Setting Up a Business – exportfuturepath

2.Banking Services and Monetary Transactions

1. Rights and responsibilities

In Finland, the employee has the right to

salary and other minimum conditions based on the work contract
protection according to the law and contracts
join workers’ associations that guard employee’s rights
safe and healthy working environment

The employee is obliged to:

conduct the work carefully
follow agreed working hours
refuse competing operations with the employer
keep the Business and Professional secrecy
take into account the employer’s priority

The employee has the responsibility to:

choose a suitable candidate for the job
conduct work and give directions connected to the work
dismiss and dissolve the job contract within the boundaries set by the law

The employer is obliged to:

follow laws and contracts
treat the workers equally regardless of their religion, ethnic background, sex, age and political view
take care of the safety and occupational healthy of the workers
give the employee a written clarification of the principal conditions of the work
proactively work for a good working atmosphere
help the workers do better in their job and develop professionally

Additional material

Infofinland.fi – Employee’s rights

Infofinland.fi – Employer’s rights

2. Banking services and monetary transactions

You should consider whether you want to have an account in an Iraqi bank or whether your company’s monetary transactions are going through a Finnish bank. Do as you feel is the most practical and easiest for you.

You may also take care of all banking services with a computer. in Finland using the internet is safer than abroad. The banks recommend using a smartphone or tablet while you are abroad. General use computers may have installations or software which are not safe; be careful especially if you are using somebody else’s private computer. If you are using a shared, general use computer, you should empty the browser history and cookies each time you use your online bank with it. This is how you can make sure that unauthorized use does not happen and your private information is kept safe. The safest ways is to use your own computer; however, keep your data protection software updated and make sure it is effective enough.

Mobile devices are safer than computers because their applications work in separate environment. Malware does not spread as easily as in normal computers. It is worth remembering, however, to upload the mobile device and tablet applications from the device’s app store such as Google Play and App Store. The mobile device’s operational system also needs to be regularly updated by installing the recommended updates.

If you visit a location with open Wi-Fi networks it is always a threat to use the Wi-Fi, especially if the network is unprotected and you don’t know who owns the Wi-Fi network. In this case outsiders have a possibility to eavesdrop data traffic and unauthorized users may get in touch with your banking information. Airports have protected Wi-Fi networks which are safer to use. It’s the safest to use the data connection of your own mobile device. It is worth remembering that possible data restrictions can cause additional expenses when you are outside Finland.

Banks often warn that in case your mobile bank page or view appears in anyway weird you should log out immediately and contact the bank’s customer service. There may be fraud pages hosted by criminals, mimicking the real online bank. If you log into the bank services via web pages, make sure that the web page address is correct and it is protected. The https:// tag in the beginning of the web address signifies protected connection.

Additional information

Be careful when using open wi-fi network s abroad

3. Financing

It requires some amount of money to start a company in Iraq. Your money can be either your own savings or loans from private persons, banks or other partners. You can transfer money from a Finnish Bank to an Iraqi Bank to start a company there. However, there may be some limitations in (monthly) money transfers.

Finnvera admits loans to companies which have been in operation for at least three years. An initial guarantee can be admitted to a domestic company or a registered trademark. The entrepreneur’s own bank applies for the initial guarantee from Finnvera on behalf of the entrepreneur. Finnvera offers financing also when the company is expanding towards foreign trade or business abroad or it wants to diminish the risk of export trade. ELY centre may also give financial development aid with which the company is able to develop its operations or invest. Strengthening internationalisation is considered operational development. If the company aims at growth in the international market, Business Finland is one of the operators offering financing. Business Finland financing is financial aid a loan, and the financing covers a part of the expenses. The applicant company has to finance part of the operations itself.

Financing can be used for example for the following purposes:

planning the international growth program
development and research of the product services; business model competence in customer understanding
trials, demos pilot programs
making business reports and market analyses
developing your business operations towards the international market

‘Capital investors or business angels (private equity investors) invest money to a company against a certain percentage of ownership. Normally the ownership rate is below 50% of the company’s share. Investors aim at fast growth in order to get profit for their investment. In addition to financing, a company may use the capital investors competence and personal network. A competent capital investor brings a deeper vision and experience for the development of the business he or she is helping. You may look for a suitable capital investor in the venture investor web page (see additional information).

Public crowd financing or debenture is a loan or investment model for companies based on advance sale. Companies provide shares or public crowd bonds for investors. This type of public financing means that the companies are loaning money from the public and promise to pay back with certain conditions: with interest or without interest. Financing is often applied via an online public funding platform which is hosted by a certified dealer.

In Team Finland you can find information on all sorts of support and services which are offered and financed by the government and which can help the company in starting foreign trade. Different types of financing services are offered by multiple different operators.

An asylum seeker is able to apply for a commodity grant in Finland if he or she is going back to the home country and is going to start up a business there. The commodity Grant must be applied separately and it is granted after careful consideration. You can get it for example to get products for selling. If you need more information on the commodity grant, see the migration office web page.

Additional information

Venture capital investors – web page

Finnvera’s webpage

ELY centres in Finland

https://www.businessfinland.fi/en/

Team Finland web page

4. Taxation

Taxes are obligatory payments which are collected from various different operations. Taxes are paid by private persons and companies. Individuals must pay taxes off their income (for example salary and study grant). Taxes are also paid of capital income. For example if you own an apartment and you rent it, you must pay taxes of the received amount of rent.

The prices of all products include taxes so we pay taxes on our food, candy, massage services and spa vacations. Everybody pays taxes for the properties they own such as their house, the cars, inherited goods and expensive gifts.

The public sector is financed with taxes. This means public health care, education and other services needed by the citizens. Taxes are also used for income transfer such as child support benefits, pensions and basic social assistance. Also the public administration uses part of the taxes collected, as well as infrastructure, sewage network, roads and public debt interest. Taxpayers cannot decide what their tax money is spent for. Taxes are collected into a common government treasury from where they are directed into different targets.

In Finland the employer collects taxes on behalf of the employee. The amount of tax is calculated from the gross salary and transferred to the government. The amount of tax depends on a person’s individual tax percentage.

Companies pay taxes according to their company form and how much they produce profit. Companies also pay value added tax (VAT) out of the services and goods they sell.

When drafting the contract between an immigrant and a company, make sure that the immigrant understands the taxation in Finland. If the company is founded in Iraq, you should get to know what kind of taxes need to be paid, how much and how often. If an immigrant works as an employee in Iraqi location you must find out how and according to which country’s laws the taxation is carried out.

Additional information

The Finnish Tax Administration web page

5. Bookkeeping / Accounting

Bookkeeping is a written or electronic data system. It includes information about the company’s financial operations. With the help of bookkeeping you take notes of the business events (expenses, revenue and financing). Bookkeeping administers the information about the company’s or community’s financial activity and status. Each transaction is marked into the bookkeeping and the company’s invoices are added into the bookkeeping as soon as possible. All sales and purchases are added once they happen. The entrepreneur is responsible for organizing his or her company’s bookkeeping.

In Finland bookkeeping is set by a decree in the bookkeeping law. Each company needs to uphold double bookkeeping. Only a private practitioner of a certain profession (freelancer) can have single bookkeeping. Bookkeeping is often done with an expert such as an accountant company.

Bookkeeping is done for one calendar year or 18 months at most. After that the bookkeeping is closed, and a financial statement is drafted. The financial statement tells how much profit the company has made. With the help of bookkeeping the company’s money, income, expenses and profits are kept separately from the owners income and other financial units’ expenses. The financial statement also points out how much taxes has to be paid. Moreover, the financial statement gives company important information on how to plan the future actions and follow up for the company.

In Finland the law requires that of each money transaction, the customer has to be offered a receipt. The customer can refuse taking the receipt, but nevertheless it must be offered. The contents of the receipt it’s also defined by the law.

The company working with an immigrant should find out the Iraqi legislation about how bookkeeping must be done.

Additional information

Accounting ordinance in Finlex

6. Retirement allowance

In Finland companies and employees pay certain amount of taxes to the government. Taxes are used for paying pensions for persons who are unable to work, too old to work or who have lost the financial provider of the family.

Retirement allowance comprises of employee pension, national pension and guarantee pension. The employee pension is an earnings-related pension, counted on the basis of salary income during lifelong career and entrepreneurship income. The national pension guarantees a minimum income for people with no earnings-related pension or if the amount of pension is small. Guarantee pension secures everybody a bigger pension than the minimum national pension.

Employee pension is an allowance which is paid for employees (people who have received salary in their job). An old age pension enables retirement from the working life. An unemployment pension compensates the financial losses caused by unemployment. A family pension is granted for widows and children.

In Finland, as in many countries, the ole age pension security is legally regulated and obligatory. Also entrepreneurs pay obligatory entrepreneur pension payments in Finland. A company should make sure how the pension system works in Iraq. In some countries pensions are not paid at all.

Additional information

Ministry of Social Affairs and Health – web page

7. Unemployment benefit/security

Business operations will terminate when a business has been declared bankrupt, in a stage of clearance or when the company trustees have made a mutual agreement on terminating the business operations. In addition, the entrepreneur needs to give up the entrepreneurship insurance and notify the government’s tax administration. An unemployed entrepreneur has to register as an unemployed job applicant in the public employment office.

If you operate as an entrepreneur and you become unemployed, the unemployment fund pays daily allowance based on the entrepreneur’s previous income rate. The condition for the allowance is that the entrepreneur has been a member of the unemployment fund for at least 15 months and that he or she has paid the obligatory pension insurance payments. If the entrepreneur is not a member of the unemployment fund, he or she can apply for unemployment benefits in KELA (The Social Insurance Institution in Finland). An entrepreneur can have unemployment benefits even though the company stays in the company register. In such cases the daily allowance is not based on the income rate but the amount of allowance equals the basic unemployment allowance.