| In short | What does it mean in practice? |
|---|---|
| Turnover shows the value of a company’s actual sales | Turnover describes how much a business has sold in goods or services as part of its normal business activities. |
| VAT is not included in turnover | If you invoice a customer €1,255 and €255 of this is VAT, your turnover is €1,000. |
| Turnover is not the same as profit or the entrepreneur’s personal income | Business expenses still need to be deducted from turnover, so turnover does not tell you how much money the entrepreneur actually earns. |
| Turnover is worth monitoring regularly | Tracking turnover helps you quickly see whether sales are growing, falling or remaining stable. |
Turnover is one of the most common financial figures you will come across when running a business. It appears in bookkeeping, taxation, financing applications and when comparing businesses.
However, turnover is often confused with invoicing, profit or the amount of money in a company’s bank account.
Put simply, turnover tells you how much a business has sold through its normal business activities, excluding VAT and discounts granted to customers.
For example, if a sole trader sells €50,000 worth of services during the year excluding VAT, the business has a turnover of €50,000. This does not mean that the entrepreneur has earned €50,000 personally, because business expenses still need to be deducted.
Under the Finnish Accounting Act, turnover consists of revenue from the sale of products and services, less discounts granted, VAT and other taxes directly based on the amount of sales.
In practice, you can think about it like this:
Turnover = actual business sales excluding VAT and discounts
For example, if you sell a service for €1,000 and Finland’s general VAT rate of 25.5% applies:
Finland’s general VAT rate remains 25.5% in 2026. Some products and services are subject to reduced VAT rates, so the same percentage does not apply to every sale.
If VAT still feels confusing, Kletta can automatically take care of your VAT returns and tax declarations based on the income and expenses recorded in the app.
This is usually where the terminology starts to become confusing.
| Term | What does it tell you? | Example |
|---|---|---|
| Invoicing | How much has been invoiced to customers | €62,750 incl. VAT |
| Turnover | Actual business sales excluding VAT | €50,000 |
| Expenses | Costs generated by running the business | €15,000 |
| Profit | What remains after expenses are deducted from income | €35,000 |
| Bank balance | How much money is currently in the bank account | For example, €8,000 |
The most important point is this:
€50,000 in turnover does not mean €50,000 in profit, nor does it mean that the company has €50,000 in its bank account.
A business could have turnover of €100,000 and expenses of €90,000. In this case, the turnover may look high, but only €10,000 remains as profit.
On the other hand, a consultant or other service-based sole trader could generate €60,000 in turnover with very low expenses and operate a highly profitable business.
Not necessarily.
In everyday conversation, an entrepreneur might say: “I invoiced €50,000 last year.” But it is worth checking whether they mean the total value of invoices including VAT or actual sales excluding VAT.
For example:
€1,000 + VAT 25.5% = €1,255
The customer receives an invoice for €1,255, but the sale generates only €1,000 in turnover.
Understanding this distinction is particularly useful when monitoring the growth of your business or estimating your taxes.
With Kletta’s invoicing feature, your invoicing and bookkeeping work together automatically, helping you keep your sales figures up to date.
This is particularly important for sole traders in Finland.
If your sole trader business has turnover of €70,000, you do not simply pay income tax on the full €70,000.
Deductible business expenses are deducted from business income, and taxation is then based on the resulting taxable business income.
For example:
Turnover and taxable income are therefore two different things.
Sole traders should also understand how Finnish advance tax works. You can read Kletta’s English guide to prepayments and advance tax.
Keeping your bookkeeping continuously up to date with Kletta also makes it much easier to see how your sales, expenses and taxable result develop throughout the year.
Turnover is not just a line in your bookkeeping. It is one of the simplest ways to understand which direction your sales are moving.
For example, annual turnover of €50,000 does not tell you much on its own. The development over several years is much more informative:
2024: €32,000
2025: €41,000
2026: €53,000
In this example, it is immediately clear that sales are growing.
Monitoring turnover can also help you understand:
However, turnover should never be viewed in isolation. Growing turnover is positive only if the profitability of the business also remains healthy.
For small businesses in Finland, turnover has another particularly practical significance: VAT registration.
In 2026, the turnover threshold for small-scale VAT-exempt business in Finland is €20,000.
As a general rule, a business does not need to register for VAT if its VAT-related turnover is no more than €20,000 in both the current and previous calendar year and the business has not voluntarily registered for VAT.
For example:
2025 turnover: €14,000
2026 turnover: €18,000
→ The €20,000 threshold has not been exceeded.
However, if turnover in 2026 increases above €20,000, VAT registration becomes relevant. The Finnish Tax Administration assesses the threshold based on calendar-year turnover rather than only the company’s own accounting period.
It is also important to note that the turnover used for VAT threshold purposes is calculated according to VAT legislation. In certain special situations, this amount may therefore differ from the turnover shown in the company’s income statement.
You can read the Finnish Tax Administration’s full English guidance on VAT registration and the €20,000 threshold.
Not all money entering a business bank account is sales revenue.
As a general rule, turnover does not include:
This is why you cannot directly compare transactions on the business bank account with turnover.
For example, a €20,000 business loan increases the bank balance by €20,000, but it does not increase turnover by a single euro.
Both figures tell you different things.
Turnover tells you how much the business sells. Profit tells you how profitable the business is.
Consider two businesses:
Business A is significantly larger when measured by turnover, but Business B generates considerably more profit.
A high turnover alone therefore does not make a business successful or profitable.
Turnover should be a figure you can quickly see from your bookkeeping without having to calculate it manually every time.
Up-to-date bookkeeping also allows you to monitor:
The more frequently your financial information is updated, the more useful it becomes for running your business.
If bookkeeping is only completed retrospectively once a year, changes or potential problems may only become visible much later.
With Kletta’s automated accounting, sole traders can manage invoicing, receipts, bookkeeping, VAT returns and tax declarations in one place. This makes it much easier to maintain an up-to-date view of your business finances.
You can also capture receipts directly into your bookkeeping with Kletta, so expenses are reflected in your financial figures as they occur.
Turnover means the revenue generated from the company’s normal sale of products and services, after deducting items such as VAT and discounts granted to customers.
No. VAT is not included in a company’s turnover.
If you invoice €1,000 + 25.5% VAT, the sale generates €1,000 in turnover.
Not necessarily.
The total value of an invoice may include VAT, while turnover is calculated excluding VAT.
No.
Turnover tells you how much the business sells. Profit tells you what remains after expenses are deducted from income.
Income tax is not calculated directly on turnover.
For a Finnish sole trader, business income, deductible expenses and other items affecting taxation are taken into account when taxable business income is calculated.
Advance tax is also based on an estimate of taxable business income rather than turnover alone.
The threshold for small-scale business is €20,000.
When determining whether VAT registration is required, turnover for both the current and previous calendar year must be considered.
There is no single correct amount.
A good level of turnover depends on your industry, expenses and personal business goals.
For example, a consultant with very low operating costs may run an extremely profitable business with considerably less turnover than a business that sells physical products and has high purchasing and logistics costs.
Yes.
If a business’s expenses are equal to or higher than its income, the business may break even or make a loss even if its turnover is high.
For a sole trader, turnover is one of the most useful figures for understanding how the business is developing. But it becomes much more valuable when you can view it together with your expenses, VAT and profit.
Kletta brings invoicing, receipt scanning, automated bookkeeping and tax reporting into one simple app designed for sole traders.
Instead of calculating your business figures manually, your bookkeeping stays continuously up to date as you run your business.