Customer letter 09/2022

Customer newsletter 09/2022

This is a newsletter to AutoAccount customers

YEL pension insurance income

One of the most common ambiguities, especially among new entrepreneurs, is YEL income, which is the basis of the entrepreneur’s statutory YEL pension insurance. The income in question is not based on any unequivocal amount, such as how much funds the entrepreneur has withdrawn from his company. Instead, the entrepreneur must separately confirm the income with the pension insurance company, based on highly interpretable instructions such as the value of your own work input or how much you would pay an outsourced person to do your work.

The amount of YEL income is relevant to the following: For the YEL insurance payments, social security i.e., possible daily allowances from KELA and future pension. From the entrepreneur’s point of view, it is rather challenging to balance, because the insurance payment and social security are at odds. Therefore, we also do not have an unambiguous and universally applicable answer to what would be the ideal level of the YEL income amount. However, it is clear that YEL contributions should be paid according to a fairly high YEL income if you want it to have a significant impact on your future pension. It is always recommended to try to build another type of savings plan for older age.

Now the subject that has received a lot of publicity is the reform of the entrepreneur’s pension act, which has been said to deal with the so-called under-insurance, i.e. YEL income defined as too low. The matter has caused a lot of debate, as it has been feared to substantially raise pension insurance payments in these already uncertain times. So far, it is only a legislative proposal, and according to it, the pension insurance company must also take into account the median salary of the industry in question when determining income. It should be emphasised that, even according to the proposal, the entrepreneur’s income is not automatically the median salary.

In practice, the amount of YEL income is mostly confirmed these days in a way that the new entrepreneur makes an online-notification about the matter according to their own discretion. Since then, income has changed mainly with annual index increases. The purpose of the law reform seems to be to transfer responsibility for sufficient YEL income to pension insurance companies. It is likely that correspondence from the pension insurance company to the entrepreneur will increase in this regard. The entrepreneur should be aware of the topic and, if necessary, justifiably stick to his own view of the value of his own work, i.e., the so-called real income.

The effect of inflation on bookkeeping and other administrative costs

Another topic that has been brought up is accelerated inflation, which increases costs. The annual change in the latest consumer price index is a whopping 7.8%, which will gradually affect many of the entrepreneur’s costs.

Since 2009, Digibalance has kept the same minimum monthly fees (40 or 45 euros) of the AutoAccount services aimed at micro-enterprises. This has been made possible by continuous internal process development and the use of automation in IT systems. The invoicing practices of software suppliers have changed considerably over the years and have now increased sharply. According to the new practices introduced this year, the suppliers of both of the background systems we use (Procountor and Briox) charge a new system fee of 3 euros/customer company/month. Unfortunately, this system fee has to be invoiced as an reimbursement from the end customer and we have already added it to our price lists in the summer season of 2022. In practice, this additional cost line will appear in your outgoing accounting invoices sent by 13 September.

NOTE Our fight against inflation and price increases continues, and we will not raise our own monthly service fees for the time being!

DigibalanceApp mobile application

We are developing our own DigibalanceApp application and you will first notice some design updates during the autumn. After that, there are also new functional updates coming and, for example, we are moving completely to using the application for archives.



Best regards,

Mikko Ilves
Chairman of the Board
AutoAccount OÜ and Digitase Oy