For a start-up seeking rapid growth and external funding, the only sensible option is a limited company. It is also the best option from a risk management perspective. For example, a private limited company (SME) is owned by one person and ownership cannot be split between several people and the entrepreneur is personally liable. Tax considerations are also the reason why a limited company is the most common form of company.
The ownership of a limited company is divided into shares, which are transferable. Shares can be sold or donated, for example. A limited liability company is an independent legal entity which is responsible for its own obligations. Shareholders are only liable for the company’s obligations with the capital they have invested, unless they themselves assume liability on behalf of the company, for example by guaranteeing the company’s liabilities.
To set up a limited company, you need at least:
- Single shareholder
- One member and one alternate member of the Board of Directors
- The signed Treaty
- Articles of Association
The Memorandum and Articles of Association define the company’s name and activities. The name of the company should be chosen carefully, as changing it afterwards is costly and time-consuming. When choosing a name, it is also worth taking into account any domain names that may be available. Check whether the name you are considering is already available in the Trade Register. Go to the NiPa name service here.
The sector defines the business activity of the company, i.e. what the company does. A general business may be registered as the business of the company, in which case it covers all legal business activities. However, in addition to this, the main branch of activity in which the company operates must also be specified.
The steps in setting up a limited company are as follows:
1. The constitution and other registration documents are signed.
2. Pay a registration fee is €370 (in 2025) to the PRH, whether the company is set up on paper or online.
3. Submit the signed documents and the receipt for the registration fee to the PRH.
4. Wait for the PRH to register the company with the Trade Register. The Tax Administration handles the registration of the company for its part, including the VAT register.
5. The PRH and the Tax Administration send a letter once the company is registered. You can also follow the situation at www.ytj.fi. Registration usually takes between a week and a few weeks.
You can set up a private company online at www.ytj.fi. If the owners of the limited liability company are companies or foreign persons who do not have a Finnish personal identity code and bank details, the incorporation must be done using paper forms.
A shareholders’ agreement between the shareholders of a company is voluntary, but highly recommended if there are several shareholders in the company. The shareholders’ agreement usually covers matters that are not covered by the Companies Act or where the law does not provide an unambiguous answer. It can be useful, for example, in the event of disputes.
Finally, a few words on the organisation of the company’s administration. The accounting office, the accountant and the auditor are different things, and sometimes people seem to get them confused. Sometimes a potential client has mentioned that they need an accountant, when what they really need is an accountancy firm to do the bookkeeping. The board of directors of a limited company is responsible for organising the company’s accounts. If you cannot do the accounts yourself, you should outsource them to an accountancy firm.
An auditor may be omitted if, in both the financial year just ended and the immediately preceding financial year, two of the following conditions has been met. An auditor may also be elected after the company has been incorporated.
- the balance sheet total exceeds EUR 100 000
- a turnover or equivalent income exceeding EUR 200 000, or
- employ on average more than three people.
Get help from Valjas
If any of the above seems difficult and tricky, don’t worry your head about it. Here are some of the ways Valjas can help you set up a company – EASY!
- Please contact us if you have any questions.
