Finnish Limited Liability Company (Oy) 2026: What It Is, How to Set One Up and When It Makes Sense

Table of Contents

1. Short answer: what is an Oy in practice?
2. What is an Oy legally?
3. Setting up an Oy in 2026: steps and costs
4. Liability: board, shareholders and personal responsibility
5. Taking money out: salary or dividend?
6. Bookkeeping and financial statements: much more than with a sole trader
7. Reporting: who reports what and when?
8. Bank account: a separate business account is practically essential
9. Sole trader vs. Oy: comparison
10. Checklist before setting up an Oy
11. Risks and common pitfalls
12. When an Oy makes sense, and why its bookkeeping costs more
13. Summary

1. Short answer: what is an Oy in practice?

If you do not have time to read the whole guide, here is the short version:

Osakeyhtiö (Oy) is the Finnish private limited liability company. It is a legal entity separate from its owners. It owns its assets, signs contracts in its own name and is responsible for its obligations with its own assets. As a rule, the owner is not personally liable for the company’s debts unless they have, for example, given a personal guarantee or acted negligently as a board member. Ownership of an Oy is divided into shares, which determine ownership, voting rights and the right to dividends.

An Oy is a common choice because it limits the owner’s liability, works well for companies with more than one owner and makes it possible to combine salary and dividends. The benefit is not free: an Oy requires double-entry bookkeeping, annual financial statements, regular filings, formal company decisions and, in practice, a separate business bank account. That is why running an Oy and managing its bookkeeping costs clearly more than operating as a sole trader.

This guide explains the difference between a sole trader and an Oy, how an Oy is set up, how you can take money out of the company, what obligations come with it and when an Oy is a justified choice.

Need help setting up an Oy and starting the company’s financial administration? See Bisse.fi’s Oy service. If you are still testing entrepreneurship, start with what light entrepreneurship is.

2. What is an Oy legally?

An Oy is its own legal entity, separate from its founders and owners. The company can:

• own assets, such as cash, equipment, real estate and intellectual property
• sign contracts in its own name
• take out loans
• employ people
• bring legal claims and be the target of legal claims
• continue to exist even if the owners change

There are two types of limited liability companies in Finland:

• Private limited liability company (Oy): no minimum share capital is required. The former 2,500 euro requirement was removed in 2019. Most small limited liability companies in Finland are private companies.
• Public limited liability company (Oyj): the minimum share capital is 80,000 €, and the company can be listed on a stock exchange. This form is intended for larger companies.

This article focuses on the private Oy, which is the relevant option for one-person companies and small businesses.

Ownership of an Oy consists of shares. If you set up the company alone and issue 100 shares to yourself, you own 100% of the company and have all dividend rights and decision-making power. An Oy can also be founded by several people, in which case the shares are divided as agreed.

For background, see also: What is a Finnish sole trader?.

3. Setting up an Oy in 2026: steps and costs

In 2026, an Oy is set up online in YTJ, the Finnish Business Information System. Paper forms have not been available for this purpose since 1 January 2026.

Steps

1. Decide the basics: company name, domicile, line of business, financial year, shareholders, number of shares, possible share capital and board composition.
2. Choose the setup method: YTJ’s guided setup package or a registration using documents you have prepared yourself.
3. Prepare the founding documents: memorandum of association and articles of association. If you use YTJ’s guided setup package, the service generates these documents automatically. If there is more than one shareholder, it is also worth preparing a shareholders’ agreement, even though it is not filed with the Trade Register.
4. Register the company with the Trade Register within three months of signing the memorandum of association. In YTJ’s guided setup package, the registration is made in the same service as part of the setup after the documents have been approved, signatures given and the fee paid. Otherwise the setup lapses and the company is not formed.
5. Pay PRH’s processing fee in YTJ.
6. Register for the necessary tax registers: prepayment register, VAT register and employer register if your company needs them.
7. Report the beneficial owners and arrange practical matters such as the bank account, bookkeeping and possible YEL insurance.

If you set up the company alone, you are often the only shareholder and the ordinary board member. If the board has fewer than three ordinary members, the company must also have at least one deputy board member.

Guided setup package or your own documents?

YTJ’s guided setup package suits a standard small Oy when the company has no share capital, all shareholders are individuals, the persons being reported have Finnish personal identity codes and standard articles of association are enough.

A registration using your own documents is needed, for example, if the company has share capital, a shareholder is another company, not all persons have a Finnish personal identity code or the articles of association need special clauses.

Setup costs in 2026

• Guided setup package in YTJ: 300 €
• Registration with self-prepared documents: 400 €
• Share capital: a private Oy has no minimum share capital, so it can be set up with 0 € share capital.
• Possible expert help for the articles of association, shareholders’ agreement, tax planning or founding documents: usually from a few hundred euros upward.

Processing time depends on PRH’s workload and the quality of the filing. If the company name, documents or personal details require additional clarification, registration can take longer.

Read more: Starting a business and Bisse.fi’s Oy service.

4. Liability: board, shareholders and personal responsibility

The core idea of an Oy is limited liability: the owner is not liable for the company’s debts with their personal assets. In practice this usually works, but there are exceptions:

• Board members can become personally liable if they act negligently or fail to fulfil their duties. For example, late financial statements, unpaid salaries and taxes or failing to document important decisions can lead to liability.
• Personal guarantees: if you sign a personal guarantee for the company’s loan or lease, you are personally responsible for it.
• Duty to act in the company’s interest: money cannot be taken out of the company without an acceptable basis, such as salary, dividend, expense reimbursement or loan repayment.
• Insolvency situation: the board must act when the company is insolvent. Continuing operations knowingly while insolvent can lead to personal liability.

In a one-person Oy, you are often the only shareholder, the only ordinary board member and the only employee. In practice, the responsibility is largely yours.

5. Taking money out: salary or dividend?

Taking money out of the company is one of the biggest benefits of an Oy, but also one of the most complex areas. An owner-entrepreneur can usually take money out of the company in two ways:

Salary

The company pays you salary for the work you do for the company. Salary is a deductible expense for the company, and the company withholds tax and pays the required employer contributions.

• Salary is taxed as earned income in your personal taxation.
• The tax rate is progressive, meaning it rises as income increases.
• Salary can be paid flexibly each month or on another agreed schedule.
• The owner-entrepreneur’s YEL obligation is assessed separately. YEL pension and social security are based on YEL income, not automatically on the salary paid by the company.

Dividend

The company can distribute profit as dividends to shareholders after the financial statements have been approved. A dividend is not a deductible expense for the company; it is distributed from profit that has already been taxed at company level.

For an unlisted Oy, the key dividend rule in 2026 is:

• A dividend up to 8% of the mathematical value of the shares (= the company’s net assets / number of shares) is treated as capital income.
• Of this capital-income dividend, 25% is taxable and 75% is tax-exempt up to 150,000 € per recipient per year.
• For the amount exceeding 150,000 €, 15% is tax-exempt and 85% is taxable capital income.
• The part exceeding the 8% limit is 75% earned income and 25% tax-exempt, regardless of the amount.

In practice, lightly taxed dividends are one of the most important tax advantages of a Finnish small Oy, but the benefit requires the company to have net assets. Net assets accumulate over time when profit is left in the company.

You can estimate dividend taxation with your own numbers using the dividend calculator.

Practical strategy

Most one-person Oy owners use a combination of salary and dividends:

• Salary covers necessary living costs and reduces the company’s taxable profit.
• YEL income and YEL payments are handled separately if the owner-entrepreneur meets the YEL conditions.
• Dividends are paid after the financial statements if the company has distributable funds and the distribution does not endanger solvency.

Tax calculation is complex, and the right ratio between salary and dividends depends on the company’s net assets, the owner’s other income and personal taxation. Use these tools: income tax calculator and dividend calculator.

Read also: Tax deductions for sole traders and limited companies.

6. Bookkeeping and financial statements: much more than with a sole trader

This is one of the biggest practical differences compared with a sole trader.

Oy bookkeeping

An Oy must always keep double-entry bookkeeping. This means that every business transaction is recorded in two accounts, debit and credit. It is not optional; it is a legal obligation.

Double-entry bookkeeping requires:

• Careful handling of receipts and supporting documents, including every invoice, receipt and payment.
• A chart of accounts that fits the business and company structure.
• Regular entries, usually monthly or at least quarterly.
• Financial statements including a balance sheet, income statement, possible cash flow statement and notes.

The bookkeeping of a one-person Oy is often handled by an accounting firm, because the work requires knowledge of bookkeeping and taxation. Learning it on the side in a few hours is usually not enough.

Financial statements

An Oy must prepare financial statements for every financial year, regardless of the company’s size and whether it has had any activity. The financial statements must be prepared within four months of the end of the financial year. They include at least a balance sheet, income statement and notes. The board signs the financial statements, and the ordinary general meeting approves them.

The approved financial statements must also be filed with the Trade Register within 8 months of the end of the financial year. This is a different deadline from the four-month deadline for preparing the financial statements and filing the tax return. If the financial year ends on 31 December 2026, the Trade Register filing deadline is 31 August 2027. Late filing can lead to PRH’s late filing fee.

Audit

An audit is mandatory if the articles of association require it or if at least two of the following limits are exceeded in both the completed financial year and the preceding financial year:

• revenue over 200,000 €
• balance sheet total over 100,000 €
• more than three employees on average

For a small one-person company, an audit is usually not mandatory in the early years if the articles of association do not require an auditor.

Comparison with a sole trader

A sole trader can use single-entry bookkeeping if no more than one of the following limits is exceeded during the financial year:

• balance sheet total 100,000 €
• revenue 200,000 €
• on average three employees

In single-entry bookkeeping, only income and expenses are recorded, and financial statements are generally not required. This is clearly simpler and cheaper to manage.

Read more: Single-entry bookkeeping and Sole trader bookkeeping.

7. Reporting: who reports what and when?

An Oy reports to more authorities than a sole trader. Understanding this helps explain why Oy administration requires more work and therefore higher bookkeeping costs.

Finnish Tax Administration

• Tax return 6B once a year, within four months after the last calendar month of the financial year has ended.
• VAT returns monthly, quarterly or annually depending on the tax period, if the company is in the VAT register.
• VAT registration if revenue in the current or previous calendar year exceeds 20,000 € or if the company voluntarily registers.
• Employer health insurance contributions and other employer contributions if the company pays salary.

Incomes Register

Every paid salary and work compensation must be reported to the Incomes Register within 5 days of the payment date. This also applies to salary paid to the owner.

PRH, the Finnish Patent and Registration Office

• Financial statements filed with the Trade Register annually within 8 months of the end of the financial year.
• Changes to board members and persons authorised to sign for the company registered promptly.
• Changes to the articles of association registered.
• Beneficial owner information reported and kept up to date.

Internal administration

• Board meeting minutes for important decisions.
• Annual general meeting minutes, where the financial statements are approved and any dividend distribution is decided.
• Maintaining the shareholder register.

The list alone shows that there is more work than with a sole trader. In practice, most Oy companies let an accounting firm handle reporting, because a mistake in even one area can lead to fees, penalties or personal liability.

8. Bank account: a separate business account is practically essential

An Oy is its own legal entity, and in practice it should have its own business bank account. Using a personal account mixes the company’s and owner’s money flows, makes bookkeeping harder and blurs the boundary of liability.

A business account is almost always subject to fees. The monthly price depends on the bank, payment cards, online banking credentials, user rights and bookkeeping integrations. Check the current price with the bank before opening the account.

A business account usually has more features than a personal account: payment management, multiple user rights, reporting and integrations with bookkeeping systems.

9. Sole trader vs. Oy: comparison

Read also: Sole trader or light entrepreneurship and When light entrepreneurship is not suitable.

10. Checklist before setting up an Oy

Before setting up an Oy, go through at least these points:

1. Is Oy the right company form? If you do low-risk service work alone and take all money into personal use immediately, a sole trader setup or light entrepreneurship may be lighter.
2. Will profit remain in the company? Dividend planning is useful only when the company accumulates net assets.
3. Is a shareholders’ agreement needed? In a company with several owners it is practically important, even though the law does not require it.
4. Who serves on the board? If there are fewer than three ordinary board members, a deputy member is required.
5. How will bookkeeping be handled? Choose the accounting firm, software, receipt workflow and payroll needs before the first invoices.
6. Are VAT, prepayment or employer registrations needed? Registrations affect invoicing and reporting from the start.
7. Does YEL apply? A shareholder in a leading position is usually covered by YEL if they own more than 30% alone or more than 50% together with family members, and the other YEL conditions are met.
8. How will you take money out? Plan salary, dividends, expense reimbursements and possible fringe benefits in advance.

11. Risks and common pitfalls

The heavier administration of an Oy brings error risks that can become expensive:

1. Late financial statements. PRH can impose a late filing fee of 150-600 € depending on the delay, and repeated neglect can lead to more severe consequences.
2. Errors in the tax return. Tax expertise is often needed, because Oy taxation is more complex than filling in a personal tax return.
3. Dividend distribution without distributable funds. If you distribute dividends without sufficient profit or unrestricted equity, the money may have to be returned and the board may become liable.
4. Mixing company and owner funds. This blurs the separation between the company and the owner. Do not use the company account for personal expenses.
5. Missing board minutes. Without minutes, important decisions are difficult to justify later.
6. Late Incomes Register reports. Penalties can be imposed for each late report.
7. Forgetting YEL insurance. An owner-manager of an Oy may have a YEL obligation even if no salary is paid. Read: YEL insurance.

Most of these risks can be avoided by using an accountant or accounting firm that understands Oy obligations. This is one of the key reasons why the bookkeeping costs of an Oy are clearly higher than those of a sole trader.

12. When an Oy makes sense, and why its bookkeeping costs more

When an Oy is justified

An Oy usually makes sense in these situations:

• The company’s profit grows clearly and profit remains in the company after your own salary.
• You plan to hire employees or grow into an actual company.
• You have shareholders or business partners with whom you want to share ownership.
• You want to separate business liabilities from your personal finances, for example because of larger contracts or investments.
• You want to build the company for a future sale.
• Customers, financiers or partners require an Oy form, or it clearly improves credibility.

When an Oy is usually not the best first choice

An Oy is not automatically the most tax-efficient or cheapest option. It may be unnecessarily heavy if:

• you invoice only occasionally or are still testing the business idea
• the activity is low-risk service work by a solo entrepreneur
• all income is taken immediately into personal use
• you do not want to deal with financial statements, general meetings, payroll and separate reporting
• bookkeeping costs would eat a large part of the margin

Why Oy bookkeeping costs more than sole trader bookkeeping

If you compare bookkeeping prices, you will see that an Oy’s monthly fee is typically clearly higher than a sole trader’s. The difference is not random; it follows from the statutory obligations of an Oy:

1. Double-entry bookkeeping requires more account management and reconciliations than single-entry bookkeeping.
2. Financial statements must be prepared, approved and filed with PRH every year.
3. Tax return 6B is more complex than a sole trader’s personal tax return.
4. Incomes Register reports for every salary payment.
5. Board and general meeting minutes and other corporate documents.
6. Dividend distribution decisions and related tax calculations.
7. VAT remittances and other regular reports to the Tax Administration.
8. Reconciliations and liability risk: bank, receivables, payables, salaries, dividends and taxes are reconciled more carefully than in light single-entry bookkeeping.

Sole trader bookkeeping can cost 20-60 €/month, while bookkeeping for a small Oy often costs 100-400 €/month. The difference is not arbitrary pricing; it reflects the amount of work.

Choose the company form based on what you need, not on what looks cheapest on paper. Read more: Sole trader bookkeeping and Single-entry bookkeeping.

13. Summary

An Oy is a strong company form when the business grows, risks increase, there is more than one owner or profit is left in the company for future growth. It limits the owner’s liability and makes it possible to combine salary and dividends. The tax benefit usually appears only when the company accumulates net assets and not all profit has to be taken immediately into personal use.

The price of this flexibility is heavier administration: double-entry bookkeeping, annual financial statements, authority filings, board and general meeting minutes and a separate business bank account. In practice, most Oy companies need an accounting firm, which raises monthly costs clearly compared with a sole trader.

A rough rule of thumb for 2026:

1. Light entrepreneurship: when you are starting out, doing side work, invoicing occasionally or want to test demand without your own company.
2. Sole trader: when you need your own Business ID, for example for VAT deductions on purchases, you work alone, risks are limited and you want to keep administration light.
3. Oy: when the business grows, partners or employees come in, contract risks increase, profit and net assets remain in the company or you want to optimize income taxation with a salary-dividend combination.

Do not move to an Oy just because of the price. Move when the business clearly benefits from its features.

Wondering which company form suits you? See Bisse.fi’s Oy service, test the numbers with the income tax calculator, dividend calculator and salary calculator, or start more lightly by registering with Bisse.fi. Read also Sole trader or light entrepreneurship and When light entrepreneurship is not suitable.

Sources: PRH: setting up an Oy, PRH: Trade Register setup fees, PRH: financial statements to the Trade Register, Finnish Tax Administration: Oy tax return, Finnish Tax Administration: dividends from an unlisted company, Finnish Tax Administration: small-scale VAT-exempt activity and Työeläke.fi: YEL insurance. This article is general information, not legal or financial advice. Check current official guidance and speak with an accounting firm or tax adviser before making decisions. Published on 30 May 2026 and updated on 31 May 2026.