How to start a business in Sweden 

Are you planning to start a business in Sweden? There are a couple of steps and requirements that all potential business owners need to go through before being able to start their journey as a Swedish company. It may feel daunting at the outset, but if you follow the correct steps you will soon be able to get your business going. 

Different types of businesses 

What type of company you are going to start is dependent on who you are and what form of business you are planning to run. There is no straight answer as to what type is best – the choice varies based on a lot of different circumstances. If you are unsure of what is appropriate for your business you can always turn to Innecta for support. 

Sole trader (enskild näringsidkare)

As the name implies a sole trader is a person who operates a business on his or her own. You can employ other people but it’s you who are making – and are liable for – all the decisions related to said business. 

When it comes to finances, you don’t have to have any start-up capital to start a business as a sole trader, but it is important to note that you are personally liable for covering eventual debts. That means that you might have to pay out of your own pocket if there are any financial problems with the business. 

It is therefore of the utmost importance that you keep your business and private records regarding income and expenses separated from each other. Many sole traders choose to set up a business bank account to make this easier. 

Limited company (aktiebolag)

A limited company is the most common form of business in Sweden. The Swedish Companies Registration Office (Bolagsverket) describes a limited company as a “legal entity with its own rights and responsibilities, which, for example, limits your liability for the company’s debts“. 

The limited company is its own legal person and is owned by the shareholder/s – meaning you. This means that you – unlike a sole trader – would not be financially liable personally if the company would run into trouble. 

Even if you can start a limited company as the sole owner you will have to have at least one other person registered to the company. You will also have to put up a minimum of SEK 25,000 as starting capital, which can be for business purposes. The word “aktiebolag” (often abbreviated to “AB”) has to be a part of the company name. 

Trading partnership (handelsbolag)

A limited company is not the only type of business that is its own legal entity. This is the case for trading partnerships too. There are however two important distinctions between these two forms of businesses. 

The first one is that a trading partnership must have at least two partners – hence the name. The other one stipulates that you and your partner are personally liable for the partnership’s debts. If you join an already existing trading partnership you will still be liable for previous debts that have not yet been paid. 

To get the registration of your trading partnership approved the name must contain the word “handelsbolag”. 

If a trading partnership contains at least one general partner and one limited partner, that is called a limited partnership (kommanditbolag). The general partner is the one who is personally responsible for the company’s debts and agreements. 

To be allowed to start a limited partnership you must not be declared bankrupt or be prohibited from carrying on business. The name of the company has to contain the word “kommanditbolag”. 

Starting a business in Sweden – step by step 

There are three important steps that you will have to follow to be able to start and run a business in Sweden. The steps can look slightly different depending on what type of company it is you are about to start. 

Register with the Swedish Companies Registration Office 

The first thing you have to do is to register your company with the Swedish Companies Registration Office. This step is sometimes optional for sole traders depending on what kind of business it is regarding. When registered, the company name is protected in Sweden, which means you hold the exclusive rights to use it. 

Tax registration 

All of the businesses that are described above – sole traders, limited companies, trading partnerships – have to register with the Swedish Tax Agency. In most cases you apply for F-tax (the Swedish corporate taxation) and VAT (value added tax) registration. F-tax is only a requirement if your business is providing some kind of service, but most types of companies apply for it anyway. 

Report the beneficial owners 

Within four weeks of registering your business you have to inform the Swedish Companies Registration Office of the identity of the beneficial owners. This applies to both limited companies and trading companies but not sole traders. Verksamt.se defines the beneficial owner as the person or persons who own or control the company or partnership. 

Moving to Sweden 

Are you moving to Sweden to start a business? If you are a EU citizen you have the same rights – and obligations – as a Swedish citizen when it comes to starting and running a private business. There are more hurdles to get passed if you are a non EU/EEA citizen. 

If you are in the latter category and don’t have a citizenship in a EU/EEA country you will need a residence permit to be allowed to work in Sweden for longer than three months. To apply for a residence permit you will have to contact the Swedish Migration Agency (Migrationsverket). 

As a self-employed you will have to meet some requirements in order to acquire the residence permit. According to verksamt.se, the government services for business, you must: 

• have a valid passport
• show that you have significant experience in your field and previous experience of running your own business
• have documented knowledge in Swedish and/or English
• show that you are running the business, that you have the ultimate responsibility for it and that you own at least half of the business
• show that the business’ services or goods are sold and/or produced in Sweden
• show that you have sufficient funds to support yourself and, if applicable, your family during the first two years (equivalent to SEK 200,000 for you, SEK 100,000 for your spouse and SEK 50,000 for each accompanying child)
• show a credible basis for your budget
• show that you have created customer contacts and/or a network in Sweden
• show that the business, following the two-year probationary period, is expected to be able to support you and, if applicable, your family.

EU/EEA citizens must apply for the residence permit in their home country. This can be either your country of origin or another country outside of Sweden in which you are living. 

FAQ 

What do I do if my company name application is rejected? 

If the Swedish Companies Registrations Office decides to reject and not register your company name you can either choose a new name or appeal the decision. Adding additional information to your application can also work. 

Don’t hesitate to contact us here at Innecta if you need help with your application – or have any other question regarding starting a business. 

What is the EEA? 

EEA stands for European Economic Area. The EEA includes all EU countries along with Norway, Iceland and Liechtenstein. This is a single market that allows free movement of capital, services, goods and people between the EEA countries. 

Do I need a Swedish identity number to apply for F-tax and VAT registration?

No, you don’t need a Swedish identity number to apply for the registration of F-tax och VAT. You can also submit a “Tax application for foreign entrepreneurs” form to the Swedish Tax Agency. You have to submit the original copy.