Accounting/Bookkeeping is the foundation of all business operations and is almost always a statutory obligation. The obligation to keep accounts, taxation, and even the withdrawal of funds depend directly on the business form you choose. In this article, we dive into the core aspects of accounting for new entrepreneurs and compare traditional and electronic financial management.

Table of Contents

• Obligation to Keep Accounts and Key Legislation

• Impact of Business Form on Accounting and Taxation

• Vouchers and VAT: The Building Blocks of Accounting

• Electronic vs. Traditional Accounting – Which is Right for You?

• How to Find the Right Accountant for a Startup?

1. Obligation to Keep Accounts and Key Legislation

The obligation to keep accounts fundamentally applies to all companies operating in Finland, regardless of size or business form. While the implementation and scope of accounting vary, the basic principles remain the same, accounting for new entrepreneurs included.

Legislation Based on Accounting

A company's taxation and operations are based on laws, the most important of which are:

• The Accounting Act (Kirjanpitolaki)

• The Value Added Tax Act (VAT Act, Arvonlisäverolaki)

• Various Income Tax Acts (Tuloverolait)

  
  

A company's taxation is directly based on the accounting records, which document all of the company's income and expenses. At the end of the financial year, the accounting information is used to prepare the financial statements or an income statement for taxation purposes.

Note: Even if you outsource your accounting, as an entrepreneur (or CEO), you remain ultimately responsible for ensuring your company's accounting is compliant.

2. Impact of Business Form on Accounting and Taxation

The choice of business form has a major influence on how accounting is implemented and how company funds can be withdrawn.

Sole Proprietorship (Toiminimi / Yksityinen elinkeinonharjoittaja)

• Accounting: A sole proprietorship can usually use single-entry bookkeeping, which is lighter and easier to perform oneself.

• Taxation: The company's income is taxed as the entrepreneur's personal earned and capital income (progressive taxation).

• Withdrawal of Funds: Withdrawing money from the company account constitutes private withdrawals (yksityisottoja), which is administratively simple.

Limited Liability Company (Oy / Ltd)

• Accounting: A limited liability company must use double-entry bookkeeping, which is more complex. In addition, formal financial statements must always be prepared.

• Taxation: An Ltd pays 20% corporate income tax (2025) on its profits. Owners are taxed only when they withdraw money as a salary or dividends, which allows for tax planning.

• Withdrawal of Funds: Money is withdrawn as an official salary or dividend (requiring payroll and administrative work).

3. Vouchers and VAT: Accounting for new entrepreneurs - The Building Blocks of Accounting

For the accuracy of accounting and tax deductions, two things are vital to remember:

Vouchers Must Be Retained

All documents verifying business transactions – receipts, purchase invoices, sales invoices – are accounting vouchers. They must be carefully retained and submitted for accounting.

VAT Deduction Right

A VAT-registered company can deduct the Value Added Tax (VAT) included in the products and services it purchases.

• Requirement: The prerequisite for a VAT deduction is that the VAT portion is itemized on the voucher (invoice or receipt).

• Practice: The company remits to the Tax Administration (Verohallinto) only the difference between the VAT collected from sales and the VAT paid on purchases.

4. Electronic vs. Traditional Accounting – Which is Right for You?

Implementing accounting for a startup is nowadays most often done electronically.

Electronic Financial Management (Often Recommended)

Electronic financial management uses a cloud-based system accessible via a browser (such as Fennoa, Netvisor, or Procountor), used by both the entrepreneur and the accountant.

Electronic financial management offers several significant advantages that streamline the daily routines of a new entrepreneur. Its main benefit is a more real-time financial situation (once entries are made), visible anytime, and significant time savings compared to the traditional method (e.g., no need to mail receipts). The electronic system also increases security, as documents are less likely to be lost and system updates are handled automatically.

However, electronic accounting has some drawbacks. It can be expensive and unnecessarily robust as a solution, especially for very small-scale or part-time entrepreneurship. Additionally, effective use of the system often requires some technical skill or willingness to learn from the entrepreneur.

Electronic financial management is not always the most cost-effective choice.

Traditional Accounting

In the traditional model, the entrepreneur sends vouchers to the accountant by mail or email, and the accountant makes the entries using their own software. This often suits small-scale, part-time sole proprietorships but is becoming rare today.

5. How to Find the Right Accountant for a Startup?

Choosing a competent accountant is one of the most important decisions for a company. By outsourcing, you gain expertise, consultation, and save time for your core business activities.

• Recommendations and Word of Mouth: Ask other entrepreneurs for recommendations. A good accountant for a startup is often found through referrals.

• Experience with Small Businesses: Ensure the accountant has experience specifically with small business accounting and financial statements.

• Local Search: Use Google and search terms like "accountant in Pasila" or "accounting firm in Helsinki" and read reviews.

• Up-to-Date Knowledge: It is crucial that the selected accountant is up-to-date on the latest changes in tax legislation.

• What Does an Accountant Do? An accountant handles the company's bookkeeping and financial statements, manages ledgers (accounts payable/receivable), provides advice on tax planning, and ensures compliance with statutory regulations. They may also handle payroll.

  
  

Do you need assistance with choosing the right business form, implementing an electronic accounting system, or tax planning? Contact our experts today, and we will ensure your company's financial administration is in order right from the start!

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