Light entrepreneurship is an easy way to work as an entrepreneur
Self-employment will become more common in the future. An easy way to start entrepreneurship is to try light entrepreneurship, which has grown in popularity in recent years, and in which the entrepreneur's workload is reduced due to paperwork being carried out on their behalf. Today, light entrepreneurship is possible both with and without a business ID.
As a result of the global structural change in business life, the forms of work and its significance will change. Income is increasingly earned in multiple simultaneous employment relationships and through self-employment.
"People do not necessarily want to be in salaried employment from 8 am to 4 pm five days a week, but would rather employ themselves and complete short, project-like tasks. Entrepreneurship can start from, for example, one's own hobbies and interests. Entrepreneurship may grow over time and become full-time work, but this is not necessary. The majority of self-employed persons work as part-time entrepreneurs, and this is just as much "real" entrepreneurship as full-time entrepreneurship," says Lassi Leppänen, who works as an expert in the OP Light Entrepreneurship service.
The number of self-employed persons, i.e. private traders, is constantly increasing in Finland. According to various estimates, there may be up to 300,000 self-employed persons in Finland after 2030.
What is light entrepreneurship?
Traditionally, entrepreneurs have engaged in business and carried out paperwork either themselves or hired an accountant for the task. Around ten years ago, light entrepreneurship began to become more common in Finland. According to Lassi Leppänen, the term light entrepreneurship, at its simplest, is a generic term for a private trader performing an assigned job, and the invoicing related to the work and other paperwork are handled by a specialised service.
“Entrepreneurship is greatly facilitated when an invoicing service carries out paperwork on your behalf. However, keep in mind that it does not remove your responsibility for your entrepreneurship. You must be aware of what you are doing when you become an entrepreneur. You are solely responsible for the performance of your tasks, customer acquisition, marketing and, for your part, for ensuring that all statutory obligations are met. The purpose of light entrepreneurship services is to provide support for starting a business and to facilitate entrepreneurship.
What are the benefits of light entrepreneurship?
If you have competence that could be offered as a invoiceable service, you can start implementing your competence professionally. Choosing light entrepreneurship is one good option in this case.
“It is the simplest way to start entrepreneurship. You do not need to pay the start-up costs, and you will receive your fee according to the invoicing. Invoicing services only charge a fee of a certain percentage of the invoiced sums, which is much cheaper for you than using an accountant. The invoicing service is a new digital version of accountants and payroll clerks, and it can be your partner throughout your time as an entrepreneur,” Lassi Leppänen explains.
Light entrepreneurship is well suited for such things as seasonal and project-like work.
“If you like painting and, while out on a walk, you notice a fence where the paint is peeling, knock on the door of the house and suggest that you could paint the fence at the price you specify. This may become your first customer acquisition and pricing experience as well as your first invoiceable job. Your goal as a self-employed person does not necessarily need to be a business that produces millions, rather what’s fundamental is that you have the opportunity to employ yourself.
With or without a business ID?
One of the special features of light entrepreneurship has long been that the entrepreneur does not have a business ID, but now it is also possible for a light entrepreneur to work as an entrepreneur with a business ID.
“The key difference between a light entrepreneur without a business ID and a light entrepreneur with a business ID is that a light entrepreneur without a business ID is regarded as an employee in taxation, but in terms of pension insurance and other social security, as an entrepreneur. In practice, this means that the tax deductibility of a light entrepreneur without a business ID is very limited, but they pay contributions such as a pension contribution in accordance with the YEL pension scheme in the same manner as an entrepreneur with a business ID,” Lassi Leppänen says.
The possibility of light entrepreneurship with a business ID has been created because light entrepreneurs without a business ID lose the statutory benefits that entrepreneurs with a business ID have.
“As an entrepreneur with a business ID, you will receive a 5% deduction from taxation, i.e. you will pay less taxes on your activities. In addition, you will receive a VAT refund for essential purchases such as buying a phone or computer. If you are a light entrepreneur with a business ID, not all the VAT paid by your customers will go to the Tax Administration. Instead, you can keep some of it according to the government's VAT relief for small businesses. As an entrepreneur with a business ID, you also have the opportunity to receive a start-up grant granted by the TE Office, unlike an entrepreneur without a business ID,” Leppänen lists the benefits of the business ID.
However, according to Lassi Leppänen taking the first step is even more important what form of entrepreneurship you choose.
“I believe that choosing a company form, invoicing service or accountant is the easiest phase and the lowest threshold for starting a business. Instead, the question of whether you can paint a fence bordering a yard is the most important step. In other words, you will learn the most by starting and doing, but you should understand some things before starting your business.
Entrepreneurship involves continuous learning
Lassi Leppänen lists a few characteristics that entrepreneurs should have in order to create successful business activities.
“As an entrepreneur, you need to know your customers and adapt to their needs. If you are making sourdough bread and your customer is a residential centre for coeliacs, you must modify your business idea and remove gluten from your product. You should also keep up to date on the special features and market trends in your area of competence. You don't have to be the world's best painter on your first painting job, but your customer will feel that they are getting added value from the work they pay, if you can tell them about such things as different paints or painting techniques.
Also determine whether there is competition in your field and act accordingly. If you notice that someone in another city is better in a task that you also perform, use regionality: emphasise that you are offering that service locally. Also make sure that it is easy for potential customers to find and reach you.
“When planning to start a business, compare services and acquire information. Even so, keep in mind that no one ever graduates when the School of Entrepreneurship, as entrepreneurship is continuous learning. Whether you are a part-time, full-time or one-time entrepreneur, it will certainly provide lifelong lessons for your to utilise.
Lassi Leppänen spoke about light entrepreneurship at the RekryExpo fair at Turku Fair Centre on 14 November.