As we get hundreds of questions everyday from both potential and existing customers, we decided to put together a list of nine important things you should know before joining us.
At Xolo, we believe starting and running a business should be simple.
Since we started in 2015, we've helped over 2,000 people from over 100 different countries to become founders of their own Estonian companies and run their businesses from anywhere in the world. Fun fact: some of them haven't even stepped foot in Estonia yet!
Xolo isn't for everyone. We'd love to be, but mostly we support freelancers, solopreneurs, or one-person, single shareholder businesses.
Examples of these are:
And you should know up front the major business types we can't support:
If you're on that first list and you haven't got Xolo yet, what are you waiting for? Get Xolo Today!
If you're not sure of anything, just ask! We're here to help you. If we can't support your business, we'll happily suggest an alternative way forward, and even another provider if we know of one.
A major part of our signup and onboarding process involves finding out what your business does. We really want to know as much about your business as possible. This means that we will ask you for your business description and everything else about it:
It's important to be transparent. When it comes to Xolo Leap, the whole concept of e-Residency is about transparency and ease of doing business, so your company data will be publicly available. There are also strict money laundering regulations for everyone running a business and you can't be hidden or detached from your company in any way.
Your business description also helps us to figure out if Xolo is a good fit for you, and if your business can be supported by us. It's also submitted to the Estonian business registry, and the Estonian tax board. And we can even send it to our partner bank LHV if you need an account there. Everyone involved will assess it diligently, so you need to consider this as well when completing your description.
When you sign up with Xolo Leap, you get to choose a name for your brand new company!
This is one of the first things we ask you when you sign up. If you already know exactly what you want your company to be called, that's great. If you don't, then you would want to have a bit of a think so that it is both impactful and memorable.
You could of course just stick with your own name, something like 'John Smith OÜ', if you'll be acting as a freelancer, as this will be trustworthy for your clients and easier for you.
However if you're looking to create a brand which isn't just your own name, it's great to try and pick a name which represents what your business does in some way, or something which will stick in people's heads.
And don't forget to do research around what other names are out there already. There may not be a company with exactly the same name, but if there's a company in Europe with a similar name it could cause confusion.
When you get Xolo Leap, you'll also need Estonian e-Residency. You can start applying for e-Residency before, or after you've signed up for Xolo Leap, it's totally up to you.
You can sign up on the e-Residency website. It'll cost you a one-off state fee of €120. This will give you access to all the necessary online services the Estonian government provides for running your brand new business, along with easy ways to access banking services and Xolo Leap.
One of the main features of your e-Residency is the digital ID card that you'll receive when you sign up. Once you've collected this, you'll need to put it to good use, when you sign your company registration application for Xolo Leap.
To make digital signatures, you'll need to use your ID card with the card reader that you'll also receive in your e-Residency starter pack. Your ID card can also be used to sign into your Estonian banking services once you've set them up, along with your Xolo Leap dashboard. You'll also need to download the ID card software here and you can always consult our FAQs about ID cards, or the FAQs on the ID card website.
We also highly recommend downloading the excellent app Smart-ID. You use your ID card and reader to sign up with Smart-ID, and from then on you can use Smart-ID to log in to your services, as well as authorise payments from your Estonian bank accounts. This means that you can manage everyday things with Smart-ID and only use your ID card for signing your annual report once a year.
You won't be surprised to hear that starting a company doesn't come for free.
There are a few one-off costs to content with. These are:
There are three different price plans for Xolo Leap products so choose the one that works best for you. However, it's important to know that if your company becomes a VAT payer, you can claim the VAT back at the end of the tax year.
The other possible costs you might run into include travel costs for going to the nearest Estonian embassy to collect your e-Residency card, and costs for setting up your bank account. But we'll cover that next.
Now you need to choose how you manage your company's money.
We strongly suggest opening an account with our partner bank, LHV. They've been around since 1999, and now have more than 100 000 customers using their banking services. We have a close co-operation agreement with them, and using their feature LHV Connect, you'll be able to view your up-to-date business bank account balance on your Xolo Leap dashboard
Setting up an account with them will cost you a one-off setup fee of €100, a €2 fee for your bank card, and €10 per month from then on.
To open your account, and collect your bank card, you'll need to make a trip to Estonia to meet a representative of LHV and sign on the dotted line. And you'll also get to meet the wonderful Xolo team, so what could possibly be better?
Don't fear though, if you're not able to travel to Estonia for any reason, you're not out of luck. You do have another option - a Wise borderless business account. You can set this up completely online, and totally free. It comes with multi-currency support, a company MasterCard, and we're also integrated with them so you can see your account balance in your dashboard.
If you're selling services online, you'll likely want a PayPal business account as well, as they're one of the most recognised online payment providers out there. Getting a PayPal business account is easiest once you've got your LHV business account, as PayPal requires that you have an Estonian business bank account to link to your account.
It's important to understand that e-Residency doesn't mean tax residency. If you're an e-Resident of Estonia, and you've established a company here, it doesn't mean you'll need to pay personal taxes within Estonia. Your company/business taxes will be paid in Estonia, while your personal taxes will be paid to your country of tax residency.
Xolo currently assumes that your Estonian company will be an Estonian tax resident and provide you with the necessary tax compliance and reporting in Estonia. Estonian policies on company income tax are quite unique. Company income tax (CIT) is charged on distributed profits (dividends) only and not on the company's income. Distributed profits (dividends) are generally subject to a flat 20% CIT at 20/80 of the net amount of profit distribution.
There are two types of salary you can pay yourself, a board member salary and an employee salary. The tax rates on the two salary types are different:
You can see more information in our FAQs about receiving money from your company.
The minimum share capital for an Estonian limited company is €2,500. Don't worry if you're not ready to pay it when the company is being established. You can choose to defer the payment for as long as you want if the share capital is under €25,000.
However, you'll need to pay your share capital before you make any dividend payments. You're also still personally liable for your company up to the amount of share capital not yet paid in.
Luckily, paying share capital is an easy process in Estonia. When you're ready, simply make the payment directly into your company bank account and name it 'payment of share capital'.
You won't need any third party software to deal with, or create, your invoices when you're a Xolo customer. You'll be able to create and send invoices from your self-service dashboard, and there are basic settings so that you can customise the design of them.
Creating a new invoice is simple, you can simply click the button in the top right hand corner - 'New sales invoice'. Fill out all the fields and an invoice will be created. Done.
You can keep an eye on when your invoices have been paid, or are overdue, in the notification section on the right of the page. And you can get an overview of your company finances in the graph at the top of your dashboard.
These are just nine of the things we think are great to know before you get Xolo Leap, but if you still have unanswered questions, don't hesitate to get in touch at firstname.lastname@example.org.
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