Sole Proprietorship In Sweden

Sweden is a highly competitive economy in the world. It is among the most technologically advanced and innovative world economies and is praised equally for its excellent social indicators.  

The World Bank noted Sweden as an export-orientated nation that traditionally followed an open and liberal approach to doing business. As per its ease of doing business report 2020, Sweden ranks 10th among 190 countries. In IMD world competitiveness ranking 2022, Sweden has secured fourth out of 63 economies. Its stable economy offers the lowest tax rate of 20.6% among other EU nations. 

In this context, several commercial opportunities exist for global companies to expand their operations. One great way to utilize these exciting opportunities is by setting up a sole proprietorship in Sweden. 

Keep reading and learn about how to register a sole proprietorship in Sweden. 

Who can be a Sole Proprietor in Sweden? 

Setting up a sole proprietorship in Sweden is one of the easiest ways to enter the market with minimum requirements. A sole proprietorship, or otherwise a sole trader, is commonly referred to as Enskild Firma in Swedish. There is only one shareholder, and they are liable for all aspects of the business. You can set up a sole proprietorship if you own a business activity conducted in Sweden. 

Anyone aiming to expand and establish their business can set up a sole proprietorship in Sweden. If you wish to incorporate a sole proprietorship in Sweden, the rules may vary depending on whether you are an EU/EEA citizen or a citizen of a non-EU/EEA country. The European Economic Area (EEU) includes 27 member countries of the European Union (EU), along with Iceland, Liechtenstein, and Norway. 

To register a sole proprietorship in Sweden, a sole trader is required to meet the following conditions:

  • Be older than 16 years
  • Not be declared bankrupt 
  • Not be subjected to trade prohibition
  • Have a coordination number with the Swedish Tax Authority in case of foreigners 

Individuals older than 16 but younger than 18 can also start a sole proprietorship in Sweden with a guardian’s consent attached to the registration form. 

A sole proprietorship can employ staff, issue bills/invoices, and pay taxes as a business entity in Sweden. Freelance entrepreneurs can register as self-employed in Sweden for hiring, issuing invoices, and tax purposes.

Benefits of Sole Proprietorship in Sweden

Sweden presents diverse reasons for foreign businesses investing and expanding operations in the Nordic region. Global businesses can leverage the golden opportunity by setting up a sole proprietorship in Sweden. It is one of the most straightforward business structures an individual operates, and here’s why: 

  • Dynamic economy: Sweden has produced several unicorn startups – Skype, Spotify, fintech like Klarna, and game developers like King and Mojang, in addition to remaining competitive in goods and manufacturing. Its two big cities, Stockholm and Gothenburg, are hot spots for major technology companies. Starting a sole proprietorship in Sweden can be profitable for global companies who wish to try out the market in the short term.
  • Ease of doing business: Sweden has a stable and robust economy offering efficient processes that makes doing business in the country easy. It offers access to online platforms for incorporation, property transfer, and taxes, making operations more straightforward. In addition, the country has the lowest corporate tax in the EU.
  • Access to larger markets: By incorporating a sole proprietorship in Sweden, companies get access to larger markets in the European Union. 
  • Zero capital requirement: Any national & local law does not impose minimum capital requirements to register a sole proprietorship in Sweden. 
  • Operation flexibility: The proprietor can sign any legal documents, conduct any legal operations, or sign a power of attorney on behalf of the business entity. 
  • Minimum paperwork: Sole proprietorship transfers unlimited liability to individual owners, making them responsible for all the profits and losses. For this reason, incorporating a sole proprietorship involves less paperwork, unlike other business structures.
  • Minimum legal & tax obligations: It is rare for sole proprietorships to cross a threshold revenue to manage extensive bookkeeping and maintain financial records. It is sufficient for the owners to file their annual returns as sole proprietorship taxes in Sweden. 
  • Simple banking: The banking process is straightforward for sole proprietors. Business owners can accept and make business payments through their bank accounts. 
  • Social benefits: Any registered self-employed individual in Sweden is entitled to a sickness benefit from the Social Insurance Agency. 

Documents Required for Registering Your Business in Sweden

The documents required for registering a sole proprietorship in Sweden are as follows: 

Residence permit

  • A citizen of a non-EU/EEA country willing to incorporate a sole proprietorship in Sweden can do so after receiving a valid residence permit. 

Coordination number 

  • A coordination number is a unique personal identity in Sweden for temporary residents. 
  • The Swedish Tax Agency or Skatteverket issues coordination numbers. 
  • It applies to foreigners usually not registered in the Swedish population database. When applying for F-tax registration, businesses can use their coordination number.
  • Upon the registration, you must attach a copy of your passport or other identity documentation.

Tax identity 

  • A sole proprietorship in Sweden is required to apply for F-tax or VAT registration with the Swedish Tax Agency by submitting the SKV 4620 form. 
  • F-tax is best for entrepreneurs and freelancers registered as self-employed in Sweden. It will allow their clients not to deduct tax or pay employer contributions. 
  • Incorporating a sole proprietorship in Sweden for Value-Added Tax (VAT) purposes or to identify as an employer will allow businesses to file tax returns as separate entities and hire local talent.   

Incorporation documents

  • A sole proprietor registers their business with the Swedish Tax Agency. 
  • Incorporation documents include the company name, social address, the company’s purpose, shareholder name, and others. 
  • Registering sole proprietorship with the Swedish Companies Registration Office or Bolagsverket is optional. 

Corporate bank account

  • Sole proprietors can use their bank accounts to make or accept client payments. However, they can also open a separate bank account for their business. 
  • Specific requirements for opening a corporate bank account for a sole proprietorship in Sweden may vary depending on the bank policies. In most cases, establishing the tax identity of the beneficiary is critical. 

Other Criteria for Registering a Sole Proprietorship in Sweden

Individuals interested in setting up a sole proprietorship entity must follow proper procedures while setting up a sole proprietorship in Sweden. Below is an overview of some specific criteria for the same:

Register business name 

  • Registering the name of the sole proprietorship in Sweden with the Swedish Companies Registration Office (Bolagsverket) is not mandatory. However, we recommend it to maintain a unique brand identity. 
  • One can register the business name for a fee on the Swedish Companies Registration Office website using form 903 e
  • It is suggested to keep a business name representing the business idea and activities. While submitting the form, you need to specify the details of your business activities so that the registration office can analyze the proposal. 
  • However, the protection for business names is valid only within the respective Swedish county of registration. 

Register an auditor

  • A sole proprietorship in Sweden is not required to appoint an auditor by law. 
  • However, registering a qualified auditor becomes necessary where the sole proprietorship has –
    1. An average number of 50 employees, or 
    2. A reported balance sheet of SEK 40 million, or 
    3. A net turnover of SEK 80 million in the last two financial years. 
  • You can register an auditor by submitting form number 913 e, which is also available online. 

Permits and applications

  • Sole proprietorship operating in regulated businesses may have to apply for necessary permits and register separately with the respective regulator.  
  • A few regulated businesses and professions in Sweden include animal care, construction, education, healthcare and medicines, insurance, legal, real estate, and transportation.  

How to Register a Sole Proprietorship Company in Sweden

Here is a simple overview of how to register a sole proprietorship in Sweden.

1. Start your research

  • Sweden has a stable economy with a well-established manufacturing and service sector with modern tech startups and unicorns. 
  • Before starting a sole proprietorship or any other business form in Sweden, you should conduct thorough research on the Swedish market. 
  • Statistics Sweden is another reputed source of information about Sweden and its demographics, business sentiment, and industrial capacity. 
  • There are numerous trade organizations involved in all sectors and industries in Sweden. They can give you useful insights and regulations that apply and the general state of the market. 

2. Select and register your company name

  • Choose a business name that aligns with your business activities. 
  • You may also register a secondary business name to promote a part of your business activities. 
  • Ensure that the business name of the sole proprietorship may not use the word bolag (corporation in Swedish) or any other word that indicates more than one person administers the business.
  • Register your business name for a fee in each county where you plan to operate your business. 
  • Fees may vary from around SEK 1,100 to SEK 1,400 (around USD 110-140), including primary and secondary business names and changing the business name. 

3. Register a sole proprietorship for tax purposes

  • As a sole proprietor, your business is identified by the personal identity number (personnummer). 
  • Visit or avail of e-services from the Swedish Tax Agency to apply for VAT registration.
  • Once approved, you can apply for F-tax approval and register yourself as an employer and for business VAT. You can complete this step online by submitting form SKV 4620, if you have a Swedish identity number and e-identification on the website, verksamt.se. 
  • Valid VAT registration will help you file tax returns as a business entity. 

4. Set up a sole proprietorship for hiring employees

  • Visit or avail of e-services (available only in Swedish) from the Swedish Tax Agency to apply for employer registration.
  • Valid registration as an employer will help you hire local talent, withhold employee taxes, and pay social contributions toward employee benefits. 

5. Open a corporate bank account

  • A sole proprietorship in Sweden can open a corporate bank account.
  • Documents related to incorporation, business registration, and tax identities may be required. 

If the business owner resides inside the European Economic Area (EEA), they must get their coordination number from the Swedish Tax Agency. Those residing out of the EEA must appoint a manager and register them with Bolagsverkert. The manager must be above 18 years, a Swedish resident, and must have a Swedish identity number. 

The registration process usually takes a lot of time and effort, scanning multiple registration documents. We recommend entrepreneurs or global businesses look for global EOR solutions to work through the process swiftly. Once the procedure is complete, you can start operating as a sole proprietorship in Sweden! 

Conclusion

A sole proprietorship offers maximum benefit for foreign entrepreneurs looking to take advantage of the vibrant Swedish economy. Sole proprietorship in Sweden laws does not impose any minimum requirements for the number of employees or capital. The tax laws in Sweden for sole proprietorship companies are straightforward with simple filing procedures. 

Overall, it is a win-win situation for global companies to set up a sole proprietorship in Sweden and explore new business opportunities. 

However, when expanding teams and hiring employees in Sweden, payroll and team management are real challenges to overcome. It is time-consuming and financially burdening. That is where Multiplier comes to your help. 

Multiplier is a global employment solution designed for sole proprietors looking to expand globally. It offers reliable EOR solutions to ease up your recruitment and management process of international employees. We have one-click payroll services to help seamless payments for international employees and freelancers. 

Our team of experts also helps with onboarding employees and managing HR responsibilities in Sweden. All our services are 100% compliant with the local rules and regulations for running a business in Sweden.

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Frequently Asked Questions

Taxation in Sweden for a sole proprietorship is simple. As a registered self-employed in Sweden, you can submit a preliminary tax return with an estimate of your profits during the start of any financial year. 

Before the year starts, you need to send a preliminary income tax return with the estimated profit. Then, the Swedish Tax Authority will calculate the amount of tax you are required to pay as preliminary tax each month. 

At this moment, the Swedish Tax Authority analyses your returns and calculates the total amount of tax, which is usually around 40% of your profit. If you paid more in preliminary tax, the authorities would refund the excess amount.  

Bookkeeping throughout the financial year will help you arrive at the actual profits. You need to file your returns again after the financial year ends.

One of the most flexible aspects of operating a sole proprietorship is the sole sharing of profits with unlimited liabilities. To calculate operating profits, you may start by: 

  • Deducting expenses from income
  • Then, deducting a standard allowance of 25% of the profit
  • The remaining 75% is your profit, which is your business’s taxable income.  

If you are a registered self-employed in Sweden, you have set up a sole proprietorship. Swedish laws offer sickness benefits from the Social Insurance Agency (Försäkringskassan) after a waiting period. The sickness benefit generating income is typically calculated on the company’s profit. 

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