What is the Light Business Billing Service and how does it work?

The light entrepreneur invoicing service reduces the workload of the light entrepreneur. It takes care of the invoicing, accounting and taxation for the light entrepreneur, leaving him/her more time to do what he/she does best.

Invoicing service companies offer an invoicing service to entrepreneurs, which effectively outsources the invoicing, accounting and taxation of the entrepreneur. Entrepreneurs who use invoicing services are referred to as 'light entrepreneurs'.

The invoicing service allows a light entrepreneur to use their own skills or business idea without the usual bureaucratic complexities of being an entrepreneur. It is not a formal form of business, but it allows you to work in an entrepreneurial way with your own clients.

Light entrepreneurship is an easy and practical way to be an entrepreneur, and becoming one does not require a ready-made network of customers or a fully-fledged business idea. All you need is a reliable billing partner.

Billing services in practice

Next, we'll open up a bit about the process of how working with a billing service company works in practice. The formula may seem complicated at first, but in the end it's really simple and straightforward:

1. First, the light entrepreneur finds the client and agrees on the terms of the work to be done with the client
2. A light entrepreneur submits his/her tax card to the billing service for payment if he/she has a formal employment contract or is not on the pre-tax register.
3. When the work purchased by the customer has been completed, the light entrepreneur must create an invoice for the work performed in the billing service.
4. The billing service sends the invoice to the customer and takes its own service charge from the total amount of the invoice, as agreed. The billing service also deducts and remits taxes, any self-employed person's pension insurance contribution and employer's contributions.
5. The light entrepreneur asks the billing service to pay the salary, i.e. the amount invoiced minus all expenses and other costs

Voilà! Billing service companies have developed their services to make your transactions as smooth as possible. This leaves time for the light entrepreneur to grow their customer base and work on their own.

How does a billing service company work?

As already mentioned, at the heart of light entrepreneurship is the use of a billing service. A billing service company is a service provider that bills the light entrepreneur's customers according to the work done by the entrepreneur. The invoicing company also takes care of the tax and other legal obligations of the light entrepreneur and passes on the compensation paid by the customer for the work to the light entrepreneur, either as a salary or as a work allowance.

In most cases, a light entrepreneur has the choice between two different approaches to dealing with a billing service company:

1. The invoicing service company and the light entrepreneur can enter into a formal employment contract, which means that the light entrepreneur is defined as an employee and is therefore paid a salary. This model requires the light entrepreneur to send his tax card to the billing company, on the basis of which the billing company withholds tax on the salary. The invoicing company registers the wages paid and the withholding tax paid in the national income register.
2. Another option is to sign an invoicing agreement. In this case, the light entrepreneur is a person engaged in gainful activities (no business ID) or a self-employed person (business ID), in which case either he or she or his or her company is paid a work allowance. If the light entrepreneur is not registered in the pre-tax register, a tax card is required for the work allowance.

In simplified terms, an entrepreneur can enter into a formal employment contract or invoicing contract with an invoicing service company. Whichever model you choose, billing service companies are reliable and greatly reduce the entrepreneur's workload.

Who is the billing service for?

The billing service is particularly suitable for those who want to test their skills or business idea in working life on a part-time basis, for example alongside their day job or studies. In this case, we can talk about what is known as "gig work".

The billing service is suitable for professionals in almost all sectors. However, it is not suitable for everything, as licensed jobs such as health, taxi services and e-commerce cannot be done through the billing service.

Light entrepreneurship is the best platform to try out your own idea or skills, as using billing services is risk-free. It has given many people their first taste of entrepreneurship through its easy-to-use approach. Invoicing services lower the threshold for entrepreneurship considerably.

What are the costs of billing services?

Prices for billing services vary between companies, but in general, billing service companies charge between 4% and 7% of the invoice amount net of VAT. Some billing service providers may charge a flat rate instead of a percentage, which is relatively high for small volumes but low for larger volumes.

The percentage of the amount to be billed is fixed for some billing service providers and variable for others. Variable means that the percentage varies according to the amounts billed. Some providers may use a higher percentage at the beginning, but once the light entrepreneur has reached a sufficiently high level of billable amounts, the percentage decreases.

There are also other differences between billing services

The services provided by billing service companies may also differ in other respects, for example in relation to insurance. This is why it is important to compete carefully for billing services, rather than going straight for the cheapest one or the one with the best-looking website.

Speaking of insurance, some billing service contracts include by default all the insurances covered by a light entrepreneur and others do not. In cases where insurance is not provided automatically by the light entrepreneur, he has to buy it separately from the billing service company. This can lead to additional costs.

What makes billing services great is that registration is free. Almost without exception, starting a light business is free and there are no costs until you have invoiced for the first time for the work you have done.

Be careful when tendering for a billing service

All light entrepreneurs want to find the most suitable one for them billing service. However, the number of service providers is huge and it is difficult to know which one is the best. Take these things into account when competing for billing services:

Price

The price of billing services varies. It is not worth hunting for a cheap price alone, because when it comes to billing services, cheap is rarely the best. The cheapest billing services may include a large number of hidden charges that will only be revealed to the light entrepreneur when it is too late. Or, conversely, a cheap price may not include all the services you would have needed.

Billing service companies can also offer various start-up packages, for example for start-ups. These packages may even be free, but they are also very limited. In such a situation, it is important to find out what the package includes and how long it is valid for.

Insurance

Insurance is very important for light entrepreneurs, as they do not have the insurance normally covered for employees.

Some of the billing services cover, for example, all mandatory pension, accident and liability insurance premiums. Other services require the light entrepreneur to provide these themselves. A light entrepreneur may also be covered by motor insurance if the work requires vehicles registered for transport.

Before tendering, it is important to find out which insurances are necessary for your business.

Counter

Many billing service companies have calculators on their websites that allow you to calculate the amount of the service fee to be charged for the amounts to be billed. Some of these calculators also allow you to compare different companies and thus examine the differences between them.

It is definitely worth using the calculators when looking for a light business billing service.

Peer support

Nothing is more useful than the experience of other light entrepreneurs. Ask the light entrepreneurs you know which invoicing service they have used and how they have liked it.

Social media and many online forums can also help you find the best billing service. Bad experiences also spread like wildfire on the bush radio. In these situations, however, a reasonable degree of source criticism is necessary.

The invoicing service is a partner for the light entrepreneur

Although the billing service is not free, it offers a great relief from the workload. If price is a concern, you can also think of it as a way to use all the time you save on accounting, for example, to collect new customers or do customer work. In the end, it could be worth more than the amount paid for the billing service.

At Kevyesti.fi, we make sure that your finances run smoothly and you can focus on what you do best. With us, you can rest easy - we don't charge any obscure hidden fees.

Contact us if you are a new or experienced light entrepreneur. We give you the freedom to do what you do best.