Light Entrepreneurship

The lightness of a light entrepreneur comes from the fact that the light entrepreneur does not have to take care of bureaucracy, ie accounting, taxation and official declarations. For a service fee, a light entrepreneur receives financial and administrative services through a billing service provider. The service fee is usually about 4-5% per invoice. The invoicing service usually also charges and pays the amount for incidental expenses, which cover, for example, mandatory employer and insurance contributions as well as withholding taxes. The withholding tax is based on the tax card provided to the billing service provider. There are usually no other running costs for light entrepreneurship services. However, a light entrepreneur should take social security and insurance premiums into account in their pricing.

Income earned as a light entrepreneur is taxable earned income that is taxed progressively: the more income, the more taxes. The income received as a self-employed person is thus added to other earned income, such as full-time pay, and is taxed at the same withholding tax rate. A light entrepreneur cannot usually deduct business-related expenses in full in his/her taxation.

Light entrepreneurship is a great and risk-free way to test your own personal business idea and entrepreneurship without practically committing to long-term business. A light entrepreneur can focus on his or her own business after outsourcing statutory paperwork and payments to a billing service provider.

Light entrepreneurship is ideal for part-time work, such as full-time paid work or studying. A light entrepreneur can stop using the billing service at any time and thus interrupt the business easily. After testing the business idea and experimenting with entrepreneurship, an entrepreneur who has adopted the basics of business, such as taxation and simple accounting, can decide whether to become an entrepreneur by establishing a business name or a limited company, for example.

Even those considering light entrepreneurship should discuss the business idea and the practicalities of entrepreneurship with a business advisor before taking action to make the transition to entrepreneurship as smooth as possible. For example, Finnish Enterprise Agencies, including YritysEspoo, can help you create a business plan and calculations completely free of charge. You can easily book a time with us  here .

A light entrepreneur who uses the services of billing service companies, such as Eezy and UKKO.fi, is not entitled to start-up money. Default entries and lost credit information that prevent you from receiving start-up money may not prevent you from starting a light business.

You can apply for a start-up grant as a continuation of light entrepreneurship when starting your own business. The start-up grant granted by the TE Office is intended for those who become full-time entrepreneurs who operate under their own business ID. You can obtain a business ID by registering as a private trader and establishing a business name, for example.

It may come as a surprise that a user of the OP Light Entrepreneur service will receive a business ID, in which case, for example, the status of an unemployed jobseeker will automatically change to a private entrepreneur. In this case, the user of the service is not, in principle, entitled to unemployment insurance.

Unemployment security for a light entrepreneur can be explained by an example in which a part-time light entrepreneur becomes unemployed. When a person becomes unemployed, the main or secondary activity of the entrepreneur is assessed at the Employment and Economic Development Office. Light entrepreneurship is usually counted as full-time if the light entrepreneur is unable to accept the full-time work offered by the TE Office. If light entrepreneurship has been practiced in addition to paid work, it is almost always interpreted as a side job when you become unemployed. Even full-time business activities lasting less than two weeks, such as a work gig, do not need to be reported to the TE Office. In practice, therefore, the income of a light entrepreneur is irrelevant, but only for the time required for the job. As an unemployed part-time light entrepreneur, it is possible to receive an adjusted unemployment allowance. It is possible for an unemployed full-time and YEL-insured light entrepreneur to receive an adjusted earnings-related unemployment allowance if the light entrepreneur meets the employment condition. The new amendment to the Unemployment Security Act came into force in January 2018. If light entrepreneurship is started as unemployed, the main and secondary activities will only be assessed after four months. Read more On the TE Services website.

A light entrepreneur should start their own company at the latest when the turnover for a calendar year, ie sales, exceeds € 10,000. A light entrepreneur must take out YEL insurance when his or her annual earnings exceed € 7,799.37, which is the lower limit of YEL’s earnings per year in 2019. In addition, light entrepreneurship through the invoicing service must be recurring, ie the business must take out YEL insurance.

The questions were answered by Matias Holmqvist, M.Sc. We thank the representative of UKKO.fi for their comments contributed to this article.