Start saving on taxes from the beginning of your business
Taxation can feel complicated, especially to a new entrepreneur. It is nevertheless important to understand which expenses may be deductible. Well-managed tax planning can create meaningful savings and improve cash flow, supporting the company’s growth and stability.
What does a tax deduction mean in practice?
As a general rule, expenses incurred in acquiring or maintaining business income may be deducted for tax purposes. A deduction reduces the taxable business result; it does not reduce the tax payable euro for euro. Work equipment, the business-use share of phone costs and office supplies are common examples of potentially deductible expenses. Private expenses are not deductible.
Common deductions for new entrepreneurs
Typical deductible expenses include business travel, software licences, accounting services and rent for business premises. Training that maintains professional skills and costs relating to a home workspace used for the business may also be deductible when the relevant conditions are met. If an item has both business and private use, only the business-use share may be deducted. Document expenses and retain supporting documents as part of the accounting records.
Vehicle use and daily allowances
The tax treatment of travel expenses depends on the company form. A sole trader cannot pay themselves tax-exempt mileage allowance or daily allowance. They may instead qualify for a corresponding additional tax deduction when the Finnish Tax Administration’s conditions are met. A limited company may pay tax-exempt travel expense reimbursements to a shareholder working for the company for qualifying business trips. Keep a driving log and retain documents showing the purpose and cost of each trip.
Expenses during the start-up phase
Expenses incurred before operations begin may be deductible when they relate directly to a business started for the purpose of earning income. Examples may include marketing, software, work equipment and professional advice connected with establishing the business. Record all start-up expenses and confirm their treatment with an accountant, as it may depend on the nature of the expense and the company form.
Use deductions to support growth
Using valid deductions is an important part of financial planning, particularly during the early stages of a business. Careful accounting helps ensure that deductions are claimed correctly. If you are unsure whether an expense is deductible, ask an accountant or the Finnish Tax Administration. Tax rules and monetary limits can change, so check the current guidance before filing a tax return.