The sole trader tax return: one form, one date

A Finnish sole trader is not a taxpayer. That sounds like pedantry, and everything else follows from it.

The business does not pay the tax, you do

A limited company is a separate taxpayer. It pays tax on its own profit, and the owner pays tax on what they draw out. A sole trader has no such boundary: the profit for the accounting period becomes your taxable income, divided between capital income and earned income.

The practical consequence is that you cannot treat the bookkeeping as the business’s problem and your own tax return as something else. They are one thing on two pieces of paper, and they are due on the same day.

One form, two returns, the same date

The business details go on form 5, the business tax return for a business operator or self-employed person, filed in MyTax. Alongside it you check, and where necessary correct, your own pre-completed personal tax return.

Both share a deadline: 1 April. If that date falls on a weekend or a public holiday it moves to the next business day. If you are married, the same date applies to your spouse.

An extension can be requested, but it needs a valid reason such as illness, and the request must reach the Tax Administration through MyTax before the deadline. Unfinished bookkeeping is not a valid reason, which is worth knowing in February rather than in April.

What filing late actually costs

A late return incurs a late-filing penalty fee. It is unwelcome, but it is predictable, and you can work out what it will be before you decide to accept it.

The expensive case is the other one. A return that is never filed, or that is filed incomplete, is no longer a fee but a punitive tax increase, and its size depends on what went unreported. This is the point at which time saved doing the work yourself turns into a cost, and it is the one figure in the whole exercise that cannot be priced in advance.

The work is not in April

The tax return looks like March work, because March is when it becomes urgent. It is not.

Form 5 summarises an accounting period that has already closed. If the bookkeeping has been done monthly, filling in the form is checking work: the figures exist and the question is only whether they land in the right boxes. If the receipts are in a bag, then March means a full year of bookkeeping and a tax return done at once, under a deadline. That is when mistakes get made, and it is also when correcting them costs the most.

This is the only place in this piece that offers advice. If you are reading this in the autumn, you are early, which is the correct time to be. If you are reading it in March, stop reading and ask.

How we handle it

We do the bookkeeping monthly, and the closing accounts and the tax return are built on top of that. Form 5 comes out of finished bookkeeping rather than instead of it.

Financial statements and the tax return sets out what the work covers, and the price list says what it costs. We bill by time, so a simple accounting period costs less than a complicated one, and a small sole trader does not pay for a large one.

How it works explains what is required from you in practice. And if you are already late with something, say so straight away. A late return is usually fixable, and fixing it is cheaper the earlier somebody looks at it.

Source: Finnish Tax Administration, the business tax return for a business operator or self-employed person (form 5), its deadline and the consequences of filing late.