Basically we have in Finland two kinds of workers: Wage-earners and entrepreneurs. Wage-earners can present a digital or a paper tax card to their employer for the taxation. Entrepreneurs are responsible for paying their taxes by themselves. There are clear rules for all this.
Between the wage-earners and entrepreneurs we have freelancers who may have a whole lot of clients. Freelancers work under an assignment or they have a commission agreement.
Entrepreneurship is a way to get self-employed. There are several ways to establish a company or a trade name, but in all business there are risks, such as Do you have enough clients for successful entrepreneurship? In case you don´t want to take these risks, you can consider starting as a light entrepreneur.
Acting as a light entrepreneur is not so different from being a freelancer. We have so called invoicing service companies that can handle most of the paper work for you. Your task is to find your client, and do and finish your work assignment for him. Then you send a bill to your client through the invoicing service company, which collects a service fee of about 5 % from you. The invoicing companies usually have no fixed costs, so you will need to pay the fee only in case you have income. But the invoicing service companies may also have some additional costs, so make sure you read their terms of service properly.
Typically you will have a formal employment contract with an invoicing service company. Then you are a wage earner and the company pays you wages. The invoicing service company will use the tax rate on your tax card to withhold tax from your wages. The company will report the wages paid and the tax withheld to the Incomes Register. So this is easy for you and especially for your client.
In the Finnish employment and social insurance legislation, individuals using an invoicing service are usually regarded as entrepreneurs. As a light entrepreneur you must take an insurance according to the legislation on an entrepreneur’s pension, provided that you meet certain requirements.
You may have a possibility to receive an adjusted unemployment benefit as a light entrepreneur, in case you are considered a part-time entrepreneur. Full-time entrepreneurs should arrange their own unemployment security by themselves.
The TE Office (Employment and Economic Development Centre - TE Centre) will first determine whether you are an entrepreneur as referred to under the Unemployment Security Act. In case you are considered an entrepreneur, the TE Office will determine whether you are employed as a full-time or as a part-time entrepreneur. If you are neither a wage-earner nor an entrepreneur, you may be self-employed. The TE Office will determine whether your self-employment is considered full-time or part-time.
If you are a part-time entrepreneur or self-employed person, the officials take into account the income received from your business activities and they adjust the unemployment benefit accordingly.
This may sound a little bit complicated, but this way you can start to work like an entrepreneur without any major risks of losing your social security. When you start getting more income, you can shift to a full-time entrepreneurship.
The great thing is that you can be a light entrepreneur already during your studies!
You can find more information about this topic on these websites:
Adjusted unemployment benefit:
Pensions for the self-employed:
The Finnish bank Osuuspankki (OP) has it´s own Light Entrepreneurship Service, which is little bit different than others. There you will have your own Business ID.
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