Organising an Artist Entrepreneur’s Operations in Finland
The most important decision an artist entrepreneur faces is the selection of a business form. In Finland, the alternatives include:
- Private Trader (i.e., self-employed person or entrepreneur)
- General Partnership
- Limited Partnership
- Limited Company
- Co-operative
Private Traders
When operating a business as a private trader (self-employed), the artist operates under his or her own name. A private trader can operate alone or with a spouse. In this structure, the artist makes all business-related decisions independently and is financially liable for any obligations.
- Profit and Loss: The artist keeps any profits but is also liable for any losses.
- Salary and Benefits: Paying a salary to oneself or a spouse is not possible, nor is offering fringe benefits. However, the entrepreneur can withdraw profits after taxes.
- Taxation: The business income is taxed as personal income.
General Partnership and Limited Partnership Companies
A general partnership and a limited partnership are forms of partnership companies. A general partnership requires at least two founding general partners. A limited partnership differs from a general partnership because, in addition to one or more active general partners, it also has silent partners who contribute financially.
- Liability: General partners and active partners are personally liable for the company’s obligations. The liability of silent partners is limited to the agreed capital investment.
- Decision-Making: General partners or active partners make decisions individually or collectively.
- Profit Distribution: Profit distribution is agreed upon by the general partners. They can also claim reasonable salaries, fringe benefits, and tax-exempt allowances. However, in practice, general partners usually take their share of profits as personal withdrawals.
- Taxation: The business profit is considered income for the general partners.
Co-operatives
A co-operative is a corporation jointly owned by its members, and it is becoming an increasingly popular choice for artists. A co-operative can be formed by just one person, and no capital investment is required to found one.
- Ownership and Liability: Each member has a vote in decision-making, and members are not personally liable for the co-operative’s debts.
- Compensation: Members may receive limited compensation for their capital investment, but in a worker co-operative, additional salaries can be paid to members.
- Taxation: Co-operatives are independent taxable entities, and their income is taxed as company income.
Limited Companies
A limited company is generally not the most profitable option for artists. The company requires an initial capital investment of EUR 2,500.
- Liability: Shareholders are not personally liable for the company’s obligations.
- Management: A limited company is represented by a board of directors.
- Taxation: The income of a limited company is taxed as company income.
Founding a Business
- A private trader, co-operative, and general partnership can be founded without any capital investment.
- In a limited partnership, silent partners are required to make a capital investment (amount not determined beforehand).
- A limited company requires a capital investment of EUR 2,500 in total.
To register a business, submit a start-up notification to the Business Information System (YTJ), which is maintained by the Finnish Patent and Registration Office (PRH) and the Tax Administration. The business will then receive a Business ID, serving as its unique identification code.