Sweden is a country full of chances, not only for job seekers looking to earn a salary, but for those looking to create new businesses as it’s a wealthy place filled with people who have money to spend.

So, if you’re thinking of starting your own business here, you’re in for an exciting adventure!

The thing is that starting a business isn’t not always easy…

I mean, you need to understand a lot of rules, learn about rules and regulations, and as you may already know, there isn’t much information about this out there.

So, this guide is here to help you.

I’ll walk you through all the steps to start your business in Sweden, from understanding the market to choosing the right business structure and more.

Let’s get it going!

First Step: Learn About the Swedish Market

To successfully start a business in Sweden, I’d say you should first learn about its consumer market.

What do I mean with this?

Well… It’s not just about having a good idea, but making sure it fits what the Swedish market needs.

In other words, this means figuring out what people want and what’s already out there.

So, what’s the best way to do this? Research, and then some more research.

Here are some actionable steps to understand the Swedish market:

1. Market Research: Start by looking at industry reports specific to Sweden. Websites like Statistics Sweden (SCB) are gold mines for understanding economic and social trends.
2. Consumer Surveys: Get direct insights by conducting surveys. Use online tools to reach a Swedish audience and ask them about their preferences and needs.
3. Social Media Analysis: Dive into Swedish social media platforms (twitter, Facebook, TikTok, you name it!). See what’s trending, what people are talking about, and what they’re passionate about. This gives you a real-time pulse of the market.
4. Competitor Analysis: Check out what your potential competitors in Sweden are doing (use tools such as Google, LinkedIn or even SEMrush). See what works for them and where they might be lacking.
5. Networking: Engage with local Swedish business communities. Platforms like LinkedIn or local business events can connect you with industry insiders. They can offer valuable insights that you won’t find in reports.

You might be interested in: How to get a self employed visa in Sweden?

Choosing a Legal Structure: Enskild firma vs Aktiebolag

You’ve got two main choices here: Sole Proprietorship (Enskild firma) and Limited Liability Company (Aktiebolag).

Each has its own set of pros and cons, so let’s break them down.

1. Sole Proprietorship (Enskild firma): This structure is ideal for individual entrepreneurs who want to start small and have full control over their business. In a Sole Proprietorship, the business and the owner are legally the same, meaning the owner is personally responsible for all financial aspects, including debts and profits. It’s simpler in terms of setup and management, but it does put your personal assets at risk if the business encounters any financial troubles.
2. Limited Liability Company (Aktiebolag): An Aktiebolag is a more formal business structure where the company is a separate legal entity from its owners. This setup protects the personal assets of the shareholders, as their liability is limited to their investment in the company. While it offers financial security and more funding opportunities, it requires more capital to start and involves complex management and reporting procedures.

You might be interested in: Freelancing in Sweden

Pros of Sole Proprietorship (Enskild firma)

1. Straightforward Setup: In Sweden, being a Sole Proprietorship is a breeze. The bureaucracy is minimal as you only need to register your business with the Swedish Tax Agency (Skatteverket). This process is streamlined and user-friendly, allowing you to quickly focus on getting your business up and running without getting entangled in excessive paperwork.
2. Complete Control: As a sole proprietor in Sweden, you make the decisions, steer the direction, and shape the future of your business without needing to consult partners or shareholders.
3. Simplified Taxation: In this structure, your business income directly translates to your personal income, making tax reporting simpler as you’re primarily dealing with personal income tax on your business earnings. Additionally, you’re subject to VAT if your sales exceed a certain threshold, and you may need to handle preliminary income tax payments.

The Swedish Tax Agency (Skatteverket) offers guidance on these specifics, ensuring you’re on track with your fiscal responsibilities while enjoying a more straightforward taxation setup compared to more complex business structures.

Cons of Sole Proprietorship (Enskild firma)

1. Personal Financial Risk: In Sweden, if your Sole Proprietorship faces financial troubles, your personal assets (like your home or savings) could be at risk to cover any debts or liabilities.
2. Funding Challenges: Getting loans or attracting investors can be trickier in Sweden as a sole proprietor. Financial institutions often perceive a higher risk in single-person businesses.
3. Limited Growth Potential: Scaling up as a sole proprietor in Sweden can be challenging. The business model inherently limits expansion, especially if you need more hands or bigger investments.

Who Should Start a Sole Proprietorship (Enskild firma)?

So, who’s the right fit for a Sole Proprietorship in Sweden? This structure is perfect for you if:

• You’re a Solo Entrepreneur: If you’re all about independence, steering your own ship, and making decisions on your own, this is your arena.
• You’re Starting Small: Got a business idea that doesn’t need a lot of upfront investment or complex setup? This could be your best bet.
• You Want Simplicity: If you prefer a straightforward approach to business, without complex accounting or legal structures, this model aligns well with your needs.

Pros of Limited Liability Company (Aktiebolag) in Sweden

1. Limited Personal Liability: The standout advantage of an Aktiebolag is the protection of your personal assets. If the company faces financial issues, your personal property, like your house or car, is generally safe from being used to cover business debts.
2. Easier Access to Funding: Banks and investors in Sweden tend to view Aktiebolag as more credible and stable, making it easier for you to secure loans and investments compared to a Sole Proprietorship.
3. Growth and Expansion Potential: With an Aktiebolag, scaling up your business is more feasible. You can hire staff, expand operations, and potentially attract more significant business deals, thanks to the more formal structure.

Cons of Limited Liability Company (Aktiebolag) in Sweden

1. Complex Setup and Management: Establishing an Aktiebolag involves more paperwork, higher initial capital (at least 25,000 SEK), and a more complex setup process, including registering with the Swedish Companies Registration Office (Bolagsverket).
2. More Rigorous Accounting Requirements: You’ll face stricter accounting and auditing requirements (annual financial statements, regular bookkeeping, potential audits, vat declarations, payroll accounting, separate tax return filing, etc). This means keeping detailed financial records and possibly hiring an accountant, which can increase your operational costs.
3. Tax Complexity: In an Aktiebolag, the tax situation is indeed more complex as the company is taxed separately from your personal income. You’ll need to navigate a variety of corporate tax rules specific to Sweden. Common taxes for an Aktiebolag include corporate income tax on profits, VAT (value-added tax) on sales, payroll taxes if you have employees, and potentially capital gains tax on any sold assets. Additionally, there are specific filing requirements and deadlines for these taxes. (You might be interest: How do taxes work in Sweden)

Who Should Opt for a Limited Liability Company (Aktiebolag)?

An Aktiebolag is ideal if:

• You Plan to Scale: If your vision includes expanding your business significantly, hiring employees, and attracting larger deals, this structure supports that growth.
• You Want to Minimize Personal Risk: If protecting your personal assets from any business liabilities is a priority, an Aktiebolag offers that shield.
• You’re Looking for Investment: If you plan to seek funding from investors or banks, they often prefer the formal structure and perceived stability of an Aktiebolag.

How to Start a Business in Sweden: Step by Step

Starting a business in Sweden involves a unique set of steps that, if correctly gathered, could even grant you the right to get a residence in Sweden.

You might be interested in: How to get a residence permit in Sweden?

To guide you through the journey of starting a business in Sweden, I’ll walk you through the essential steps for registering both as a sole proprietorship and as a limited liability company:

How to Start a Business in Sweden as a Sole Proprietorship (Enskild firma)

Registration Requirements:

Starting a business as a sole proprietorship in Sweden involves understanding and fulfilling specific registration requirements, such as having:

• Swedish personal identification number (personnummer): This is crucial for identification and handling all official processes related to your business, as it uniquely identifies you within the Swedish system (You might be interested: How to get a Swedish tax id)
• E-identification (e-legitimation): You need a Swedish e-identification tool (BankID or Freja eID Plus) for online registration.
• Unique business name: In Sweden, when setting up a sole proprietorship (Enskild firma), you typically operate under your own personal name. However, you have the option to choose a specific business name if you prefer.
• Physical business address in Sweden: A local address is needed for receiving official communications and legal notices, serving as the formal base of your business operations in Sweden.
• No starting capital is required for sole traders

Online Registration as a Sole Proprietorship (Enskild firma): Step by Step

• Access Verksamt.se:
  • Click “Log in” and choose your e-identification method.
  • Go to https://www.verksamt.se/ and switch to English if needed.
• Start Your Application:
  • Click on “My services” and then “Start a new company”.
  • Select “Sole trader (Enskild firma)” as your business type.
• Enter Personal Information and Business Details:
  • Provide your personal information (name, personnummer, address).
  • Specify your chosen business name and registered address.
  • Select your industry and primary business activity.
• Apply for Tax Registration & F-tax:
  • Complete the online tax registration application form.
  • If applicable, apply for F-tax registration and VAT registration for selling taxable goods or services.

• Review and Submit Application
• Await Processing and Approval:
  • Skatteverket will process your application and review the submitted information.
  • You will be notified of the approval decision within a few weeks.
• Start Your Business:
  • Upon approval, you can start operating your sole trader business in Sweden.
  • Remember, you must comply with all applicable regulations and requirements for sole traders, including filing tax returns and paying taxes.

How to Start a Business in Sweden as a Limited Liability Company (Aktiebolag)

Registering a Limited Liability Company (Aktiebolag) in Sweden involves a series of steps, ensuring that your business complies with Swedish laws and regulations.

Registration Requirements

Here is what you must gather before creating the Limited Liability Company (Aktiebolag) in Sweden:

• Minimum Share Capital: At least SEK 25,000 in share capital must be deposited into a Swedish bank account or paid with other assets (capital contributed in kind).
• Company Name: Choose a unique company name that complies with Swedish regulations and is not already registered by another company.
• Memorandum of Association: This document outlines the company’s basic information, including its purpose,share capital, and structure.
• Articles of Association: This document establishes the company’s internal rules and regulations, such as voting rights, dividend distribution, and board member responsibilities.
• Founders: At least one founder is required to initiate the company formation. Each founder needs to have a personal identity number (personnummer) or be registered with the Swedish Tax Agency.
• Bank Certificate: A bank certificate from a Swedish bank or a bank within the European Economic Area (EEA) confirming the deposit of the share capital is needed.

Registering your Limited Liability Company (Aktiebolag) in Sweden: Step by Step

Here is what you’ve got to do to register your Limited Liability Company (Aktiebolag) in Sweden once you got all the requirements I just told you about:

• Access Verksamt.se:
  • Go to https://www.verksamt.se/ and switch to English if needed.
  • Click “Log in” and choose your preferred login method (BankID or Freja eID Plus).
• Start Your Application:
  • Click on “My services” and then “Start a new company”.
  • Choose “Limited liability company (Aktiebolag)” as your company type.
  • Provide your chosen company name, registered office address, and contact details.
  • Select the industry and primary activity of your business.
• Define Share Capital and Shares:
  • Specify the total share capital (minimum SEK 25,000) and its distribution among shareholders.
  • Define the nominal value and number of shares for each shareholder.
• Upload Required Documents:
  • Upload the signed Memorandum of Association (stiftelseurkund), Articles of Association, and Bank Certificate.
  • Attach the shareholder register and any other relevant documents.
• Review and Submit Application
• Pay the Registration Fee:
  • You will receive an invoice via email for the registration fee (1,900 SEK using e-service as of the time of writing)
  • Pay the invoice within 30 days to finalize your application.
• Await Processing and Approval:
  • Bolagsverket will process your application and review the submitted documents.
  • You will be notified of the approval decision within 2-4 weeks.
• Obtain Your Registration Certificate:
  • Upon approval, you will receive your official registration certificate from Bolagsverket.
  • This certificate confirms your company’s legal existence and allows you to commence operations.

Post-Registration Requirements

Here is what you must do AFTER creating the Limited Liability Company (Aktiebolag) in Sweden:

• Tax and VAT Registration: Register with the Swedish Tax Agency (Skatteverket) for F-tax, VAT, and, if applicable,as an employer.
• Bolagsverket Registration: Submit the required documents and pay the registration fee to the Swedish Companies Registration Office (Bolagsverket) to receive legal entity status.
• Other Permits and Licenses: Depending on your industry, additional permits or licenses might be required for your business to operate. You can check Verksamt.se for specific requirements.
• Beneficial Ownership Report: Within four weeks of registering the Aktiebolag, inform Bolagsverket about the company’s beneficial owners. This requires providing their personal information and details of control over the company. This is how you do it (full guide here):
  • Go to Bolagsverket website and log in (Click on the “Engelska” button in the top right corner to switch to English)
  • Click on “My services” and then “My companies” and navigate to “Beneficial Ownership” section of the company you’re opening
  • Enter information for each beneficial owner (name, ID, nationality, control type).
  • Review and submit information.
  • Pay the processing fee via email invoice.

Starting a Business in Sweden as a Foreigner

Embarking on the entrepreneurial journey in Sweden as a foreigner is thrilling, but it comes with its own set of challenges. Whether you’re from the EU or outside it, there’s a pathway for you, but it’s essential to navigate it correctly.

Let’s dive into what you need to know:

Visa and Permits: The Starting Point

EU Citizens: You’ve got it easier here. As an EU citizen, you can start your business venture in Sweden simply by registering your business with the Swedish Companies Registration Office and ensuring you meet local business regulations.

Non-EU Citizens: Well… If you’re planning to run your business physically in Sweden, you’ll need to navigate a bit more of a process. Firstly, you’ll need a residence permit, which requires a well-thought-out business plan and proof that you have enough financial resources to support yourself. You can find the necessary information and start your application process on their website: Swedish Migration Agency – Residence permit card​​.

Swedish: A Key to Success

While English is widely spoken, understanding and speaking some Swedish can be a game-changer.

It’s not just about language; it’s about showing respect for the local culture. Plus, it makes daily business operations smoother.

There are plenty of language courses (Duolingo comes to mind) and immersion programs available. And remember, it’s okay to fumble with words at first – your effort will be appreciated.

Networking: Connect and Grow

Networking is particularly crucial for foreigners starting a business in Sweden for several reasons:

1. Cultural Insights: As a foreigner, understanding the local business culture is key. Networking with those who have already navigated this landscape can provide invaluable cultural insights and help you avoid common pitfalls.
2. Local Knowledge: Experienced entrepreneurs can share specific knowledge about the Swedish market, including consumer behavior, legal nuances, and industry-specific practices that might not be immediately obvious to someone from outside the country.
3. Resource Sharing: Building a network can lead to sharing resources, such as contacts, suppliers, and even potential client leads, which can be especially beneficial when you’re new in the country and building your business from the ground up.
4. Moral Support: Starting a business in a new country can be challenging. Having a network of people who understand what you’re going through and can offer moral support is incredibly valuable.
5. Collaboration Opportunities: Networking can open doors to collaborative ventures with other businesses, which can be a powerful way to expand your reach and grow your business in Sweden.

Avoiding Double Taxation

The intricacies of the Swedish tax system can pose a significant challenge, particularly for foreign entrepreneurs who decide to do business in Sweden while living in other countries.

An accountant well-versed in both Swedish tax laws and those of your home country is crucial because they can navigate the complexities of cross-border taxation, ensuring compliance and optimizing your tax obligations.

Managing New Business Operations

Managing your business’s finances effectively is crucial for its success, and I’m a strong believer that in Sweden, this involves setting up a dedicated business bank account and implementing a robust bookkeeping system.

Business Banking and Bookkeeping

First of all, I must say that if you’re planning to open a business in Sweden you’d need to create a separate bank account for it whether it’s a separate entity or even if you’re operating as a sole proprietorship.

I mean, banking separation is crucial for maintaining clear financial records and simplifying tax filing. It also helps in tracking business expenses and revenues accurately, providing a transparent view of your business’s financial health.

I personally recommend the following banks:

• Swedbank: One of Sweden’s largest banks, offering a wide range of business banking services.
• SEB: Provides comprehensive financial solutions for businesses of all sizes.
• Handelsbanken: Renowned for personalized service and relationship banking, strong focus on financial advice.
• Nordea: Leading Nordic bank, extensive international network, diverse product portfolio for businesses.
• N26: Purely online bank with English information and no ATM fees abroad.

Sometimes, the Swedish banks will ask you for a business plan to open a business bank account for you.

So, I’d say it would be smart to start working on a business plan a couple of weeks before actually opening a business bank account to have everything ready when the time comes.

Additionally, establishing a robust bookkeeping system is vital.

It not only keeps your financial records organized but also prepares you for any audits and financial analysis. A good bookkeeping system helps in budgeting and forecasting, essential tools for effective business management.

Here are a few bookkeeping software options that I personally recommend (some of them offer support only in Swedish, so be careful!):

• Visma Spcs
• Fortnox
• Bokio
• Debitoor

Hiring Staff Legally

When you’re ready to hire staff for your business in Sweden, it’s important to do it the right way.

This involves ensuring compliance with Swedish labor laws, which cover areas like employment contracts, working hours, overtime pay, employee benefits (e.g. parental allowance), and workplace safety.

Doing so not only protects your business from legal issues but also fosters a positive working environment.

There are some great websites that can help you understand all the rules and steps:

1. Verksamt.se: This is the official site of the Swedish Companies Registration Office. It’s packed with useful information about hiring people, what the law says, and how to handle things like contracts and pay
2. Arbetsmiljöverket (Swedish Work Environment Authority): Here, you’ll find out about keeping your workplace safe and fair. It covers safety rules, what rights your employees have, and what you need to do as their employer.
3. Skatteverket (Swedish Tax Agency): Dealing with taxes for your employees can be tricky, but this website makes it easier. It guides you on things like payroll taxes and social security payments.
4. Unionen (Swedish Confederation of Professional Employees): This union website provides information on employment contracts, collective bargaining agreements, and employee rights for various professions. (give me specific url of resource)

Cost of Running a Business in Sweden

Starting a business in Sweden involves various initial costs, which can vary depending on the type of entity you choose to establish. Here’s a breakdown:

Initial Setup Costs

The initial cost of starting a business in Sweden varies depending on the type of business entity chosen. Here’s a breakdown for common structures:

• Sole Proprietorship:
  • Registration Fee: SEK 1,200 if registered electronically or SEK 1,500 if done by post
  • Permits & Licenses: Varies depending on the type of business
  • Insurance: SEK 2,000 – SEK 5,000. Most Swedish insurance companies offer packages tailored for small entrepreneurs. It’s recommended to compare prices and terms and consider contacting trade associations for industry-specific group insurance options.
• Limited Liability Company (AB):
  • Registration Fee: SEK 1,900 if registered electronically or SEK 2,200 if done by post​
  • Share Capital: SEK 25,000 (minimum)
  • Permits & Licenses: Varies depending on the type of business
  • Insurance: SEK 5,000 – SEK 10,000. As with sole proprietorships, costs vary, but they are generally more expensive as these companies often have greater assets, higher revenue, and more complex operations, which increase the risk and the insurance coverage required

Ongoing Expenses

• Renting Business Premises: Rent varies widely based on location and property type. In larger cities like Stockholm, Gothenburg, and Malmö, rents are higher. For example, a one-bedroom office in Stockholm’s city center ranges from 10,000 to 15,000 SEK per month. In smaller towns, it’s cheaper, ranging from 5,000 to 8,000 SEK per month​​.

You might be interested in: How to find a job in Stockholm?

• Utilities: Costs for utilities like electricity, heating, and water can vary and may not always be included in the rent. On average, utilities can cost between 700 and 2,000 SEK per month, depending on the location and size of the premises​​.
• Taxes, Legal, and Accounting Costs: Services including current accounting, tax returns, and financial reporting typically cost between SEK 600 and SEK 1,100​​. Additionally, for businesses with employees, outsourcing administrative duties such as payroll processing can cost approximately SEK 300 per employee per month​​.

Frequently Asked Questions

How hard is to start a business in Sweden?

To be honest, it’s not so difficult. While there’s some paperwork, accounting, and bookkeeping to handle, these tasks are manageable. The language barrier can be a challenge, but hiring an English-speaking accountant and seeking support from Skatteverket, which offers assistance in English, can make the process smoother.

Do I need Swedish to start a business in Sweden?

No, it’s not a requirement. While knowing Swedish can be beneficial, especially for local networking and understanding the market, many business dealings can be conducted in English.

Can anyone start a business in Sweden?

Yes, but there are different requirements based on residency, particularly if you’re planning on running your business in Sweden while living there.

EU citizens have an easier path, while non-EU citizens need to secure a residence permit and meet additional criteria like having a solid business plan and sufficient financial resources.