is also used as a basis for several social security benefits.

You can check the full criteria from the Finnish Centre for Pensions’ YEL guidance.

Many new entrepreneurs initially see YEL only as a cost, but it is an important part of an entrepreneur’s social security.

Sole trader taxation in brief

Taxation for a sole trader differs from taxation for a limited liability company.

A sole trader does not normally pay themselves a salary in the same way as an owner of a limited company. Instead, the taxable result of the business is included in the entrepreneur’s personal taxation.

In simple terms, the business result is calculated by deducting allowable business expenses from business income.

A sole trader typically needs to take care of:

income tax prepayments
VAT, if registered for VAT
the business income tax return
possible employer obligations if employees are hired

A sole trader can also transfer money from the business for personal use as a private withdrawal.

A private withdrawal is not a business expense and does not reduce taxable business profit.

This is important to understand from the beginning. Moving money from your business account to your personal account is not the same as paying yourself a salary. Your business result is taxed regardless of how much money you withdraw for personal use.

Kletta helps automate both .

Sole trader bookkeeping – what should you remember from day one?

Every sole trader must keep records of their business income and expenses.

Even if your business is small, receipts, invoices and other supporting documents must be stored systematically.

Typical bookkeeping documents include:

sales invoices
purchase receipts
supplier invoices
bank transactions
cash sales records
mileage records

It is a good idea to keep business and personal finances as separate as possible from the beginning.

A separate business bank account is not always mandatory for a sole trader, but it can make bookkeeping considerably easier. When business income and expenses are not mixed with personal purchases, your records remain much clearer.

This is also where many new entrepreneurs make their first bookkeeping mistake.

At first, it is easy to think that receipts can be dealt with later. At the end of the year, those receipts are suddenly scattered across emails, phone photos, the glove compartment and online banking.

Kletta solves this by keeping the essential tools in one place. You can create invoices, scan and store receipts, record mileage and keep your bookkeeping up to date in the same app.

You can explore all the .

Sole traders and invoicing

Once you have started your business and received your Business ID, you can begin invoicing customers.

Your invoices need to contain the required information, such as:

seller details
customer details
invoice number
invoice date
due date
the product or service sold
price
applicable VAT information

If you are VAT registered, your invoice must also show the relevant VAT details.

If you are not VAT registered, you do not add VAT in the same way.

It is worth using a proper invoicing tool from the beginning. Creating invoices manually in Word or Excel may work for a while, but it quickly becomes difficult to manage invoice numbering, due dates, payments and bookkeeping.

With Kletta’s invoicing feature, you can create invoices easily while the income is automatically included in your bookkeeping.

Starting a sole trader business on the side

A sole trader structure is also well suited to part-time entrepreneurship.

For example, you can be employed or studying while running your own business alongside your main activity.

Starting on the side can be a good way to test a business idea with less risk. You can find out whether there is demand, whether your pricing works and whether entrepreneurship suits you before moving into it full time.

However, part-time entrepreneurs still need to consider taxation, possible YEL obligations and the effect of entrepreneurship on certain benefits.

If you receive unemployment benefits or other income-related support, it is worth checking the consequences before starting the business.

Sole trader or limited liability company?

Many new entrepreneurs wonder whether they should start as a sole trader or create a limited liability company.

A simple starting point is this: if you are working alone, selling your own expertise and want to keep administration light, a sole trader structure is often a good choice.

A sole trader may be suitable if:

you are starting alone
you want to get started quickly
you sell your own expertise
the business is initially small or part-time
you want to keep administration simple
you do not need a complex corporate structure

A limited liability company may be more suitable if:

there are several owners
the business involves significant financial risks
you need external investment
you are targeting rapid growth
you want a clearer separation between the company’s liabilities and your personal finances

You can also change your business structure later as the business grows. Your first choice does not need to determine the structure of your business forever.

Common mistakes when starting a sole trader business

Starting is relatively simple, but new entrepreneurs often make the same mistakes.

1. Forgetting VAT when setting prices

If you are VAT registered, VAT is not your business income. It is collected from the customer and paid to the Finnish Tax Administration.

If you set your prices too low and only consider VAT afterwards, your actual margin may become much smaller than expected.

2. Not saving receipts immediately

Business expenses need supporting documentation.

If a receipt disappears, you may lose the ability to properly document the expense. This is why it is a good habit to scan receipts immediately.

3. Misunderstanding private withdrawals

A sole trader does not normally pay themselves a salary from the business. Instead, you can make private withdrawals.

A private withdrawal is not a business expense and does not reduce your taxable business profit.

4. Setting tax prepayments too low

If your business grows faster than expected, your tax prepayments may become too low.

This can result in additional tax later.

Monitor your income, expenses and profit during the year and request an adjustment when necessary.

5. Leaving bookkeeping until the last minute

This is perhaps the most common mistake.

When receipts, invoices and mileage are recorded as they occur, bookkeeping stays manageable. When everything is left until the end of the year, even a small business can quickly turn into a pile of paperwork.

Checklist for starting a sole trader business

Before you start:

Decide what you are selling and to whom.
Choose a business name.
Check whether you need any licences.
Decide whether you will register with the Trade Register.
Submit the start-up notification.
Apply for the necessary registrations.
Check whether you need VAT registration.
Check whether you need YEL insurance.
Choose a reliable invoicing method.
Start saving receipts and documents immediately.
Monitor income, expenses and taxes regularly.
Choose a bookkeeping solution designed for sole traders.

If you want to keep your bookkeeping as simple as possible, compare and choose the package that best suits your business.

Frequently asked questions about starting a sole trader business in Finland

Can you start a sole trader business for free?

Starting can be very inexpensive.

Registering a private trader with the Finnish Trade Register costs €75 in 2026.

If Trade Register registration is not necessary in your situation, you may be able to start without paying the Trade Register registration fee.

Does a sole trader get a Business ID?

Yes.

When your start-up notification is processed, your business receives a Finnish Business ID, or Y-tunnus.

The Business ID is used on invoices, contracts and when dealing with authorities.

Does a sole trader need a separate business bank account?

Not always.

A separate business bank account is nevertheless highly recommended because it makes bookkeeping easier, reduces mistakes and keeps business transactions separate from personal spending.

Does a sole trader need an accountant?

Not necessarily.

Many sole traders with relatively straightforward businesses can manage their bookkeeping themselves when they have the right tools.

Kletta is built specifically for sole traders who want to manage bookkeeping without unnecessary complexity. You can explore .

When does a sole trader need to register for VAT?

A business generally needs to register for VAT when its turnover exceeds €20,000 in a calendar year.

Voluntary VAT registration is also possible in certain situations even when turnover remains below the threshold.

Can a sole trader hire employees?

Yes.

A sole trader can hire employees. If you regularly pay wages, you may also need to join the Employer Register and fulfil the relevant employer obligations.

Is it easy to close a sole trader business?

Closing a private trader business is generally simpler than winding up a limited liability company.

It does not require the same formal liquidation procedure as closing a limited liability company.

Final tip: organise everything properly from the beginning

Starting a sole trader business is one of the easiest and fastest ways to become an entrepreneur in Finland.

It is particularly well suited to solo entrepreneurs, freelancers, part-time entrepreneurs and people selling their own expertise.

Even though getting started is simple, it pays to organise the important things correctly from day one.

Choose a suitable business name, check your VAT registration, understand your YEL obligations, set up invoicing and keep your bookkeeping organised.

Kletta makes this significantly easier. You can invoice customers, scan receipts, track mileage, keep your bookkeeping up to date and handle tax reporting in the same application.

When you start your sole trader business, bookkeeping does not need to become another problem to solve.