Sweden is a country blessed with business-friendly laws and regulations. It holds the distinction of being one of the most business-friendly countries in Europe. That's why starting a new business venture there is relatively easy once you get the hang of a few basic principles. Despite being a high-tax, high-spend economy (which tends to reduce incentives for starting new enterprises) Sweden defies conventional wisdom by being home to a large percentage of successful startups.
Global brands including Spotify and Klarna were developed here, and Sweden is second only to Silicon Valley in terms of producing billion-dollar tech companies. Indeed, Sweden has a very high survival rate for startups, with 74% of all startups making it past the first three years.
The Atlantic found that 65% of Swedes aged 18 to 64 think there are good opportunities to start a business where they live, while companies from abroad have also found success when establishing a business in Sweden. Here then, for anyone considering doing business in Sweden, we have compiled a guide on how to get started and what you need to think about. Read on to learn more.
Starting a Business in Sweden – First Steps
As with setting up a business in any country, a solid foundation will allow you to be prepared for a range of contingencies. Here, we look at five key fundamental requirements and responsibilities that your business must fulfil, helping you to sidestep legal barriers for starting a business in Sweden and work through the entire process efficiently.
- Basic business requirements — Identifying the basic elements required for your business to function on a day-to-day basis is the first place to start. These include the location of the business, basic equipment requirements and costs, staff and suppliers, as well as overhead costs such as insurance, rent, website costs etc.
- Basic investment requirements — Initial investments are only the beginning of the story, and the costs of starting a business in Sweden can quickly mount up. Identify your start-up and running costs, search for ways to finance your business venture, research financial support and benefits. Almi, a state-owned organisation aiming to help startups with capital and advice is a good place to start, however, there are also many startup incubators in Sweden that can help.
- Analyse potential risks — Risk is an integral part of any new business venture, and getting to grips of those risks associated with your specific business is critical. Identify issues that may lead to a downturn in profit, supplier issues, tax or cash flow problems, and anything else that may present itself.
- Get to grips with the tax system — The Swedish tax system for new businesses aims to be as transparent as possible, however, getting acquainted with the finer details of any system is extremely important. Start with your responsibilities to the business and its employees, schedule deadlines and understand your commitments. It is also highly recommended to get a qualified Swedish accountant to help you out.
- Search out business support programmes — Your business plan is the foundation of what you intend to achieve, however, before you dive in you should search for support in the form of education and funding. The Swedish Government runs an Innovation Partnership programme, which is a good first step.
Starting a business in Sweden: The Process
After you’ve spent a little time researching, you can begin starting your business in Sweden in earnest. Below, we walk you through the main points to consider.
1. Write a business plan
A business plan is the foundation of your startup, and it will allow you to plan, apply for funding, and prepare for unforeseen eventualities. At a minimum, you should factor in a business pitch, a forecast for the short-, medium- and long term, a list of your experience and potential markets/customers, as well as suppliers and partners. A cash flow planner can also be useful, giving you a concrete guide to your incomings and outgoings.
Differentiating yourself from competitors is a daunting task, but it is worth the effort. You can start by listing your goals and how you intend to achieve them. Keep in mind that your goals should be realistic and include verifiable evidence wherever possible. For more information on writing a business plan, read the Verksamt guide here.
2. Choose your structure and register
There are several steps in the process for starting a business in Sweden, which vary according to what kind of business you intend on running. Your options include a limited liability company (Aktiebolag), becoming a sole trader (Enskild Näringsidkare), a partnership (Handelsbolag), or limited partnership (Kommanditbolag). It is also possible to set up a branch of a foreign based company (Filia).
These specific definitions determine what kind of business you can start. For example, limited companies will require you to have a board of directors and a manager in place. If you set up a branch of a foreign business in the country you will be required to have a separate managing director and accounts from the parent company. However, it may be possible to receive some tax incentives when starting a branch of a business in Sweden and you can find more information on this on the Government's Versksamt platform.
Businesses with more than 10 employees will need to employ a clerk and comply with all Swedish accountancy regulations. However, you are not legally required to have an accountant if your turnover is less than SEK 24 million a year or if you have fewer than 10 employees.
Each of the business definitions are explained below.
- Sole Trader (Enskild Näringsidkare) — Sole traders individuals who want to set up a business in Sweden. They are personally responsible for all the company's obligations, such as liabilities and agreements.
- Limited Company (Aktiebolag) — Suitable for one or more individuals, responsibility is divided up by the amount of shares that each shareholder owns. A minimum of SEK 25,000 in share capital is required to start this type of company.
- Partnership (Handelsbolag) — A business of two or more people who are jointly responsible for business obligations. No investment capital is required.
- Limited Partnership (Kommanditbolag) — A type of partnership established by two types of individuals. At least one member must have general liability, and at least one other is a limited partner. The liability of the limited partner is based on the extent of his capital.
- Foreign Branch (Filia) — No share capital is required and assets and liabilities are part of the total assets of the foreign-based company. The branch must keep its own accounting records separate from the foreign-based company. Only one branch per company can be set up in Sweden
3. Branding options
You will need to choose a name for your business and then submit an application to the Swedish Companies Registration Office. Registration certificates take about two weeks to finalise and cost SEK 2,200 for an ordinary filling and SEK 1,900 for an electronic one. You are also required to register with the Swedish Tax Agency. The Verskamt also offers a handy tool for you to check whether your chosen name is available.
Choose your name carefully as it will directly speak to the professionality of your company. It will also be used for branding and marketing, as well as email and online domains.
4. Funding and banking
Funding for startups comes from many places. It can be private funding or it can come from government programs, such as the aforementioned Almi program. Much will depend on the nature of your business and amount required, you can find more information here.
Setting up your bank account is also an important step at this point. It is relatively easy to set up a business bank account in Sweden, and both residents and non-residents are eligible. Having said this, the application for non-residents is likely to be more complicated and you can find a guide here to open a bank account.
Online banking options are another route you can explore. Online banking in Sweden is very popular, and Intergiro’s online banking solutions offer easy setup and efficient multi-currency payments, among a range of other banking features built for modern businesses.
5. Register for taxes
Once registered at the Swedish tax office, you will be issued a unique corporate identity number (Oranisationummer). This will be sent to your registered company address. You will also be required to pay an annual tax on the estimated yearly profit—this can change during the year. In addition, 25% VAT is charged on all goods and services, except for hotels and restaurants (12%) and transport, magazines, newspapers, books and entries to cultural or sporting events (6%). If you import any goods, you will be required to pay the customs duty (Tullverket).
For more information on how Intergiro can help you successfully start a business in Sweden, stay tuned to the Intergiro blog here. Additionally, open your online business bank account today and get your startup off on the right foot!
Skip the hassle - acquire a Swedish Shelf Company
One way to buy a business is to purchase an off-the-shelf company; an excellent option if you need a company registration number quickly. A shelf company (or ready-made company) is a business that has been formed but never traded. Buying a shelf company can make your business more trustworthy. When suppliers, clients or investors look up your business, they might be more confident in you having a longer operating history.
Starting a Business in Sweden – FAQs
Is Sweden a good place to start a business?
Doing business in Sweden is easy, largely thanks to a sound banking system and strong public finance initiatives. The political stability and high-performing economy also make it a secure option. The excellent transport infrastructure, well-educated workforce and high levels of research and development investment (over 3% of the country’s gross GDP is invested in R&D) also add to its appeal.
Sweden has an incredible 22.5 megabit-per-second average internet speed, which is among the fastest in the world. Sweden is the 10th best country in the world to do business, according to the Doing Business 2020 report.
However, you do need to be aware that the above benefits also mean that competition in some industries can be fierce. So, it is essential that you have a strong business plan in place and have conducted your research before launching.
Is it easy to start a business in Sweden?
In general, there are few legal barriers to starting a business in Sweden. However, the rules that apply do vary depending on whether you are an EU/EEA citizen or a citizen of a non-EU/EEA country. If you are a non-EU citizen starting a business, then you need a residence permit which you can apply for at the Swedish Migration Agency. You will need to meet certain criteria in order to be successful in your application.
High individual tax rates and complex labour laws can complicate matters. As can the high cost of living and difficulty transporting goods and services at certain times of year—owing to severe weather conditions. But, taking the big picture, these are minor obstacles that detract little from the fact Sweden is a great place to do business.
How do I become self-employed in Sweden?
The self-employed are legally considered as sole traders (Enskild Näringsidkare) and must start a private firm (Enskild Firma). This means that they have unlimited personal liability for any debt incurred. This is done at the Swedish Companies Registration Office. In addition, you also need to apply for a F-Skattesedet tax form. This means you will be liable to pay your own monthly tax and social insurance fees.
It is important to remember that to qualify as self-employed you must be independent and are required to have more than one customer. If you work only for a single client, the tax authorities may consider this as an arrangement by a company trying to avoid paying tax and social security contributions. You will also be required to keep accounts and pay tax on a full year’s income.
What are the costs of starting a business in Sweden?
The process of registering a limited liability company directly with the Swedish Company Registration Office (Bolagsverket) has a fee attached, varying between 1,900 SEK and 2,200 SEK, depending on how you choose to apply.
If you are purchasing a pre-registered limited liability company, you should expect to pay 10,000–25,000 SEK, excluding the mandatory minimum share capital. The minimum share capital when setting up a limited liability company is 25,000 SEK. However, no shared capital is required to establish a branch.
There are also the associated costs of renting or purchasing a business premise, recruitment, payroll and more. But these will depend on the nature of your business. You will also need at least a basic business banking package in place, which can cost around 1,200 SEK per year.