How do I open a business in Estonia?
And don’t make a mistake.
Find out what you should pay attention to to save your money, time and nerves when working in the Estonian market.
So, the errors are:
1. Choosing the wrong company name
Mistake number one is choosing the wrong company name. I’ll start with a simple example. Parents think about what to name their child. They care how beautiful the name will be, whether it will be consonant with the last name and patronymic. So it should be the same with business. Many entrepreneurs do not think deeply enough about the name. There is a name, but there is no domain or email address, or it is already occupied by someone. It happens that first people come up with a name, then they go to the designer. It creates a brand and suggests a more appropriate name. Now owners have to change their name in the commercial register. You should remember that starting a company is equivalent to having a child. Even the Birthday of your company is desirable to celebrate with a soul. If you decide to open a company in Estonia, invest a little time in the conception process and you will save money and time in the future.
2. Choosing the wrong form of doing business
The second most common problem is the wrong choice of the form of doing business. In Estonia, this can be: – entrepreneur-individual (FIE) — limited liability company (OOO) – joint stock company (AS). For example, you need to know that if you choose an entrepreneur-an individual, then with debt obligations you risk all your property. Selecting a non-unique business name (on-screen only)
3. Another mistake is choosing a non-unique business name.
You can check the desired company name in the Center for Registers and Information Systems. Choose your company name as carefully as possible. The fact is that if your company name is not unique, it will not be registered and you will have to come up with a new one. In Estonia, the commercial register is managed by the judicial system. On average, the review process takes from 1 to 5 days, so if the company name is already registered, multiply the company registration period by the number of your attempts to register it. It is also very important to check the company name for a match with registered trademarks.
4. The next most popular mistake when starting a business in Estonia is choosing a coordinator and accountant in a hurry.
A coordinator is a person who solves questions and helps you solve any issue in another country. The coordinator is indispensable for remote work. When choosing, write down 3-5 contacts of potential partners, contact them and ask them questions related to starting and running a business in Estonia. Choose an expert who is willing to share useful information and give you the most explanatory answers. As a rule, such people are more serious about managing their clients. Professionals love their work and enjoy bringing value to their clients. There are professionals who love their work, but are willing to communicate with you only for money. Who you will work with is your choice. But remember, a cheap accountant or coordinator will cost you a lot!
5. Another mistake is the desire to hide the real owners of the company
Owners of large corporations do not hide anything, because it has long been proven that transparency increases trust and helps legitimate entrepreneurs conduct business with greater ease around the world. This means that you can access more services, attract more customers, and establish more partnerships. The services of a “nominee director” or “nominee share holder” are not permitted under Estonian law. This should be clearly understood by Estonian e-residents who, despite the ban, will use the services of nominee directors or nominee shareholders. In addition, there is a risk that at any time these individuals will be able to appropriate this business. Today, it is easier to pay taxes in the EU than to use offshore companies, where money will be frozen until better times.
6. You can only go sailing around the business expanses of Estonia or the EU by thoroughly familiarizing yourself with its legislation, which is very often not done by business founders.
That is, they are trying to consult, on the principle of asked questions-got answers, ran to cut cabbage. After a year or two, the entrepreneur begins to think about the accountant and throws on the head of the poor accountant everything that he has done over the past years and, as usual, asks to do it urgently. Further, it turns out that in the course of the activity it was necessary to pay taxes on salaries or on NSO. The conflict begins. How so?! I asked you! You told me that you don’t have to pay taxes! But in fact, the entrepreneur did not delve into the details, heard in his own way, pulled the answers for himself, in two years the laws changed and it turned out that you have to pay money, and no one planned this money in pricing.
7. Some types of activities require licensing, and therefore it is necessary to get acquainted with the list of licensed activities before, and not after registration.
And this is another mistake that can be costly for novice businessmen.
8. Many entrepreneurs want to start a business together with a partner in order to reduce risks and gain self-confidence.
This is a good path, but it lacks a map. No one thinks about a partnership agreement in which partners on the shore agree on how they see working together, how they will manage money. For example, one wanted to reinvest profits, and the second wanted to receive dividends. All this will immediately lead to a conflict and in most cases to the collapse of the business. I’ll talk about this in more detail in the following videos.