Sweden maintains a robust and stable economy, making it a desirable location for foreign investment. Doing business in Sweden is easy, mostly thanks to a credible banking system and powerful public finance initiatives. The political stability and high-performing economy also make it a solid option. Its outstanding transport infrastructure, well-educated workforce, and high levels of research and development investment also add to its appeal.
Start your business in Sweden: here are the main steps.
Below, are the points to consider and the main steps involved in starting a business in Sweden.
Resident permit
This is an important requirement when starting a business in Sweden. Citizens of the Nordic region do not require registration through the Swedish Migration Agency, nor do they need to apply for residence permits. Also, citizens belonging to the European Union or European Economic Area are exempt from registration and are authorized to apply for personal identity numbers.
But citizens not belonging to Switzerland, the EU, or the EEA, are required to apply for residence permits if they wish to start a business in Sweden.
Write a business plan
A business plan is the foundation of all startups, as it allows them to apply for funding, and prepare for unexpected eventualities.
After deciding on the products or services for your business, you need to go ahead and
prepare your business plan. A detailed plan makes it easier for you to get attention from customers, banks, and investors.
Choose the appropriate business structure
There are several business forms available for investors and entrepreneurs looking to start a business in Sweden, and the one selected varies according to the kind of business the owner intend on running. Below are the forms through which you can choose to register when starting a business in Sweden:
- Sole trader (enskild näringsidkare): Sole traders are personally responsible for all the company’s responsibilities, such as liabilities and agreements.
- Limited liability company (aktiebolag): this business structure is suitable for one or more individuals, and its responsibility is divided up by the amount of shares that each shareholder owns.
- Trading partnership (handelsbolag): this is a business of two or more people who are jointly responsible for business obligations.
- Limited partnership (kommanditbolag): this is a type of partnership established by two types of people. At least one member must have general liability, and at least one other is a limited partner. The liability of the limited partner depends on the extent of his capital.
- Branch (filial): under this business form, no share capital is required and its assets and liabilities are part of the total assets of the foreign-based parent company. The branch must also keep its own accounting records separate from the parent company.
The most used type of company in Sweden is the private limited liability company as it has various advantages over other forms.
Choosing a business name
Business owners need to choose a name for their business and then submit an application to the Swedish company’s registration office. The name must be assigned carefully as it will directly speak to the professionality of the company. The name will also be used for branding and marketing, as well as email and online domains.
Choosing a legal address
This is another important aspect to handle when opening a company in Sweden. The business must have a legal address in the city in which it will be registered. This can be a temporary one until a permanent location is set up and for this purpose, the virtual office can be a good alternative at the beginning of the process.
Opening a corporate Bank account
Setting up a bank account is also an important step. It is easy to set up a business bank account in Sweden, and both residents and non-residents are qualified. The business owners must deposit the capital shares (if needed) in a bank account and acquire a written statement from that bank institution.
Register your Swedish Company
An applicant going for company registration in Sweden would have to register the company with the official authority which is Bolagsverket. After this, the applicant would have to fill in the application form.
Note that at least 50% of the board of directors must reside within the European Economic Area for company registration in Sweden.
Memorandum of Association and Articles of Association must also be drafted in Swedish and filed with the registrar for incorporating a Swedish company.
Register for taxes
The company must register at the Swedish tax office, and once registered, the business will be issued a unique corporate identity number, which will be sent to the registered company address. The business will also be required to pay an annual tax on the estimated yearly profit. Additionally, between 6-25% VAT is charged depending on the sector of the business.
And when discussing VAT registration, this step can be finalized voluntarily alongside tax registration or when the necessary threshold or reached or if the businesses engage in activities that require VAT numbers, such as import-export operations( in this case, the company representative may also consider applying for EORI registration for cross-border operations within the European Union)
Hiring employees in Sweden
When opening a business in Sweden, this is one of the most important steps after registering the company.
One of the necessary steps to carry out when hiring employees is for the company to register as an employer, ensued by the registration of the employees. In this sense, the workers must also be enrolled for social security and pension contribution. Employment conditions in Sweden are governed by the Employment Protection Act (Lagen om Anställningsskydd). This act asserts that employment contracts are for an indefinite term unless otherwise stated in the employment contract.
There are also four types of agreements for determined periods, including for persons over the age of 67.
Setting up your business in Sweden can be an exciting challenge, but it can also be time-consuming. To simplify the process further, let’s go ahead and contact your Damalion expert now.
