Starting as a sole trader is one of the easiest ways to start your own business in Finland. It is particularly suitable when your business is mainly based on your own work, your costs are relatively low and you want to get started without complicated administration.
However, being a sole trader is not automatically the best option for everyone. As a sole trader, you are personally responsible for the debts and commitments of your business, so it is important to consider your level of risk, income, investments and growth plans when choosing a company form.
In this article, we explain when becoming a sole trader makes sense, when you should think twice and when a limited liability company may be a better alternative.
A sole trader, commonly called toiminimi in Finnish, means operating as a private entrepreneur. It is the simplest company form in Finland and is particularly suitable for small businesses based on the entrepreneur’s own work.
As a sole trader, you can invoice customers, sell services, work as a freelancer or run a small business under your own name or a registered business name.
Typical sole traders include:
A sole trader is generally a particularly practical choice when there is one entrepreneur and the business does not require a complicated company structure.
A sole trader is often a good choice when your business is still relatively small, mainly based on your own work and does not involve significant financial risks.
One of the biggest advantages of being a sole trader is simplicity. It is inexpensive to start, administration is relatively light and accounting can be handled efficiently without the heavier company structure required for a limited liability company.
In 2026, registering a private trader with the Finnish Trade Register costs €75.
A sole trader can be a particularly good option if:
A sole trader may not be the best option if the business involves large contracts, significant debt, employees, substantial inventory or other major financial risks. In those situations, a limited liability company may provide a clearer structure and better separation between your personal and business finances.
| Area | Benefit | What to consider |
|---|---|---|
| Starting the business | Quick and inexpensive | Trade Register registration costs €75 |
| Administration | Relatively simple | You are personally responsible for the business |
| Accounting | Often simpler than for a limited company | Bookkeeping still needs to be handled correctly |
| Taxation | Business income is taxed through your personal taxation | Tax prepayments need to be estimated correctly |
| VAT | Small businesses may not need to register for VAT | The €20,000 turnover threshold must be monitored |
| Financial risk | Suitable for low-risk businesses | You are personally responsible for business debts |
| Growth | Works well for solo entrepreneurs | A limited company may be more suitable as the business grows |
A sole trader often works well when you sell your own work or expertise and the business model is relatively straightforward.
For many service entrepreneurs, there is no need for large investments or a complicated company structure when starting out.
Laura works full-time but also provides marketing consulting to a few clients. She invoices around €1,500 per month and has relatively few business expenses.
A sole trader can make sense because the business is based on her own expertise, the risks are limited and administration can remain simple.
However, Laura should estimate her tax prepayments from the beginning and update them if her business income changes significantly during the year.
Mikko starts working as a massage therapist through his own sole trader business.
He has some business expenses, including equipment, marketing, insurance and possibly rent for business premises. A sole trader structure can work very well because the business mainly depends on Mikko’s own work.
If his turnover grows above the VAT threshold, he also needs to take VAT registration into account.
In practice, it is worth getting sole trader accounting organised from the beginning so that income, expenses, VAT and tax reporting remain up to date.
With Kletta, invoices, expenses and receipts are automatically transferred to your bookkeeping, which means you do not need to manually enter every transaction.
Sara wants to start a small online store and sell products under her own brand.
A sole trader structure may work well while the business is small. However, an online store can require inventory purchases, marketing investments and other financial commitments.
If Sara starts purchasing significant amounts of inventory, taking out loans or signing larger contracts, a limited liability company may become a better alternative.
This is because a sole trader is personally responsible for the debts and commitments of the business.
You should consider the company form more carefully if your business involves significant financial risk.
Examples include:
A sole trader is also fundamentally built around one entrepreneur.
A limited liability company may therefore make more sense if:
The profit of a sole trader business is taxed as the entrepreneur’s personal income.
In simple terms, the income and deductible expenses of the business are calculated, and the resulting business profit affects your personal taxation.
There are three particularly important areas to understand.
Sole traders generally pay income tax through tax prepayments.
The amount of tax prepayment is based on your estimated taxable business profit and your other income. If your income changes significantly during the year, your tax prepayment estimate should also be updated.
If your business is registered for VAT, VAT is generally added to taxable sales and the business reports and pays the VAT to the Finnish Tax Administration.
The standard VAT rate in Finland is 25.5%.
The turnover threshold for small businesses is currently €20,000. A business does not generally need to register for VAT if its turnover is no more than €20,000 in both the current and the previous calendar year.
With Kletta, VAT returns and tax declarations can be handled automatically based on the income and expenses recorded in the app.
A sole trader must submit a business tax return for their business activity.
The Finnish Tax Administration requires self-employed individuals to submit a business tax return for every year, including years when there has been no business activity.
This is one reason why keeping your bookkeeping organised throughout the year is important.
Not necessarily.
Not every private trader is legally required to register with the Finnish Trade Register.
Registration is mandatory in certain situations, including when the entrepreneur is required under the Accounting Act to file financial statements for registration or when the entrepreneur has their permanent place of residence outside the European Economic Area.
Many entrepreneurs still register voluntarily because registration protects the registered company name.
The Trade Register start-up notification for a private trader costs €75 in 2026.
VAT liability depends especially on your turnover and the type of business activity.
A company does not generally need to register for VAT if its turnover is no more than €20,000 in both the current and the previous calendar year.
This means that very small businesses may be able to operate outside the VAT Register.
However, a business can also register for VAT voluntarily even if its turnover does not exceed €20,000.
For example, voluntary VAT registration may make sense if your business has significant VAT-deductible purchases or mainly sells services to other VAT-registered businesses.
Imagine you invoice private customers €15,000 per year and have relatively few deductible expenses. Staying outside the VAT Register may be worth considering.
On the other hand, if you mainly invoice other businesses and make a lot of VAT-liable business purchases, voluntary VAT registration may be a natural option.
The right choice always depends on your individual business.
Even though a sole trader is a relatively simple company form, bookkeeping should not be left until the last minute.
Every invoice, receipt, expense, purchase and sale affects your accounting and potentially your taxes.
Good bookkeeping helps you:
Kletta is an accounting app designed for sole traders in Finland. When you send invoices, upload receipts and record your income and expenses, Kletta automatically creates your bookkeeping based on this information.
You can create and send invoices directly from Kletta, while the app also allows you to capture receipts directly into your accounts.
This keeps your business finances in one place instead of having invoices, receipts and accounting scattered across several different services.
Many people starting a business wonder whether they should set up as a sole trader or use a light entrepreneurship or invoicing service.
An invoicing service can be convenient if you only invoice customers occasionally and do not yet want to establish your own business.
A sole trader often makes more sense when:
In simplified terms:
| Situation | Light entrepreneurship | Sole trader |
|---|---|---|
| Occasional project | Can be sufficient | Not always necessary |
| Regular invoicing | Service fees can add up | Often more suitable |
| Building your own business | More limited | Better suited |
| Managing business expenses | Depends on the service | More straightforward |
| Building your own brand and customer base | More limited | Better suited |
If regular invoicing is becoming part of your business, you can create and send invoices with Kletta while keeping the related income automatically connected to your bookkeeping.
A sole trader can be an excellent choice if you want an easy way to start your own business in Finland, your business is mainly based on your own expertise and your financial risks are relatively limited.
It is particularly well suited to freelancers, consultants, massage therapists, personal trainers, hairdressers, content creators and other solo entrepreneurs.
A sole trader may not be the best choice if your business involves substantial debt, employees, investors, large inventories or significant contractual risks. In those situations, a limited liability company may provide a more suitable structure.
The most important thing is to consider how your business actually works:
If you choose a sole trader structure, getting your accounting, tax prepayments, VAT and tax reporting organised correctly from the beginning makes running your business much easier.
Kletta brings invoicing, receipt scanning, automated accounting and tax reporting into one simple app designed for sole traders in Finland.
You can explore Kletta’s accounting features or compare the available plans and pricing to find the right option for your business.
Yes. A sole trader can be a good option for part-time entrepreneurship, particularly if you regularly invoice customers and the business is based on your own expertise.
Remember to estimate your tax prepayments and monitor whether your turnover exceeds the VAT registration threshold.
In 2026, registering a private trader with the Finnish Trade Register costs €75.
Yes. A sole trader must keep records of their business activity.
Bookkeeping is also the basis for business tax reporting, VAT reporting and understanding the financial performance of your business.
If you want to minimise manual bookkeeping work, Kletta automates accounting for sole traders based on the income, expenses, invoices and receipts you add to the app.
There is no automatic turnover level at which a sole trader must become a limited liability company.
Changing company form may make sense when the business grows, financial risks increase, you want additional owners or investors, you hire employees or a limited liability company otherwise becomes more appropriate for the business.
It depends on turnover and the nature of the business activity.
A business does not generally need to register for VAT if its turnover is no more than €20,000 in both the current and the previous calendar year.
Businesses below the threshold may still register voluntarily in certain situations. Once your business is VAT registered, Kletta can automate your VAT returns and tax declarations based on the business data recorded in the app.