Trade in General
Trade signifies independent and continuous business and professional activity in accordance with good practice, which is engaged in for the purpose of earning an income. The prevailing principle in Finland is the principle of the right to carry on trade. In Finland, both natural persons and corporations, such as limited liability companies, may engage in trade in accordance with law and good practice.
The different forms of trade can be divided into three categories:
those that do not require registration;
those that are subject to compulsory registration; and
those that are subject to licensing.
The first two categories are usually also referred to as free forms of trade. The majority of trade forms are free.
If the activity takes place in a store, office or in some other place of business open to the public, or if the entrepreneur employs external labor for his services, he/she must, as a general rule, have full legal capacity and be in possession of his/her own property. An entrepreneur cannot e.g. be bankrupt.
Licensed forms of trade can be practiced only once a separate permit has been obtained and within the limits of the permits. These forms of trade have been separately regulated for the sake of important general concerns, which include, inter alia, human health, security and maintenance of public order. The law separately provides for certain forms of trade which are subject to a license. A number of special regulations concern e.g. real estate brokerage, as well as operating hospitality services or pharmaceutical businesses. An entrepreneur engaging in free and licensed trade needs to submit a start-up notification to the Trade Register before commencing any activity. [Incorporation of the Company].
There are four different business forms in which are possible to engage in a trade; are the private trader [Sole Trader], the general partnership [General Partnership and Limited Partnership] and the limited liability company [Limited Liability Company]. A private trader is a person, who acts as an independent entrepreneur contributing his/her work input to the company. Both in general and limited partnerships at least two persons perform business activities based on a trust relationship in such a way that the general partners bear liability for the risk of loss. A limited liability company is a separate financial entity in which the investors’ liability is limited to the amount of money invested in the company. Particular organs, such as the general meeting, the board of directors and the managing director, exercise authority within a limited liability company.