Setting up a company in Estonia is a decision that comes with a lot of research and considerations. Is Estonia good for your business? What are the requirements? What about taxes? You can find answers to these questions from our full guide to starting a company in Estonia.
But if your decision is made, you should also be ready to do some research about service providers who offer various services to e-Residents and e-Residency companies in Estonia. As it is quite an important decision – choosing who will be your main partner in operational processes and managing your new company – you should put some time into finding a perfect match.
Therefore, we have put together a small guide on how to choose a service provider for setting up a company in Estonia. Let’s get started!
Understand your business needs
First and foremost, you have to understand and define your needs. If you know what is necessary for your company, it’s easier to start searching for service providers who can offer you what you need.
#1 Business address and Contact person
Assuming you are managing the company from a foreign country (not from Estonia), you’ll definitely be needing a business address and a contact person which are mandatory for every Estonian company. Is this all that you’ll be needing at first? Or are you looking for someone who can also offer some easy accounting solutions?
#2 How do you plan to do accounting?
As you’ll have to do accounting anyway – either monthly or yearly, it’s reasonable to decide if easy accounting platforms, often called self-accounting services, are enough. If you are not so familiar with accounting rules, it would be clever to order a full accounting service, meaning that professional accountants will be handling all your accounts and you don’t have to worry about getting documents correctly declared. This is mandatory if your company has a VAT number or pays salaries to employees. If not, you can still do monthly accounting, but don’t have to – submitting the accounts once a year with an annual report is enough.
#3 Registrations – do you need VAT? EORI? OSS/IOSS?
Also, you should think about additional accounting registrations you might need. For example, will you need to register a VAT number in Estonia? Is an EORI number something you’ll need for your business? If you are in e-commerce, maybe it would be beneficial to do OSS/IOSS registration?
#4 E-commerce service provider
Are your business activities connected with e-commerce? Do you plan to sell on Amazon FBA or Shopify? Then it’s so important to find a service provider that specialises in that field. As e-commerce is a completely different world, reporting and accounting requirements are also a bit different and growing in business often leads to increasing accounting costs as transactions increase. Therefore, it’s a good idea to find a service provider that offers fixed costs or at least a reasonable system for managing your accounting costs.
#5 Legal help
And of course, if your business takes off, there are so many additional legal services you might need – maybe you need legal consultation or some contract templates? Are there any changes you need to make to the Estonian Business Register or company structure? Want to sell some shares or register a trademark for your company in the EU?
As you can see there are a lot of business services that you may need at some point during your activities. Yes, you will most definitely not need them right away and altogether. But when choosing your service provider you should think about these things and if you see that your new business will need help in operational processes and might grow at a fast pace, it’s essential to choose a partner that can offer you as much as possible.
Overall, it’s much easier to conduct all the activities with one company rather than searching for a new partner for each additional service you need.
Company related cost management
Another thing you should consider is obviously cost management. Setting up a company in Estonia and managing it can be done in different ways. There are service providers who offer special starting packages, there are service providers who offer services based on add-ons, meaning you will put together your package yourself.
You can be charged yearly, you can be charged monthly. There are companies that send out monthly invoices, there are ones that have made everything subscription-based.
So, it’s safe to say that there is something suitable for everyone. Just make sure you have thought through what is the most convenient option for your company and choose your fit.
Make sure the team you’re hiring are professionals
Now, if you have decided what exactly you need and how you want to pay for it, we have reached the point where you actually need to start filtering out service providers based on their competence and experiences. Here are a few tips to think of:
#1 Local and international scope
If you are doing business internationally then it is essential to look for a provider who can offer international experiences and has worked with similar companies before. And this applies to all the specialists working for the company – the accountants, lawyers, tax advisors, and even salespersons have to be good in what they do and understand the international business.
#2 Service Provider trustworthiness
How to be sure if you are dealing with specialists? Well, usually other people’s experiences speak for themselves, and checking the reviews on official sites like Trustpilot helps a lot.
Even better, if you have some personal acquaintances who have gone through the process and can give you some first-hand feedback. It’s always worth a shot to also ask recommendations from impartial partners to the e-Residency like EERICA – the Estonian e-Residents International Chamber Association.
#3 Service Provider Experience
What else shows professionalism? The age of the company can be a factor – if the company has been offering the services for a long time, it also means that they have more experience and have had more time to educate their specialists in fields that are most important.
Another good thing to notice is the way the service provider meets your special needs or offers tailored solutions. If they know what they are doing, it’s easier to offer tailored solutions for clients. If the company is only offering really strict solutions, it shows that most probably their services rely on systems and not people. Which is not necessarily a bad thing, but it definitely can make your life more difficult if it’s not possible to meet you halfway.
Check if the company is trustworthy and has a licence issued by the state
Another concern, and maybe even the most essential one, is actually verifying the trustworthiness of the service provider you want to hire. Fortunately, Estonia is a really transparent country, and checking the company’s reputation and financial situation is made quite easy.
Here are some main pages and tools you can use to check your service provider:
#1 For checking if the service provider has an official licence issued by the state for offering financial services, use this search: https://mtr.mkm.ee/taotluse_tulemus
First, enter the name of the company to the “Name of the entrepreneur” field
Then check if the company has a licence. It should begin with FI and be followed by numbers.
#2 For checking the financial status and standing of the company, use one of two official company background providers
Some of the information is behind the paywall, but you are able to check the most important information like turnover, debts, permits, etc for free.
#3 For checking if the service provider is actively in cooperation with the e-Residency program, you can also check the e-Residency Marketplace.
Make sure that there are no hidden fees
Hidden fees are unfortunately something that many new entrepreneurs have to consider when choosing a service provider. As starting a company and choosing a suitable package for managing it is a service that consists of many different aspects, there are some main things you should check.
#1 State fee
When comparing the company formation prices, definitely check if the state fee is included in the price. You can also verify if the price is meant for one founder or can also be used for multiple founders and if it includes the articles of association.
State fee in Estonia is 265 € (March, 2022).
#2 Additional one-time fees and cancelling the contract
When comparing the packages that already include address service, accounting, and some other additional services, be aware that at first you usually have to pay a one-time company set-up fee and the monthly or yearly payments are additional to this. That is the well-known standard, but it’s always good to double-check.
But one thing that can differ quite a lot is the time period that you have to be connected to the company from where you are ordering the services. Usually, it is not displayed on the main page and you have to check the Terms of Service to know if after ordering the service you can cancel any time, have to be a client for 3 months, 6 months, or even 12 months. So, this is definitely something worth checking.
#3 Accounting quality-price ratio
And of course, the main differences come in when comparing the accounting prices. There are actually very many things to consider while choosing an accounting partner and as many things can be additional to the initial price, we really urge you to follow these recommendations:
- The price offer should include communication with the client to get the most accurate financial overview of the company’s situation. Many businesses might offer lower prices at first but might add additional fees later for the communication and consultation.
- A high level of expertise regarding accounting and annual reporting is a must. Many companies do “dumping” reports which contain a lot of errors. It can be cheap at first, but you might end up paying extra money later when you get in trouble with the tax office.
- Choose a service provider who works with documents (invoices and bank statements), not with Excel sheets. Sales and costs summary reports written by the client in Excel are often inaccurate and can include incorrect information, which in return can cause issues with the authorities.
- If you are doing business internationally, then hire a company with international experience. Selling around the world means that many additional accounting details have to be considered and not overlooked.
- Make sure to ask if the price offer includes everything and no additional charges will be added to avoid any later disappointments because for example annual report offers must include missing VAT declarations, share capital declarations, and all other necessary work.
- Ask your service provider who will be responsible for the data and mistakes.
Communicate with service providers to see who seems most suitable
And finally, the most obvious one. Ask different offers and communicate with different companies as it is very important to find someone who replies quickly and is willing to look into your case specifically. And communicating with different providers is the easiest way to make sure that the connection between you and the employees of the service provider is good and your wishes are taken into account.
In conclusion about how to choose a service provider for setting up a company in Estonia
Setting up and running a business with a professional and experienced team of local experts is always more successful. So, if you have taken your time to research Estonia and e-Residency, you should also take some time to research the service providers to find the most suitable one for you. Hopefully, this article gave you a good overview about what are the main aspects to keep in mind and made the selection easier for you.
We also recommend checking out these articles about Estonian company FAQ, company formation process steps, and choosing the right company type.
