Financial calculations

Accurate economical calculations are an important phase when evaluating one’s own possibilities to succeed.

Calculations must be realistic and preferably estimate expenses to be too high rather than too low. This guide is associated with the Excel calculation programme Financial calculation. You can fill the Financial calculation with the help of this guide. On the left side of the calculation programme, there is a reference to the point in this guide. You will find advice, figures or calculation formulas to base your calculations on. With the help of the Financial calculation, you can calculate the profitability of your business.

With These Instructions You Can Fill Financial Calculations

The calculation program is xlsx -file and you can fill it with Microsoft Excel software (pay) or Libre Office Calc software (free). Do not use Google Sheets -spreadsheet program. This instructions is associated with the calculation programme Financial calculation. You can fill the Financial calculation with the help of these instructions. On the left side of the calculation programme, there is a reference to the point in this web page. You will find advice, figures or calculation formulas to base your calculations on. With the help of the Financial calculation, you can calculate the profitability of your business.

The calculation gives you answers to following questions
1) Where do you need money and how much, and where will you get the funding?
2) What are the costs of entrepreneurship?
3) How will sales be formed?
4) How will the money cover annual costs?
5) How much will the entrepreneur earn per year?

3.2 Instalment of a Loan and Interests

In Act 1, we calculated the needed financing. In this item, the programme calculates automatically the expenses of the financing.

3.5 Wages and Salaries

In Finland, wage is paid for 2150 hours of work to the employee (8 work hours per day), although the real period of employment is approx. 1750 hours. Similarly, a person working 7,6 hours per day gets a wage of 2015 hours. Remember to include the wage paid to owners. It is wise to pay it due to a capital transaction tax in all company forms except companies with a corporate name, where wage payment is not possible.

Social security payments are 30 % of an employee’s gross wage with natural benefits, and in the accident-prone branch even 35 %. In case of illness, KELA (National Pensions Institute) does not cover all expenses and therefore it is recommended to calculate the social security payment at 50%. An entrepreneur in a corporation (Ltd., owns over 30 % of the company) pays an entrepreneur’s pension from his wage income, so extra payments of personnel will be 3 %. On behalf of other co-owners, the company will pay payments of its wages as they are employees. In a Commandite Company and in a company with general partnership, all responsible business partners belong to YEL (Entrepreneur’s Pension Insurance). To be safe, calculate all wages according to 50 % of extra payments.

3.6 Entrepreneur’s Pension Insurance

3.7 Other Indirect Employee Cost

You need at least liability and legal expenses insurance. If you need fire insurance, it is approximately 0,3 % of the replacement value of the fixed assets. There are not obligatory personal insurance for the entrepreneur except YEL–insurance (Entrepreneur’s Pension Insurance). But it is highly recommended to take the following insurances due to financial safety:

1. Working and leisure time accident insurance and occupational diseases due to work
- insurance fee 1,7 % of annual wage which is the basis for the YEL payment
2. Permanent disability insurance
3. Life insurance whose amount is the same as the company loan

3.8 Other Staff Costs

Employees' health care is compulsory in Finland and costs are approx. €250 - 450 per worker per year.

3.9 Rent of Business Premises

Generally speaking, the best way to start a business is to acquire rental premises, unless you already have a suitable place. Location is important, therefore owning a premise in the wrong place doesn’t guarantee success. In the retail business, rental premises are common. Entrepreneurs want to keep a possibility to change place when necessary. Budget also for a 1-3 month deposit which the landlord requires. The deposit will be paid back at the end of the rental period. If a municipality is the landlord, ask if it is possible to have a compensation e.g. in connection with a purchase.

3.10 Rental of Equipment, Leasing and Partial Payment Installments

There are different ways to rent equipment:
1) Can be rented traditionally without obligation to buy for a short time
2) Leasing rents 2-5 years period (you don’t own the purchased equipment after the payment period)
3) Partial payment financing, financing period max. 60 months (you own the purchased equipment from the beginning)
In cases 2) and 3) additional collateral is not needed.

Leasing financing means that you have to pay by cash 0 – 30 percent of the value of the purchase and the rest you pay in monthly instalments. The maximum pay-back period is 60 months. You can choose the amount of the final installment as a percentage of the total financing, max. 40 %. Usually after the payment period, the equipment is not yours, but you can also purchase the equipment from the leasing company. In leasing, the overall interest is approx. 5 %. Each month you can deduct the VAT included in the purchase.
Partial payment financing means that you have to pay by cash 20 - 40 percent of the value of the purchase and the rest you pay in monthly instalments (max. pay-back period is 60 months). You will get a return of the VAT you pay within 2 months.

Benefits of Leasing Rental
Expenses are easy to budget and also maintenance and repair are often included in the leasing agreement. VAT can be deducted every month. In a final accounts analysis, a company’s invested capital Interest is higher because invested capital is replaced with leasing. Money is not committed to purchasing equipment, capital is available to use in the business.

3.11 Cost of Vehicles

Cost of operating vehicles in business use.

3.12 Costs of ADP-equipment and -programs

Office costs include office supplies and equipment. Office machines can be deducted as a small-scale acquisition. The highest sum for these is €2500 VAT 0 %. In this way, a single purchase can be at most €850 VAT 0 %. Also personal computers etc. are included in this category in spite of the price.

3.13 Costs of Other Machinery and Equipment

The tools discussed here mean tools whose operating life is under 3 years, like hand tools, office work equipment and so on. The tax authority approves deductions once also machinery purchases €850 per piece VAT 0 %, which total amount won’t exceed €2500 per year. Tools and work clothes are a part of a company’s image and must be updated.

3.15 Travelling Expenses

Travelling expenses connected to business travel can be deducted, i.e. expenses due to visiting an exhibition. It is good to remember tax free kilometre allowance when using your own car and also daily expense allowances. Practitioners and privat traders are not allowed to pay kilometre and daily expense allowances to themselves in cash (other forms of business can). Those must be marked as a travelling expense allowance on a personal tax declaration.
Owners of commandite companies, general partnerships or corporation companies (Ltd) travelling expenses are paid in cash. Because the tax authority is interested in tax free payments to owners of companies, travelling-expenses accounts or a driver’s log must be carefully documented and delivered to a bookkeeper. There are also other expenses due to travelling; accommodation, bus tickets, plane tickets, etc.

Refund for Transportation costs in year 2025:

• Kilometre allowance when using own car is €0,59 per km
• Daily allowance is €53, with following terms: the trip lasts over 10 hours and is over 15 km from the starting point and also over 5 km from home
• Half-day allowance is €24, with following terms: the trip lasts over 6 hours and is over 15 km from the starting point and also over 5 km from home

3.17 Marketing VAT 0 %

The costs of marketing depend on the business. At the lower end, marketing costs consist of business cards and logo costs.

• Printing a business card costs app. €50 - 300.
• Designing a business logo and forms costs aprx. €300 - 400.
• Websites costs €300 – 2000.
• Advertising light: The minimum cost is €500 + installation. A new advertising light box with decals size 300 x 40 cm costs €900-1800 + installation.
• Decals: Window/wall taping 10m² with your own graphics starting at €500 installed. Car taping €200 - 3000 installed. Additional costs may arise from design costs and cleaning of taping surfaces.
• Remember to budget also for printed advertisements in different media.

3.19 Administrative Services

3.20 Knowledge Acquisition

A new entrepreneur should increase his/her expertise and knowledge of entrepreneurship. The Employment and Economic Development Centre organises many different kinds of trainings each year. Attendance fees are reasonable due to public financial aid.In order to keep up your expertise in your field, you should order professional journals. You might also need to order newspapers and magazines for your customers or your own knowledge acquisition. However, your daily newspaper is worth changing to company’s expense. Suomen Yrittäjät is the Finland’s largest community of business owners. You can get there to help and support with expert lawyers, broad networks, useful services and cash-saving member benefits. Membership for year is from €186/person, €275/2-3 persons and €350/4-5 persons etc.

3.21 Costs of Communication and Monetary Transactions

Telephone operator may require €300-500 worth of deposit or security payment to guarantee the payments under the agreement.

• Internet connection fee is aprx. €360 VAT 0 % per year.
• Mobile plan packages for businesses €300 - 500 VAT 0 % per year.
• Web hosting €35 - 260 VAT 0 % per year.
• Payment terminals cost from €300 VAT 0 %.
• Cash register €300 VAT 0 %.
• Cash register software €230 - 720 VAT 0 % per year.
• Card payment: The commission for Visa and Mastercard purchases in Finland is 0,5 - 1,95 % of the total purchase amount, depending on the verification and settlement method of the purchase transaction.
• Online payment: The commission for example Paytrail €14,90 per month + 3,25 % + €0,50. MobilePay 2,49 % + €0,2. PayPal 1,9 % + €0,35.
• Company bank account: €130 - 320 per year.
• Counting cash in the bank costs aprx. €3 - 7. Fees vary between banks.

3.22 Insurance Premiums

The company needs a liability- legal insurance. The insurance costs are in retail business €400 - 1000 per year and in industrial business €1000 - 2000 per year.

Other Expenses

• Employees’ health care is compulsory in Finland and costs are aprx. €250 per worker.
• Parking fees, representation expenses, meeting costs and cost of establishing a business.
• Federation of Finnish Enterprises membership fee is aprx. €160 per single membership
• Unemployment Funds for Entrepreneurs example annual income €30 000, annual fee €510 per year. More info: Entrepreneur Fund.

Lisence to play background music
There is a fee for playing backround music in business premises in Finland. According to law, if you play recorded music in your premises or in your switchboard (e.g. from radio, television, computer, etc.), you must pay a royalty fee via Gramex (record company) and Teosto (artists). More details: www.musiikkiluvat.fi

Yleisradio tax (YLE tax)
Limited liability companies, cooperatives, associations and foundations which taxable income is more than €50 000 are obligated to pay the YLE tax. General partnerships, limited companies and housing cooperatives are not obligated to pay YLE tax. Taxable amount is at minimum €140 and at maximum €3000, and it is counted €140 + 0,35 % from the amount that exceeds taxable income €50 000.

3.23 Office Supplies

Office supplies and machines, mileage under three years, regardless of purchase price.

3.24 Other Costs

Business meeting and confrence expenses with suppliers, customers, staff. Research expenses and other deductible expenses.

3.25 Company Vehicle Costs for Privat Use

All company vehicle expenses are included for example: leasing costs, services, fuel/electric, tyres, insurances. VAT is not deducted from them.

3.26 Handling Fees of The Trade Register and bank loan delivery fees

Price list for notifications to the Finnish Trade Register:

• Starting up a limited liability company through a guided process in the online service at ytj €280
• Start-up notification for limited liability companies €370
• Start-up notification for private traders €70
• Start-up notification for general or limited partnerships €280
• Start-up notification for other types of company (for example co-operatives, associations) €370

Bank loan delivery fees
At the time of processing a loan, a bank will be bearing some cost related to administration. This amount varies between 0.5 % and 2.50 % of the loan amount.

Business Costs (Total Fixed Expenses)
These expenses don’t depend on sales, but it is possible to change them when sales grow. “Needed working capital per month” reveals the sum which must be considered when calculating the need for money. It is better to be prepared to double the sum.

3.27 Number of sales performance billing hours per year and value added tax (VAT)

The number of billing hours is about 1300 - 1500 hours per year/employee. Hours of an entrepreneur working hourly also take sales, bid calculations, orders, financial administration, work planning, machine maintenance and transfers, cleaning, etc. When calculating an entrepreneur's hourly rate, the biggest mistakes are made in estimating the amount of time that entitles to invoicing, if the number of billing hours is estimated to be too high and the price is small, resulting in profitability problems and/or long working days. The actual number of billing hours is affected by logistics, problems with suppliers and subcontractors, machine failures, complaints, sick leave, family leave, number of weekdays, trainings, etc. With good work planning and risk preparedness, billing hours can be increased.