TheNextWeb's article on Finnish startups

An entrepreneur always gets his/her income from the company he/she owns, right?

So all Entrepreneurial income is either taxed as salary + pensions + company's huge share of salary taxes + insurances etc.

OR it is taxed from all profit the company makes AFTER all costs, mandatory bookkeeping, mandatory taxation bookkeeping (which is separate in Finland, AVLs etc), mandatory audit on the company, etc with the corporate gains tax (26%) PLUS the capital gains tax 28% (compounding) on top of this.

..so an Entrepreneur pays either more taxes from salary than an employee ever would, or more taxes from profit than an employee ever would (out of salary). Two choices which both are taxed more heavy than the employee.

Research has shown that when every single non-profitable and struggling entrepreneur is also counted in the cold average taxation % for entrepreneurs in Finland is 34.4%, which is about 6% higher than average among employees. Also Entrepreneurs do in AVERAGE 20% longer work days than employees do. In a more typical case an entrepreneurs tax % is closer to about 40% pretty much despite of the small sums he/she is getting out of the company.

Niko: you might be the exception. Doing shorter days, and perhaps getting a similar enough standard of living. However, remember that putting any of your own expenses into the company's expenses is criminal: so an entrepreneur cannot casually "lighten up" the taxation load by using his/her company to pay for private expenses, for example. All income has to be either salaries or dividends, and both are taxed way more heavily than any tax burden on employees.

Freedom is the part you can't measure in income ;-) and with that I agree: it's more freedom, naturally. Just the way it should be.

However, think about this: the entrepreneur is the one taking all risks. He/she is the one employing others. And as thanks for this risk taking the Finnish society rewards him/her with more heavy taxation than everybody else. Question to politicians is: do you consider this to be fair? It sounds like the opposite of fair, and completely goes against the economics theory of degreasing marginal utility (for example). Those who produce the most should be the most motivated to produce even more - not the opposite, which is the case where this kind of taxation structure leads to.

Hi Taneli,
I read the post over at the Next web, and i will be visiting Finland at the end of October as well. I was selected to be part of a Delegation of South African entrepreneurs who will visit Finland as part of knowledge exchange programme.

The program details are at http://www.safipa.com/

If you have time, i would love to meet you and i am sure some of the other delegates would like to as well. If you can confirm with me via email, and i will send your details to the programme co-ordinator.

After some 7 years of entrepreneurship I can fully attest to this. In Finland it's more like a stigma than a merit - I noticed quite quickly that here being an entrepreneur means you're someone who couldn't get a real job, or just a potentially sociopathic individual preying on the helpless =)

Will I be running another startup in Finland? Most likely not.

It is interesting time being an Entrepreneur in startup businesses. Normally you first believe that your company is sucessfull but then someday something happens and you notice that your startup may not make any money with the business idea. I personally separate businesses to "healthy" businesses and "gamblingwithinvestormoney" businesses.

I started Artic.net 1998 with Robert living next door and Lauri and we were supposed to run portal with first free finnish webmail, forums, chat etc. We supposed to run that as a "healthy" business and grow it little by little. Our aim was to sell ads with reasonable price to advertisers. Time was not ready for selling ads on Internet, so I desided to quit and later Artic.net was sold to Spray.se and to Lycos ( http://www.itviikko.fi/internet/2000/09/21/articnet-siirtyy-lycosille/20...).
Taneli: you propably should add that to your list ;)

I have been running startups in "healthy" way since I was 17 and still I have a strong feeling that businesses can only survive when they have strong cash flow. Income has to start sooner or later.

Finnish market is quite small. That's why most companies should start thinging global market immediately or they should go international as soon as possible.

"gamblingwithinvestormoney" -companies are those that has to be sold to someone very fast. Without strong cash flow your business is like sitting in a icy lake and waiting winter to continue forever. You have to sell your company before you have spent all investor money. Well.. you heard story of artic.net... imagine the cash flow.

Well... summa summarum: I like companies with strong cash flow and I want to see more people building successful businesses.
I am nowadays partner in 8 businesses. I love being an entrepreneur.

Thanks Tuomas! Will have to add those to the list. Weird that I forgot them.

Ibox valuation of 233M EUR still gets dwarfed by MySQL 1 Billion USD valuation, yet it was a fairly decent tradesale at the time. I still have 4 freezer magnets on my fridge from Iobox = old school stuff of legend ;) I use them to hold down my two master's diplomas on my fride =) (Master Scuba Diver -certification, and Master of Vodka -diploma from Altia).