Reflections on starting a limited company in Sweden
I saw this post linked on Hacker News today, reflecting on the difficulties of starting a company in Germany.
It made me think about the process of starting a company (“Aktiebolag”, or “AB”) in Sweden, which I recently went through myself.
The process took a while and was at times a little overwhelming due to translating all the Swedish documentation, but overall the barrier to entry was quite low and everything could be done online.
You file an online application on verksamt.se. There is a bit of juggling with the bank account: you need to deposit 25,000 SEK in share capital into a company account, but you can’t have a company account until you get a company. So once your application gets reviewed and accepted, you are given some information to pass to your bank when applying for a company bank account. Your bank then verifies with Bolagsverket (the Swedish company registration office) that you are indeed getting approved to start a company and opens your bank account. You deposit your mandatory share capital into this account. Bolagsverket then verifies that all is good and your company is officially registered.
The entire process, if I remember correctly, took a month or two.
Verksamt recommends listing a few naming alternatives in your order of preference when applying, since if the name you choose is not accepted for any reason it can take a long time to ask you for a new name and then apply for that name instead. To be honest, I did not do this. I checked what the naming rules are and then checked if the name is taken on allabolag.se, and then just went for it. Luckily it worked out.
VAT and F-Tax
Once that’s done I had to apply for a VAT number and F-Tax. F-Tax is a tax status which allows clients of the company not to worry about witholding any sort of Swedish tax when working with my company. This means I am responsible for reporting all relevant tax myself, making it much easier for people to work with me.
Speaking of tax - Skatteverket (the tax agency) also sends you your preliminary tax payment schedule based on your estimated profit for the year.
When registering, depending on your expected income, you are allowed to pick things like how often you file your taxes (once a year seems simplest) and your accounting method (Faktureringsmetoden or Kontantmetoden).
To be honest I’m still not quite sure of the technicalities here, but Faktureringsmetoden sounded much more confusing. It has something to do with filing all business events like accounts receivable and payable. You file when an invoice is received or sent, as opposed to when the funds actually come in. For companies with an expected turnover of less thatn 3 million SEK, it is allowed to choose “Kontantmetoden”, which is where you file based on when money actually goes in and out of your company bank account(s). I chose this one.
I talked to an accountant to help me with the initial accounting questions. He helped with newbie questions, like “How much should I pay myself?” I’m currently taking out a salary that strikes just the right balance between getting proper pension accrual and not going over unfavorable employee tax brackets.
I later had a subscription to an on-demand accounting service for a few months, when I could ask random questions that popped up to an accountant who’d answer them. I eventually cancelled this when I found myself not emailing them with questions as much. When it comes time to file my end of year report I may end up paying for someone to help me with this.
I chose Bokio as my accounting system. It seemed relatively noob-friendly. Aside from using it to record incoming and outgoing transactions, Bokio also handles my own salary payments. It also generates a file that I upload to Skatteverket every month, which registers my employment tax and benefits and tells me how much employer tax to send them.
I chose SEB for my main company account. However, I have international income go into a Wise (formerly TransferWise) company account before transferring it to SEB.
The entire setup was intended to make it as easy as possible for companies in other countries to work with me, as well as to efficiently get paid my Amazon publishing royalties (which come from a bunch of different countries and in a bunch of different currencies).
Since I’m now taking out a lower salary than I used to have when I was a full time employee, I don’t end up saving as much privately into my ISK investment account.
A company is not allowed to have an ISK account, but it is allowed to have a kapitalförsäkring (KF) account (I think this translates to “Endowment Ensurance”?), which has roughly the same (if not identical) tax conditions. So, I opened a company KF account with Avanza for investing company funds.
I think I won’t really have a full impression of what it’s like to run a limited company in Sweden until end of year filing time comes around. So far it’s been pretty smooth. The only hassle is manually reporting all income and expenses. Amazon pays royalties out separately for every storefront. So monthly, I have about a dozen Amazon transactions to convert and record. Some of which can be as low as 0.01 USD!!! Frustrating, but if that’s all I have to complain about I’m happy.