Are you thinking about starting a business in Estonia but don’t know where to begin? Don’t worry! Estonia is a fantastic country to set up your business, and the process is simpler than you might think. With the help of Estonia’s e-Residency program, anyone from anywhere in the world can run a company online. Whether you’re an entrepreneur, consultant, or have a specific service or product to offer, Estonia is a great place to get started. Here’s a simple step-by-step guide to help you on your way.
1. e-Residency Card
The first step to starting your Estonian business is applying for an e-Residency card. Estonia’s e-Residency program gives you digital access to Estonia’s business environment, even if you’re not physically present in the country.
What is an e-Residency card?
It’s a government-issued digital ID that allows you to sign documents, access secure online services, and manage your Estonian company remotely. You don’t need to visit Estonia to apply for this card, and it’s available to citizens of most countries. You can apply online, and once approved, you’ll receive the card by mail.
Why is it beneficial?
Having an e-Residency card allows you to start and manage a business easily, access Estonia’s secure digital ecosystem, and take advantage of the country’s efficient tax and legal systems. It’s perfect for digital nomads, remote entrepreneurs, and businesses looking for an easy, online-first approach to running a company.
2. Taxes in Estonia
Estonia offers a very attractive tax system for businesses. One of the main benefits is the corporate tax system: companies only pay taxes when they distribute profits, rather than when they earn them. This means you can reinvest your earnings into the growth of your company without paying corporate taxes until the money is paid out as dividends.
Some key things to know about taxes in Estonia:
- Corporate Income Tax: 0% on undistributed profits and 20% when profits are paid out as dividends.
- Value Added Tax (VAT): The standard VAT rate in Estonia is 20%. You will need to register for VAT if your business makes over €40,000 in annual sales.
- Social Security Contributions: If you hire employees in Estonia, you will need to pay social security contributions for them.
The Estonian tax system is designed to be simple and transparent, making it a very business-friendly environment.
3. Accounting
Estonia offers a straightforward approach to business accounting. While you don’t need to worry about managing complex paperwork, the finance automation system efficiently handles most processes. However, it remains crucial to maintain accurate financial records.
Here’s a breakdown of accounting in Estonia:
- Bookkeeping: All Estonian companies need to have proper bookkeeping. This includes recording all transactions, generating financial statements, and preparing for tax filings.
- Annual Reports: Estonian companies are required to submit an annual report to the Business Register. This report includes financial statements, shareholder details, and company structure. The report can easily be submitted online.
- Outsourcing: Many entrepreneurs opt to outsource their bookkeeping and accounting tasks to professionals, which is a common practice in Estonia due to the simplicity of the online systems.
There are several accounting software options available for managing your company’s finances, or you can hire a local accountant to handle everything for you.
SimplBooks offers a free 30-day trial, allowing you to explore its features before committing. The platform is accessible via web browsers and mobile devices, ensuring you can manage your finances on the go.
4. Example of Businesses
Estonia is home to a variety of businesses, from tech startups to service providers, all thriving under the country’s business-friendly environment. Here are a few examples of businesses that are commonly set up in Estonia:
4.1 SEO Agencies
SEO (Search Engine Optimization) or influencer marketing agencies are one of the most common types of businesses set up by entrepreneurs using Estonia’s e-Residency program. With an e-Residency card, you can easily start SEO agency that helps businesses improve their online visibility. You can work with clients all around the world, from anywhere, without ever having to be physically present in Estonia.
The Estonian government’s digital infrastructure makes it easy to run an SEO business remotely, and the country’s tax incentives are perfect for businesses that want to reinvest profits into their growth.
4.2 Consultants
If you’re an expert in a particular field, Estonia is a great place to set up your consultancy business. Whether you’re a business consultant, financial advisor, or marketing strategist, the e-Residency program makes it incredibly easy to manage your consulting business online.
You can invoice clients globally and use Estonia’s transparent legal and tax system to run your business efficiently. Plus, the online systems make it easy to communicate with clients and manage contracts remotely.
4.3 Other
Estonia is also an excellent location for a variety of other businesses:
- Online Stores: You can sell products online to a global audience with ease.
- Software Development: Estonia is home to a growing tech scene, and many software development companies are run remotely from the country.
- Creative Services: If you’re a graphic designer, photographer, or content creator, you can build a thriving business in Estonia while working from anywhere.
Estonia’s digital-first approach is perfect for businesses that rely on online platforms and global outreach.
Conclusion
Starting a company in Estonia has never been easier, thanks to the e-Residency program. The low tax rates, simple accounting requirements, and ease of doing business make Estonia a great choice for entrepreneurs from all over the world. Whether you’re looking to start an SEO agency, consultancy, or any other type of business, Estonia offers a business-friendly environment that supports digital innovation.
So why wait? Apply for your e-Residency card, set up your company, and start your entrepreneurial journey in Estonia today!