How can e-Residency help micro-enterprises?
With its supportive global network and simple, quick way of doing business digitally, e-Residency empowers aspiring entrepreneurs wanting to test their innovative ideas at minimal cost.
Estonia’s e-Residency program provides boundless opportunities for micro-enterprises and micro-business owners. Our digital business gateway to the EU offers a thriving ecosystem brimming with advantages. From an expansive network of mentors, investors and clients, to the ease and speed of doing business digitally, e-Residency empowers aspiring entrepreneurs wanting to test their innovative ideas at minimal cost.
What else makes the Baltic nation of Estonia a haven for micro-enterprises? Being a part of the European Union raises the trust factor and paves the way for seamless access to a vast market. Beyond that, the growth prospects, advantageous labour market and hiring processes, and potential tax benefits add to the allure of establishing your micro-enterprise in Estonia. And don’t forget the ease and efficiency of managing business affairs online coupled with Estonia’s pro-innovation ethos.
In this article, we delve into the myriad advantages of e-Residency of Estonia, where every micro-endeavour finds a pathway to flourish.
Table of Contents
- What is a micro-enterprise?
- Why become an e-resident as a micro-entrepreneur?
- Why start a micro-enterprise in Estonia?
- How can e-Residency help you run your micro-enterprise?
- Why is Estonia a great place to grow your micro business?
What is a micro-enterprise?
There are different definitions of a ‘micro-enterprise’. Under EU Recommendation 2003/361, micro-enterprises are a category of enterprise that employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million. Companies with teams or turnover higher than these figures are considered either small or medium-sized enterprises.
In contrast, under Estonian accounting regulations, companies are considered micro-enterprises if their: total assets do not exceed EUR 175,000; annual revenue does not exceed EUR 50,000; total liabilities do not exceed total equity; and one shareholder acts as a member of the Management Board.
At e-Residency, beside the accounting treatment, we consider a micro-company or micro-enterprise to include a company with a single shareholder/director who is looking for a low risk way to test a new product or service. Micro-company founders want the ability to run a company online from anywhere and are looking for an easy and efficient way to deal with business administration and a good way to eventually expand their team and operations. Founders might choose between setting up a company in their home country or in another country (e.g. Estonia, UK, Delaware) where they can set up a company and run it remotely.
Why become an e-resident as a micro-entrepreneur?
Get ahead in Estonia – the world’s most digital country
When comparing business environments for your micro-enterprise, don’t leave out Estonia in your equation. Here, in the world’s most digital country, almost all public services are online, with many private as well. Estonia has a long history of digitalisation, resulting in advanced digital services designed with its citizens in mind. The state-of-the-art digital services were designed and built over thirty years thanks to contributions from a forward-thinking government, a proactive IT sector, and a tech savvy population.
These conditions have helped position Estonia as one of the fastest growing startup ecosystems in the world. Estonia is the birthplace of globally recognised unicorns like Wise, Bolt, Pipedrive, and Skype. This is an unrivalled amount of globally successful tech companies in such a compact country.
More and more foreign founders are confident in testing their moonshot ideas here, like Glia, Estonia’s newest e-resident-founded unicorn.
e-Residency is the secret behind Estonia’s 10th unicorn
The CEO of Glia, Estonia’s 10th unicorn, attributes their success to e-Residency, which allows the company to be run remotely from anywhere.
Find mentors, partners and clients from the e-Residency network
Estonia’s 110,000 e-residents comprise a truly international community of people with a passion for entrepreneurship. When you become an e-resident, you’ll join this active, supportive and growing network of like-minded individuals.
This means that as an e-resident entrepreneur, you won’t need to go it alone. Connect to e-Residency’s huge global network of entrepreneurs and service providers and get all the support and advice you need.
Thanks to the e-Residency Marketplace, you can easily access a network of trusted service providers, including business consultants, lawyers, accountants and tax advisers. And don’t forget to leverage the Estonian e-Resident international chamber association (eerica), an independent, membership-based organisation of e-residents formed to provide support to the community.
Indian e-resident Vattan PS, CEO of Founderly is complimentary of the network he’s connected to:
“The question is, is Estonia good for entrepreneurs,” says Vattan. “I think it is. It’s definitely a good place to be at, I have a great network and I feel very connected. It makes sense to be here.”
A resilient mindset for e-resident founders
E-resident Vattan PS on raising the mental awareness of digital nomads and founders through his support-focused startup Founderly
Why start a micro-enterprise in Estonia?
Test your business idea quickly, easily and cost efficiently
Once you become an e-resident, you’re ready to get started and test that idea that has been keeping you up at night. And you can do it quickly, easily, low cost, and with as little or as much business support from the Marketplace as you need.
With e-Residency, you get full, simple, secure access to Estonia’s online business services. The first time you will really understand how easy and fast our e-services are, is when you register a company. You can do it fully online in as little as 15 minutes and 33 seconds, like e-resident Dominic Panosch of sign.online. Although, we typically see e-residents take between 2 hours and 1 day to register their business.
Polish e-resident Dawid Wiktor, CEO and founder of Media Scope Group has this advice for aspiring micro-entrepreneurs:
“If you have an idea and want to transform it into a business, prepare a strategy and business plan, develop the idea and then the project, then start the company at the right time. It’s easy to create a company in Estonia with e-Residency and due to a simple tax system based on dividends paid out rather than profits, you can check if your business concept actually works and you want to enter the market with it.”
Engaging good audience behaviour through data
5 rapidfire questions to e-resident Dawid about his innovative Estonian communications company Media Scope Group OÜ
Do business digitally in the EU
Estonia provides a gateway for businesses to enter the EU as well as to retain all the benefits of the EU business environment, i.e. trading access, in euros, with EU credibility and rules.
Take confidence from operating in an EU-based, transparent business environment. This provides a safe and reliable environment for businesses to operate confidently. Plus, it opens up extensive market possibilities for you to trade in, find customers, and expand your enterprise.
Estonia ranks very well in the EU across many key indices, as shown in the following table.
How can e-Residency help you run your micro-enterprise?
Easy and efficient business administration
Estonia’s efficient and paperless business administration is tailored to the needs of today’s global entrepreneurs. As an e-resident, run your business on your own terms, supported by digital services that can fit around your schedules and demands. Imagine having more time to engage with clients, improve your products and services, and test new ideas.
Your secure e-resident digital ID gives you 24/7 remote, secure access to the online business services you need, whenever you need them. Do business in English – all e-services in Estonia are available in English. Plus you’ll find content, knowledge, and service providers in English (as well as many local languages, including Spanish, French, German, Ukrainian, and more).
Spanish e-resident Mercedes Gil has never looked back since launching her enterprise in Estonia.
“I love the digital-first mindset. If you cannot do it online, something needs to be changed.”
Reaching students everywhere
Spanish e-resident Mercedes Gill on using Estonian e-Residency to run an international school in the most efficient, digital way possible
E-residents can use time-stamped digital signatures to sign legal contracts and confirm transactions efficiently and with the same legal standing in Europe as handwritten signatures. This allows you to run your businesses in the safest way possible, and speed up administrative processes. Given the time and paperwork saved, they also make administration quicker and easier.
The world’s most competitive tax system
For 10 years in a row, Estonia has ranked number one in the International Tax Competitiveness Index, meaning it’s the most competitive and neutral tax code of all OECD countries, ahead of the likes of the UK, Ireland, USA and Germany. Estonia’s transparent, simple tax system encourages entrepreneurship, and makes a company’s path to market more straightforward.
If you do decide to establish tax residency in Estonia, you will need to build substance for your business here. You might do that by holding key management meetings, renting office space, hiring staff, or registering assets here. This will build your business substance in Estonia, and lower the risk of a permanent establishment in other countries. Taking these steps might allow you to take advantage of Estonia’s tax and other benefits. This will make running your company easier and it might also give you the tools to expand/grow your company.
Why is Estonia a great place to grow your micro business?
Grow and succeed in Estonia’s pro-innovation culture
Estonia is built on entrepreneurship, characterised by straightforward and transparent regulations, and is a magnet for startups. Government initiatives like Accelerate Estonia are here to help entrepreneurs innovate, disrupt, and succeed.
Being a small country, Estonia’s public and private sectors also work closely together. The country’s entrepreneurship-friendly government regularly consults business stakeholders, holds events, and engages in dialogue to better the business environment. E-resident founders can also participate in these discussions and events and access the country’s policy making community.
There is an old saying of Ernest Hemingway that there are two Estonians in every port. Well, these days it’s more than likely that there is at least one Estonian e-resident in every port too. Estonia is full of problem-solving people and businesses, looking to create, innovate, and collaborate. Add to this our global network of e-residents, who comprise a crucial group of our digital society, and it’s clear that there are opportunities to network, find clients and business partners, not just in pro-innovation Estonia, but throughout our globally interconnected, digital society too.
Connect to the world’s entrepreneurs
Entrepreneurship doesn’t have to be lonely. E-residents benefit from the experience, advice and support of an active network.
Build your team – hire in Estonia or globally
Consider hiring in Estonia. It has a tech-driven economy and a highly skilled and educated workforce with a startup mindset, usually speaking multiple languages. There is flexible legislation for employers, providing a liberal ’employment at will’ system. Labour laws are also well-defined, making it easier for employers to understand their responsibilities. Unsurprisingly, businesses can use fully digital payroll procedures.
Belgian e-resident Jan Lagast, CEO and founder of ImpactBuilders has built up his team in Estonia:
“The broad use of e-government has educated the Estonians to a high level of digital savviness. That makes Estonia also interesting for hiring for non-IT functions. And, of course, it is a great test market for new apps.”
From e-Residency to Estonia with love
Jan Lagast and ImpactBuilders are fostering society-relevant businesses and recently brought operations to Estonia.
Another option for e-residents is to hire foreign staff who are looking to move to Estonia. The Baltic nation is also part of the Schengen Zone, so EU citizens can move to live and work in Estonia easily. For non-EU citizens looking to migrate, the process of obtaining work permits is simplified and efficient. The government provides clear guidelines for both employers and employees. Once settled here, there are also tailored services on migration, taxation and employment questions for new migrants.
A third way to grow your team is by hiring a distributed team of people from other countries around the world. These days, many businesses employ people to work remotely from wherever they live. E-Residency makes it easy to run a globally-distributed team for your business. The e-Residency Marketplace is your first port of call to find service providers like Deel and Payhawk to support your remote-first companies.
For e-resident Bostjan Belingar location-independence was a key reason he chose to become an Estonian e-resident, as well as the ease of running his globally-distributed team:
“e-Residency is easy, and I mean stupid easy. Especially if you are a freelancer and have a smaller team, Estonian e-Residency is really good because you don’t have a lot of moving pieces.”
The e-Residency Underdog
E-resident Bostjan Belingar is founder of eCommerce email marketing agency Hustler Marketing, which has a globally distributed team and clients on five continents