How to get started as a freelance developer in Finland
These days quite a few software developers are starting to think about switching from permanent work to contracting as a freelancer. Working as a freelancer has multiple advantages: for instance, you get the chance to work with different companies and their team members, you have plenty of freedom in choosing the most interesting and challenging project and as you gain more experience, you can command higher rates. Even when just starting out, assuming you work full-time, your total compensation based on a starting hourly rate of 60 euros will easily exceed what you can earn as a salaried employee.
You will however have to deal with the admin side of things, which can be a hassle. It may be tempting to go all in and register a limited liability company (osakeyhtiö) right away, before you even have your first project. We advise against this though, since while registering the company is easy, accounting incurs ongoing costs and shutting a company down can be tricky.
It is more prudent to take a lean approach and find a longer term project first and then begin by invoicing via a co-operative (osuuskunta) using a service for light entrepreneurship such as Ukko or Finjob, which seems to be the cheapest. This way you don't need to register your own legal entity, but costs are quite high as these services take 5%-10% in service fees. Also, it’s easier to go back to being a salaried employee with all the social security benefits involved if you never registered a company.
You can also register an individual entrepreneurship (toiminimi) and use a service such as Zervant or Holvi to manage the finances and either do the accounting yourself or pay an accountant. Costs are on the order of 100 euros a month or less so this becomes a viable option if you're invoicing over 2K a month (+VAT) and know that you'll be doing it for a while. You can also expense things to the legal entity further reducing your tax burden. There are also rumours going around that the tax authorities are looking to provide additional services to those with a toiminimi, likely removing the need for another service or the help of an accountant.
The moment you're invoicing closer to 10K euros per month (+VAT), which is something most freelancers working full time onsite are able to do, you should consider registering a limited liability company. This allows you to optimize taxes further by paying out some of the profits as dividends.
In order to estimate the most amount of tax you'd pay as "an employed freelancer" or when invoicing via a co-op, you may want to check out this online calculator. Check YEL and ignore the Ukko service fees to get the amount of tax based on projected invoiced amounts.
Finally, when it comes to finding a new project, that is where we as Toughbyte come in. All you need to do is send us an email, tell us your preferences and we’ll line up a number of projects for you. You should expect to do one interview for each potential assignment. Once you’re accepted for a project, we will sign an agreement with you and have the billing go through us. We will then ensure that your hours are logged and approved quickly and that you are paid on time.