Many people wonder whether it is better to set up a business or start as a Light entrepreneur. Both options have their advantages, and the choice depends entirely on your personal situation and goals.
Here are the key differences to help you make a decision. Choose light entrepreneurship if you want to try your hand at entrepreneurship or issue invoices occasionally without administrative responsibilities—and choose a sole proprietorship if your business is ongoing, your revenue is growing, and you want to reduce costs and build your business for the long term. The key difference is whose business ID you use for invoicing and who is responsible for taxes and bookkeeping.
Both are common: in 2023, there were nearly 71,000 active part-time entrepreneurs (Statistics Finland), and approximately 230,000 sole proprietors in Finland (Finnish Entrepreneurs). The majority of Finnish businesses are one-person microenterprises.
What is " light entrepreneurship"?
Light entrepreneur invoice their work using the invoicing service's business ID without having their own company. The service handles withholding tax and pays you a salary. You don't need to keep your own books or file a tax return for the business. This is ideal for side income, project work, and trying out entrepreneurship.
What is a business name?
A sole proprietor has their own business ID. You are responsible for your own bookkeeping, value-added tax, and business tax returns—or you can outsource these tasks to a service provider, such as Truster. You can deduct business expenses for tax purposes, which is an advantage when you have high expenses and revenue.
When is it worth becoming a light entrepreneur?
- You invoice on an occasional or part-time basis.
- You want to get started right away without having to set up a company.
- You don't want to have to worry about bookkeeping and tax returns.
- Business expenses are minimal.
When is a sole proprietorship a good choice?
- Business operations are ongoing, and revenue is growing.
- You will incur deductible expenses (equipment, materials, vehicle).
- You want to build your business and brand for the long term.
- You are ready to handle or outsource your bookkeeping and VAT returns.
Responsibility and risks
- Light entrepreneur: You operate without your own business ID. Your personal assets are protected, and the price often includes competitively priced insurance.
- Business name: You establish an official company and obtain a business ID. As a sole trader, you are responsible for all business activities and contracts.
Bureaucracy and paperwork
- Light entrepreneur: You outsource paperwork to a billing service. You don't need an accountant, and you don't fill out tax returns for your business activities.
- Trade name: You are required to keep accounts. You must take care of advance tax payments, VAT returns, and financial statements yourself (or chooseLight Truster Pro Light —we will take care of everything for you).
Start-up grant
- Light entrepreneur: You usually cannot get start-up funding because the activity is often considered a side job or an experiment.
- Business name: You can apply for start-up funding if you become a full-time entrepreneur and meet the conditions for support.
Summary: light entrepreneurship the easiest way to launch and test a business idea without any commitments. A sole proprietorship is a good choice if your operations are extensive, you plan to invest heavily in equipment, or you’re eligible for startup funding. You can start as a light entrepreneur, test the demand, and switch to a sole proprietorship once your business stabilizes. Through Truster, you can invoice as both a light entrepreneur and a sole proprietor, so the transition is seamless.