Selection of business form

Selection of business form

With regard to the organisation of an artist entrepreneur’s operations, the most important decision is the selection of business form.In Finland, the alternatives include a self-employed person (i.e., private trader or entrepreneur), general partnership, limited partnership, limited company, and co-operative.

Private traders

When operating a business as a private trader, or entrepreneur, the artist operates under his or her own name. A private trader can operate alone or with a spouse. When handling his or her business as a private trader, the artist makes related decisions independently and is financially liable for his or her obligations.

A private trader has access to any profits from the business operations but is also liable for any losses. Paying a salary to oneself or one’s spouse is not possible, and neither is the granting of any fringe benefits. The entrepreneur can utilise the company’s profits after taxes by making personal withdrawals.

The business operation result obtained by the private trader is taxed as his or her personal income.

General-partnership and limited-partnership companies

A general partnership and a limited partnership are types of partnership companies. A general partnership requires two founding general partners. A limited-partnership company differs from a general partnership in that, in addition to at least one active general partner, it has one or more silent partners who participate financially in the company’s operations.

The general partners in a general partnership and the active partners in a limited partnership are personally liable for the obligations of the company. The liability of the silent partners in a limited partnership is limited to the capital investment agreed upon in the partnership agreement.

The general partners in a general partnership and the active partners in a limited partnership exercise their power of decision either alone or together.

In both a general partnership and a limited partnership, the general partners agree on the principles for the distribution of profit and loss. The general partners can claim a reasonable salary and receive fringe benefits and tax-exempt expense allowances. In practice, the general partners usually claim their profits as personal withdrawals.

For taxation purposes, the business profit in partnership-type companies is designated as income of the general partners.


A co-operative is a corporation jointly owned by its members. The co-operative has become an increasingly common form of business operation for artists. Even just one person can form a cooperative, and founding one does not require any capital investment.

In a co-operative, each member has a vote. Only limited compensation is paid for the capital invested in the co-operative society for the co-operative’s profit. In a worker co-operative, an additional salary can be paid to the members.

Members of the co-operative are not personally liable for the co-operative’s debts or other obligations.

Both a limited company and a co-operative society are independent taxable entities whose income is taxed as company income.

Limited companies

A limited company is usually not a very profitable form of business for an artist. Founding a limited company requires initial capital of EUR 2,500.

A shareholder in a limited company is not personally liable for the obligations of the company. A limited company is represented by a board of directors.

A limited company is an independent taxable entity whose income is taxed as company income.

Founding of a business

A private-trader entity, a co-operative, and a general partnership can be established without an investment of capital. In a limited-partnership company, each silent partner is required to make a capital investment in an amount not determined beforehand. Founding a limited company requires a financial investment of EUR 2,500 in total.

A company is founded by submitting a start-up notification to the Business Information System (YTJ) maintained by the Finnish Patent and Registration Office (PRH) and the tax administration. A business ID is provided for the company, serving as a unique identification code.

 Business Information System BIS (“YTJ” in Finnish)
Pellervo Coop Center

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