Comparing company forms

Private entrepreneur: You can only set up a company alone. 

Limited liability company: You can set up a company alone. You will, however, need at least one alternate member for the company's Board of Directors.

General partnership: You cannot set up a company alone. At least two persons are required for setting up a general partnership.

Limited partnership: You cannot set up a company alone. At least two persons are required for setting up a limited partnership, one of whom is a responsible partner and the other a silent partner.

Cooperative: You can set up a cooperative alone. You will, however, need at least one alternate member for the cooperative's Board of Directors.

Private entrepreneur: You do not have to invest money in your company at its start-up phase.

Limited liability company: You do not have to invest money in your limited liability company. If you set up a public limited liability company the shares of which are traded on, the minimum share capital is EUR 80 000.

General partnership: There are no minimum capital requirements for establishing a general partnership, so you do not have to invest any money in your enterprise at its start-up phase.

Limited partnership: A limited partnership does not have minimum capital requirements. If you are ta responsible partner, you do not have to invest money in your company at its start-up phase. If you are a silent partner, you will need to invest capital in the company. You will have agreed the amount with the other partners in the Memorandum of Association.

Cooperative: A cooperative does not have minimum capital requirements. In other words, you do not of the have to invest any money in your cooperative at its start-up phase.

Private entrepreneur: You will make all the decisions alone, and you will also represent your company yourself.

Limited liability company: Depending on the issue, decisions are made by the General Meeting, the Board of Directors, the Supervisory Board or the Managing Director. The company is represented by the Board of Directors and by the Managing Director in a matter that is part of his or her duties. A provision on the right of a member of the Board of Directors or the Managing Director to represent the company may also be included in the Articles of Association. In addition, the Board of Directors may authorise a nominated person to represent the company, provided this is indicated in the Articles of Association.  

General partnership: In general, you will make decisions together with the other partners. Each partner has the right to represent the company, but you can restrict this in the partnership agreement. The Managing Director may also represent the company and make decisions in certain issues.

Limited partnership: You will make decisions either individually or together with the other partners in accordance with the partnership agreement. Each responsible partner has the right to represent the company. A silent partner, on the other hand, cannot normally represent your business. The Managing Director may also represent your company, and make decisions on certain issues.

Cooperative: Depending on the matter, decisions are made by the General Meeting, the Board of Directors, the Supervisory Board, the Board of Representatives or the Managing Director. The cooperative is represented by the Board of Directors and by the Managing Director in a matter that is part of his or her duties. A provision on the right of a member of the Board of Directors or the Managing Director to represent the cooperative may also be included in the rules of the cooperative. In addition, the Board of Directors may authorise a nominated person to represent the cooperative if this is indicated in the rules. 

Private entrepreneur: You cannot pay yourself a salary. However, you can draw money from your company’s account as personal withdrawals. Please note that personal withdrawals do not reduce your company’s profit.

Limited liability company: You can withdraw money from your company as wages or as a dividend. You can also withdraw money as kilometre allowances and daily allowances. You cannot make personal withdrawals from the company account.

General partnership: You can withdraw a salary from your company. You can also make personal withdrawals from your company’s account. Count on a case-by-case basis, which is best in terms of tax purposes. You can also withdraw money as kilometre allowances and daily allowances.

Limited partnership: You can withdraw a salary from your company. You can also make personal withdrawals from your company’s account. Count on a case-by-case basis, which is best in terms of tax purposes. You can also withdraw money as kilometre allowances and daily allowances.

Cooperative: You can withdraw a salary from the cooperative. A cooperative may also distribute the surplus. You can also withdraw money as kilometre allowances and daily allowances. You cannot make personal withdrawals from the cooperative’s account.

Private entrepreneur: A private entrepreneur is not a separate tax liability. You will receive all the profits from your business activities. Business losses can either be confirmed as the company’s losses, or be transferred for deduction from capital income.

Limited liability company: Company's profits or losses shall be confirmed to the company every tax year. If the company has distributable assets by law, you may withdraw a dividend. Even if your company has generated losses during the financial year, you may withdraw a dividend if there are sufficient funds for distribution.

General partnership: Share both the profits and losses with the other partners. The shares will be based on the partnership agreement or the Partnerships Act.

Limited partnership: Silent partners will receive their share of the profits first. After this, the responsible partners share the profits in accordance with the partnership agreement. The losses will be shared between the responsible partners. Silent partners do not need to pay for the losses.

Cooperative: The cooperative is responsible for its profits and losses. A cooperative may distribute the surplus in accordance with its rules. Even if the cooperative has generated losses during the financial year, it may distribute a surplus if there are sufficient funds for distribution.

The tax burden of your company and your personal tax burden together determine which company form is the most advantageous in terms of taxation for you.

Private entrepreneur: You pay income tax on the financial result of your company as personal taxes, together with your other earnings.

Limited liability company: Your limited liability company pays for its taxes independently. However, you will pay personal tax on the wage and dividend you have taken out from your company. The payment of wages reduces your company’s financial result, which means that your company will pay less income tax.

General partnership: You pay income tax on the financial result of your company as personal taxes, together with your other earnings.

Limited partnership: You pay income tax on the financial result of your company as personal taxes, together with your other earnings.

Cooperative: Cooperatives pay their taxes independently. However, you will pay personal tax on the wage you have taken out and on the surplus distributed by the cooperative. The payment of wages reduces the financial result, which means that the cooperative will pay less income tax.

Private entrepreneur: A private entrepreneur’s business activities are not automatically transferred to anyone. An undivided estate may decide to continue the business activities. This requires a notification to be submitted to the Trade Register. The estate may also decide to make a notification of termination. In this case, one of the estate’s shareholders makes a notification of termination to the Trade Register and, if necessary, the Tax Administration registers.

Limited liability company: In principle, your death will not affect the company's existence. The ownership of shares is transferred to the estate, which will make a decision on the continuation of the company's operations. In principle, the shares can be sold, the estate may decide to continue the company's activities or to terminate the company. The General Meeting, that is, the shareholders, may make a decision on the company's liquidation and subsequently, its dissolution. An alternate board member cannot make this decision alone, unless the deputy board member is the sole shareholder.

General partnership: After your death, your share in the company can be transferred to another person. This should, however, be indicated in the partnership agreement, or all partners have to agree to it. The company may also be terminated.

Limited partnership: After your death, your share in the company can be transferred to another person. This should, however, be indicated in the partnership agreement, or all partners have to agree to it. The company may also be terminated.

Cooperative: The cooperative will continue its activities despite your death. Your family members have to, however, notify the other cooperative members of your death. The membership share you paid at the cooperative's start-up phase will be returned to your estate.

Becoming a private entrepreneur is suitable for you, if your business activities are relatively small and largely based on your own work input. It is the lightest company form. It is easy and inexpensive to set up.

A limited liability company is suitable for you, if your business operations are a bit larger, your company aims to expand, and there are various founding members. A limited liability company carries smaller financial risks than, for example, a private entrepreneur. However, it is not a very light company form.

A general partnership is suitable for you, if your company operates on a relatively small scale, and you have complete trust in your business partner. It is a lighter company form than, for example, a limited liability company.

A limited partnership is suitable for you, if your business activities are relatively small and largely based on your own work input, but you want to include a familiar investor. It is a lighter company form than, for example, a limited liability company.

A cooperative is particularly suitable for collaborative entrepreneurship. It allows you to sell your expertise easily in a fairly risk-free manner. A cooperative is a relatively light company form.

Private entrepreneur: You are personally liable for your own company with all your assets.

Limited liability company: You are not responsible for your company with your own assets. However, if you have invested money in your company, you may lose the amount you have invested. If you guarantee a loan for your company, you will be personally liable for it.

General partnership: You are personally liable for your own company with all your assets.

Limited partnership: If you are a responsible partner, you are personally liable for your own company with all your assets. If you are a silent partner, you are not responsible for the company with your assets. However, you will have invested money in your company, and in the worst case, you may lose the amount you have invested. If you guarantee a loan for your company, you will be personally liable for it.

Cooperative: You are not liable for your company with your assets. However, you will have paid for a membership share, and in the worst case, you may lose the amount you have invested. If you guarantee a loan for your cooperative, you will be personally liable for it.

Private entrepreneurs: You are personally responsible for the damage that you cause in your business operations.

Limited liability company: If you are the Managing Director or a member of the Board of Directors or the Supervisory Board, you must compensate the company for the damage that you have caused by violating your duty of care. If you violate the Limited Liability Companies Act or your company’s articles of association, you must compensate your company, its shareholders or other parties for the resulting damage.  The liability may vary between the different members of the Board of Directors, for example, depending on the division of the duties. Members of the Board of Directors who have been ordered to pay compensation for damages are collectively liable and the party that suffered the damage can claim the entire amount of the damages from any of the members of the Board of Directors who have been ordered to pay compensation for the damages.

General partnership: If you are the Managing Director or a partner, you must compensate for the damage that you have caused to your company.

Limited partnership: If you are the Managing Director or a partner, you must compensate for the damage that you have caused to your company.

Cooperative: If you are the Managing Director or a member of the Board of Directors or the Supervisory Board, you must compensate the cooperative for the damage that you have caused by violating your duty of care. If you violate the Act on Cooperatives or the rules of the cooperative, you must compensate the cooperative, its members, shareholders or other parties for the resulting damage. The liability may vary between the different members of the Board of Directors, for example, depending on the division of the duties. Members of the Board of Directors who have been ordered to pay compensation for damages are collectively liable and the party that suffered the damage can claim the entire amount of the damages from any of the members of the Board of Directors who have been ordered to pay compensation for the damages.

Note that in all forms of enterprise, you must compensate for the damage that you have caused, irrespective of whether the damage was intentional or unintentional.

Private entrepreneurs: If you commit a crime in your business activities, you are held criminally liable for you action. You may also be held criminally liable for serious damage that you have caused in your business activities.

Limited liability company: If you commit a crime in your business activities, you are held criminally liable for you action. You may also be held criminally liable for serious damage that you have caused in your business activities. If you are a member of the Board of Directors, you and the other members may also be held collectively responsible for the crimes caused by the Board of Directors. There are also types of crime in a limited liability company that do not exist in other forms of enterprise, such as a company law offence and a company law violation.

General partnership: If you commit a crime in your business activities, you are held criminally liable for you action. You may also be held criminally liable for serious damage that you have caused in your business activities.

Limited partnership: If you commit a crime in your business activities, you are held criminally liable for you action. You may also be held criminally liable for serious damage that you have caused in your business activities.

Cooperative: If you commit a crime in your business activities either as a member of the Board of Directors or otherwise in the company, you will be criminally liable for it. You may also be held criminally liable for serious damage that you have caused in your business activities. There are also types of crime in a cooperative that do not exist in other forms of enterprise, such as an offence in a cooperative and an infraction in a cooperative. If the crime also results in damages, you are liable to compensate for the resulting damage.

Note that the offence does not need to be intentional. It may also be caused by negligence.

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