for starting your own business

Swedish Tax Agency SKV 462 Edition 3 Starting Your Own Business Are you thinking of starting your own business? Every day over a hundred businesses are started in Sweden. This brochure provides you with the information which we at The Swedish Tax Agency and Swedish Enforcement Service believe is important for starting your own business. Choosing the form of business, page 2 Sole trader Trading partnership Limited partnership Limited company Registering your business, page 3 Swedish Companies Registration Office Swedish Tax Agency Need a permit? Bookkeeping, page 4 Bookkeeping is a must! Should I hire an accountant? Getting Started, page 5 Purchases Sales Hiring professionals Employing staff Contents Accounting, page 6 Declaration of income Declaration of taxes Paying on time, page 6 Tax payments Pay on time Credit Blacklisting Final Statement, page 7 Annual Accounts Income Tax Return Additional Information, page 8 Contact other new entrepreneurs, page 8 (page 2) Choosing the form of business One of the first things you must do when starting a new business is to choose which form of enterprise your business will take. Decide which form of business suits you best. The most common forms of business are sole trader, trading partnership, limited partnership, and limited company. Each of the four forms is different with respect to taxation and liability. Sole Trader Maybe you are starting out on a small scale and would like to run your business as a sole trader. Personal payment liability If you choose to run your business as a sole trader it is important to know that you, personally, are responsible for everything you do in the business’ name; you have sole liability. Any income from your business is to be recorded in an appendix to your own personal Income Tax Return (self assessment). Your tax and contributions are then calculated, put simply, on the year’s profit, i.e. revenue minus expenses. This means that the amount (in money or assets) you pay in or withdraw from your business does not in any way influence the amount of tax you have to pay. Trading Partnership Should you choose to run your business together with someone else, you could form a trading partnership. At least one partner is required. Joint liability Every partner in the trading partnership is jointly liable for any debts the business may have, this is known as joint liability. This means that anyone having a claim on the partnership can demand payment of the entire amount from any one of the partners. As a partner you pay tax and fees on your share of any profit generated by your business. An account of the income from your business should then be filed as an appendix to your Income Tax Return. Limited Partnership Most of what applies to trading partnerships also applies to limited partnerships – with certain exceptions. The main difference is that in a limited partnership there is always at least one partner (general partner) who can be held liable for the entire partnership’s debts. Other partners (limited partners) are only liable for the amount that they themselves have invested in the business. Limited Company If you wish to found a limited company you must be prepared to invest at least SEK 100,000 in the company. The company must have a board of directors and a qualified accountant. Directors’ liability The company’s Board of Directors is responsible for ensuring that taxes and fees are paid and that an annual report is filed with the Swedish Companies Registration Office. Shareholders’ liability There is a clear dividing line between the liability of the limited company and that of its shareholders. Each shareholder is only liable for the amount equal to his/her shareholding, whereas the liability of the Board of Directors and Managing Director is comprehensive. According to the laws of corporate accountability (företrädaransvar), any or all of the Board of Directors can be held personally liable for, amongst other things, the company’s unpaid taxes. The company pays corporation tax on the company profit. If you receive a salary from the company, the company is classed as your employer and is responsible for paying tax and employer contributions for your salary. For more information visit Bolagsverket’s and Skatteverket’s website: www.foretagsregistrering.se You can also ring the new business helpline startlinjen. Tel:020-35 10 10, website: www.nutek.se/foretagsguiden. The Swedish Companies Registration Office (Bolagsverket) and Swedish Tax Agency (Skatteverket) are responsible for the website: www.foretagsregistrering.se in cooperation with, amongst others, The Swedish Business Development Agency (NUTEK). (page 3) Registering Your Business Registering with the Swedish Companies Registration Office Registering as a Sole Trader If you wish to run your business as a sole trader you can register it with the Swedish Companies Registration Office: www.bolagsverket.se. This ensures that your company name is protected in the county where it is registered. Registration can also simplify dealings with your customers and suppliers. Your company’s organisation number is the same as your personal identity number, regardless of whether or not the company is registered with the Swedish Companies Registration Office. Registration of Trading Partnership, Limited Partnership, and Limited Company If you wish to run your business as a trading partnership, limited partnership or limited company, you must register your business with the Swedish Companies Registration Office: www.bolagsverket.se. Your business will receive an organisation number which is to be used amongst other things when communicating with the authorities. In the case of trading partnerships and limited partnerships the name of your business is protected in the county where it is registered, whereas the names of limited companies are protected throughout the whole of Sweden. Registering with the Swedish Tax Agency Notification of Tax and Contributions Liability Your business must be registered with the Swedish Tax Agency. Before starting your business you should therefore submit a Tax and Payroll Tax Application. This also needs to be done if you take over or restructure a “going concern”. On your Tax and Payroll Tax Application you should submit details for Value Added Tax (VAT) registration and employer registration. This is also where to apply for your F-tax certificate. If you have both an income from an employer and from your business, you could be liable for both A-tax and F-tax and should apply for an FA-tax certificate. More information can be found in the brochures: • Filling out the Tax and Payroll Tax Application Så fyller du i Skatte- och avgiftsanmälan (SKV 418), (Swedish only) Order using extension 7605*. • Value Added Tax in Sweden (SKV 552b) Order using extension 7607*. • Tax Deductions and Payroll Tax Skatteavdrag och arbetsgivaravgifter (SKV 401), (Swedish only) Order using extension 7606*. What is an F-tax certificate? Holding an F-tax certificate means that you are responsible for payment of all taxes liable for your business. In order for the Swedish Tax Agency to know how much F-tax you need to pay, you must first declare how much profit your business is expected to generate. The Swedish Tax Agency will then calculate how much tax you need to pay each month. More information in Swedish can be found in the brochure: F-tax certificate for the self-employed F-skattsedel för företagare (SKV 432), Order using extension 7609*. Need a permit? Do you require a licence for your particular business? Information about various forms of licences and permits can be found on the Business Development Agency’s website: www.nutek.se/foretagsguiden Information in Swedish is also available at www.foretagsregistrering.se. Handy Hint The joint Swedish Companies Registration and Tax Agency website: www.foretagsregistrering.se has a form, Skatte- och avgiftsanmälan. This form is interactive, so you can get help filling it in. At the same time, you can register your business with the Swedish Companies Registration Agency. *Order on our service line 020-567 000, wait for an answer, enter the extension number or visit our website on www.skatteverket.se. (page 4) Bookkeeping You are obligated to keep records from the moment you start your business – starting with the first transaction. By transaction we mean anything you do on behalf of your business, ex. Buying or selling something or taking out a loan. The Swedish Accounting Act requires you to maintain well-ordered accounts. Keeping your books in order from the outset will save you both time and money. Bookkeeping is a must! According to the Swedish Accounting Act, bookkeeping is to take place on an ongoing basis. Regular bookkeeping will keep you up-to-date and help keep your business on track. Your bookkeeping will provide you with answers to questions like: • How is my business doing? • How much money can I take out? • Can I afford that investment I was considering? • Can I afford to employ staff? Your records are also an important indicator to others of how your business is doing. Maybe you need a bank loan or credit from a supplier. Moreover, you will need your records for filling in your Income Tax Return. More information is available in the brochure, Filling out the Tax and Payroll Tax Application, Så fyller du i Skatte- och avgiftsanmälan (SKV 418). Order using extension 7605* Should I hire an accountant? Choosing whether to do your own bookkeeping or to hire an accountant is up to you. It depends upon your level of experience and the amount of time you have available. Many choose to hire an accountant to take care of their bookkeeping. If you do your own bookkeeping it is important that you know what you are doing. You are always liable! Further information and practical advice about bookkeeping is available in the form of a manual released by The Swedish Accounting Standards Board (Bokföringsnämnden). The manual, Att Föra Bok (Swedish only) can be ordered from the publishers, FARFörlag, Tel: 08 506 112 60, Fax: 08 506 112 58, or can be downloaded from The Swedish Accounting Standards Board’s website: www.bfn.se (PDF-document). • • • Handy Hints Plan your bookkeeping. Make sure that your bookkeeping system best suits your needs. Keep your bookkeeping as simple as possible from the outset, especially if you are unsure of your bookkeeping skills. If you buy a computer programme for your bookkeeping, make sure that it meets the requirements of your business and is not too advanced. * Order using our service line 020-567 000, wait for an answer, enter the extension number or visit our website: www.skatteverket.se. (page 5) Getting started Now that you’ve chosen your form of business, registered your business and taken care of the bookkeeping you can get started. Purchases We know that you, as a new entrepreneur, have lots of questions about things like using your car for business purposes, using your home as an office, and tax deductions for computers and the costs involved in setting up your business. If you need further information the Swedish Tax Agency has the following free brochures available in Swedish. You can also order them using the customer service phone (020 567 000 + extension) or from the webpage: www.skatteverket.se. • • • Tax regulations for a co-owner of a close company (SKV 292), extension 7615*. Tax regulations for sole traders (SKV 295), extension 7603*. Tax regulations for a co-owner of a trading partnership (SKV 299), extension 7604*. Keep records of your receipts and invoices Make sure that what you buy really is a purchase for the business; this is a prerequisite for both deductions for business expenses and VAT deductions. Furthermore, it is important that you make sure that the receipts and invoices you keep contain the necessary details. Sales When receiving an order, you should write an invoice or a receipt. It must contain the following details: • All details about your company (name, address, organisation number, VAT registration number) • The customer’s name and address • Date of invoice and invoice number • A description which identifies the goods and services supplied and terms of deliverance • Total amount payable • Amount of VAT payable for each applicable VAT rate It also helps your customers if you state on the invoice that you have an F-tax certificate. The principle of public access to official records When selling services to customers on credit, you should be very careful. Avoid giving credit to a customer you don’t know and who might already have outstanding debts. The principal of public access to official records means, amongst other things, that you can contact the Swedish Enforcement Service and obtain information about whether or not a person or a company is registered as being in debt. How to manage late payers If a customer refuses to pay for goods delivered or services rendered you may turn to the Swedish Enforcement Service to help secure your payment. The Swedish Enforcement Service can then begin legal proceedings by issuing a default summons. Further information can be found in the brochure on default summons and assisstance, Betalningsföreläggande och handräckning (SKV 926). Order using the Enforcement Service’s customer service phone: 020 757 677. Hiring a contractor/sub-contractor If you buy services from another person, such as hiring a contractor to decorate your business premises, you should find out if he has an F-tax certificate. If the person you hire does not have an F-tax certificate you are required to pay his payroll tax and employer contributions. If the person you hire has stated on his invoice, quote, or other correspondence that he has an F-tax certificate, then that is what counts. If you would like to be certain that the person you hire does have an F-tax certificate, you can ring the Swedish Tax Agency’s service phone on 020 567 000 extension 8102*(answer sent by fax) or call your nearest Swedish tax office. Details of F-tax certificates are a matter of public record. Employing staff Hiring staff makes you into an employer. You are then required to fill in an application form for your employee’s contributions, known as a Tax and Payroll Tax form Skatteoch avgiftsanmälan. Which can be found in the brochure Filling out a Tax and Payroll Tax form Så fyller du i Skatte- och avgiftsanmälan which can be ordered by calling 020 567 000 extension 7605*. The Swedish Tax Agency will then send you a Tax Return where you as an employer account for the payroll tax and employer contributions you have paid on behalf of your employee. You must then account for these amounts, along with your F-tax and VAT when filing your Tax Return. *Order using our service line 020 567 000, wait for answer and enter extension number or visit www.skatteverket.se. (page 6) Accounting Differentiate between your Income Tax Self-assessment and your Tax Return. Income Tax Self-Assessment In your Self-assessment you specify your business’ results. This must be done just once a year. Tax Return In your Tax Return you specify payroll tax, employee contributions and VAT. If you employ staff you must always file a Tax Return and account for payroll tax and employee contributions regardless of your company’s legal structure. Tax Returns must be filed once a month. VAT can be declared in two ways, either on your Self-assessment or in your Tax Return. The determining factors for you are the form of business you have and the extent of your turnover. Sole Trader or Limited Company If you are a sole trader or run a limited company and have an annual turnover not exceeding SEK 1 million you may choose how you wish to declare your VAT. If your turnover exceeds this amount you must file tax returns, usually on the twelfth day of every month. Trading Partnership Owners of trading partnerships or limited liability companies must always account for VAT in their tax returns. Paying On Time Tax Payments F-tax, special A-tax (SA-tax), payroll tax, employee contributions and VAT must be filed with the Swedish Tax Agency by the due date at the latest, usually the twelfth day of every month. Further information can be found in the brochure Tax Account for Businesses Skattedeklarationsbroschyren (SKV 409b). Order using extension 7702*. You should check several times each year to make sure that you are paying the correct amount of F-tax. You should neither pay too little nor too much. Should your F-tax payments require adjusting you can file a new Preliminary Self-assessment with the Swedish Tax Agency at any time (form SKV 4314). Order using extension 6802*. Pay on Time It is important that you are aware of the rules surrounding payment of tax and contributions. Late payments are subject to interest charges and you run the risk of your debt being referred to the Swedish Enforcement Service for collection. This incurs extra costs and your company will be credit blacklisted. Furthermore, your F-tax certificate might be revoked. Credit Blacklisting Lapses in payment of your tax can result in credit blacklisting. It is not the Swedish Enforcement Service who are responsible for credit blacklisting. This is done by a credit rating company who receive information from various sources. Much of their information comes from the authorities such as the Swedish Enforcement Service. The information received by the credit rating company is then divulged to individuals or companies from whom you would rent property, pay by instalments etc. Using this information, decisions are subsequently made as to whether or not you may borrow, rent or purchase. Further information about what could happen if you fail to pay your bills or if you have trouble obtaining payment owing to you can be found on the Swedish Enforcement Service’s website: www.kronofogden.se. *Order using our service line 020 567 000, wait for answer and enter extension number or visit www.skatteverket.se. (page 7) Final Statement Annual Accounts At the end of the financial year it is time to see how it has gone for your business, in other words, to balance the books. Put simply, this means that you sum up your revenue and costs in a profit and loss statement and your assets and liabilities in a balance statement. The regulations governing annual accounts are different depending upon which form of business you run and the extent of your turnover. Further information and practical advice on bookkeeping can be found in a manual released by the Swedish Accountancy Board—the manual, Att Föra Bok can be ordered from the publishers, FAR-Förlag, tel:08 506 112 60, fax:08 506 112 58 or downloaded from the Swedish Accountancy Board’s website: www.bfn.se (PDF-document). Income Tax Self-assessment Your business must be declared in your Income Tax Self-assessment form which you receive from the Swedish Tax Agency in April. Use the results of your book balance to fill in the form. File your Income Tax Self-assessment with the Swedish Tax Agency. They will work out how much tax you should pay for the previous year and compare this with the preliminary tax you have already paid. If you have paid too little tax you must pay more and if you have paid too much tax you will get money back. The final page of this brochure contains references to further sources of information. Reduce the risk of losing customers by checking them with the Swedish Enforcement Service. Ask us: before giving credit if you don’t get paid about bankruptcy • • • Forms, brochures and advice about what to do when your customers don’t pay you are available at www.kronofogden.se or via the Swedish Enforcement Service’s service telephone 020 757 677. We at the Swedish Tax Agency and Swedish Enforcement Service wish you every success. Ask us if you have any queries. (page 8) Helpful Information Business ideas ALMI, www.almi.se The centre for the newly self-employed: www.nyföretagarcentrum.se The Municipal Trade and Industry Secretariat The Swedish Employment Service, www.ams.se Business legal structure The Swedish Companies Registration Office, www.bolagsverket.se, Tel: 060 184 000. Permits NUTEK, www.nutek.se/foretagsguiden Tel: 020 351 010 Registration The Swedish Companies Registration Office: www.bolagsverket.se Tel: 060 184 000. Filling out the Tax and Payroll Tax form Så fyller du i Skatte- och avgiftsanmälan (SKV 418). Order using extension 7605*. An interactive Tax and Payroll Tax application form, Skatte- och avgiftsanmälan (SKV 418) is available at www.skatteverket.se F-tax Filling out the Tax and Payroll Tax form Så fyller du i Skatte- och avgiftsanmälan (SKV 418). Order using extension 7605*. F-tax certificate for the self-employed (SKV 432). Order using extension 7609*. F-tax certificate control: 020 567 000, extension 8102* (answer by fax). Bookkeeping The manual Att Föra Bok can be ordered from the publishers, FAR-Förlag, tel: 08 506 112 60, fax: 08 506 112 58 or downloaded from the Swedish Accountancy Board’s website: www.bfn.se (PDF-document). VAT VAT brochure (SKV 552B). Order using extension 7607*. A guide to VAT can be found at www.skatteverket.se. Voluntary VAT payments on rented business property (SKV 563). Employing staff Payroll Tax and Tax Deductions Skatteavdrag och arbetsgivaravgifter (SKV 401). Order using extension 7606*. Tax return Tax return brochure (SKV 409). Order using extension 7702*. *Order using our service line 020 567 000, wait for answer and enter extension number or visit www.skatteverket.se. Contact other new entrepreneurs Sign up for one of the Tax Agency’s meetings for the self-employed and recieve free advice on bookkeeping, VAT, F-tax, employer responsibilities and on what the Swedish Enforcement Service can do for you. For more information in Swedish, visit www.skatteverket.se, go to “infoträffar”, then click on “huvudmeny”. 24 hour self service: www.skatteverket.se Service phone: 020 567 000 Personal Service: Switchboard: 0771 778 778 Tax information: 0771 567 567 Tax informations opening hours: Mon-Thu 8am to 7pm, Fri 8am to 6pm Swedish Tax Agency SKV 462, 3rd edition. Issued February 2005.