How do I become self-employed?
How difficult is it to become self employed? I have a part time job but hope to get more work on a project basis and that employer will want an invoice. Do I have to create a company? Stella, Stockholm.
Becoming self-employed can be a flexible way to supplement income from a part-time job. Additionally, with the job market looking shaky in the current financial turmoil, it can be a good way of getting back on your feet and taking control of your own working life.
If you want to work on a self-employed basis and invoice customers, you will need to start a company. The most straightforward way of doing this is to become a sole trader (in Swedish you would say you were starting an ‘Enskild Firma’ or ‘Private Firm’). This form of company is generally used by companies with a small number of staff or no staff at all (other than the owner). They usually have low overheads and low levels of risk. Unlike in an AB, in an Enskild Firma you have unlimited personal liability for your company’s debts.
If you are planning to work full-time in your new company, you need to apply for the tax certificate known as an ‘F-skattesedel’, meaning that you pay your own taxes and social insurance fees every month. Stella, who wants to continue working part time as an employee, needs to apply for the ‘FA-skattesedel’ tax certificate, meaning she will pay her own taxes and social insurance fees for that part of her income earned from her self-employment.
In order to qualify, your firm must fulfil certain criteria:it must run for profit and it must be independent – usually meaning that it has several customers and supplies its own material. Maroun Aoun, managing director of IFS, a state-run organization to help immigrants set up companies, emphasizes this point:
“According to the Swedish Tax Authority’s rules you cannot just serve one customer. They always interpret this as meaning that the company us just trying to avoid creating a job to get out of paying insurance contributions.”
One thing to think about when becoming a sole trader is that you will have to prepare accounts, but you will not be obliged to use an accountant unless you have more than ten employees or a net turnover of more than 24 million kronor. You declare your final full-year income on your annual tax return, although you will need to make a preliminary self-declaration at the start of the year, stating how large you expect your business's turnover to be. The tax authority will then tell you how much to pay in tax every month.
If you want to go into business with a partner you can do so as a trading partnership (‘Handelsbolag’). This shares most of the characteristics of a sole trader arrangement, in that the partners share personal responsibility for the company’s debts.
You can apply for either of these certificates online at the Swedish Tax Authority’s website or at any tax office. You can get help filling in forms by calling the tax authority’s helpline – staff are usually helpful and are generally willing to speak English.
Another alternative is to start an Aktiebolag (AB). This kind of company structure, similar but not identical to a UK limited company, means that the owners are a separate legal entity from the company, and are in most cases not personally responsible for the company’s debts. However, in order to start an AB you must invest at least 100,000 kronor of capital and you must file a monthly tax return. This means this kind of company structure is unnecessarily complex for most consultancy work.
Certain financial benefits are sometimes available to help people starting companies in Sweden. ‘Starta Eget Bidrag’ is a benefit available to a limited number of people every year who have been unemployed for some time before starting their companies. It is intended to help cover living costs while setting up the company. You can apply for this from the job centre (Arbetsförmedlingen).
Financial help in the form of loans is also available from Almi, a state-run organization intended to help establish small companies.
For foreigners there is also IFS, which can help foreign-born entrepreneurs who need help contacting banks and authorities, or who need assistance with business plans, calculations or market research.
“Language difficulties, cultural differences, and differences in the legal system can make starting a company harder for an immigrant. They can also find it hard to get loans or a rental contract. We can help them with these problems,” says Maroun Aoun.
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Becoming self-employed can be a flexible way to supplement income from a part-time job. Additionally, with the job market looking shaky in the current financial turmoil, it can be a good way of getting back on your feet and taking control of your own working life.
If you want to work on a self-employed basis and invoice customers, you will need to start a company. The most straightforward way of doing this is to become a sole trader (in Swedish you would say you were starting an ‘Enskild Firma’ or ‘Private Firm’). This form of company is generally used by companies with a small number of staff or no staff at all (other than the owner). They usually have low overheads and low levels of risk. Unlike in an AB, in an Enskild Firma you have unlimited personal liability for your company’s debts.
If you are planning to work full-time in your new company, you need to apply for the tax certificate known as an ‘F-skattesedel’, meaning that you pay your own taxes and social insurance fees every month. Stella, who wants to continue working part time as an employee, needs to apply for the ‘FA-skattesedel’ tax certificate, meaning she will pay her own taxes and social insurance fees for that part of her income earned from her self-employment.
In order to qualify, your firm must fulfil certain criteria:it must run for profit and it must be independent – usually meaning that it has several customers and supplies its own material. Maroun Aoun, managing director of IFS, a state-run organization to help immigrants set up companies, emphasizes this point:
“According to the Swedish Tax Authority’s rules you cannot just serve one customer. They always interpret this as meaning that the company us just trying to avoid creating a job to get out of paying insurance contributions.”
One thing to think about when becoming a sole trader is that you will have to prepare accounts, but you will not be obliged to use an accountant unless you have more than ten employees or a net turnover of more than 24 million kronor. You declare your final full-year income on your annual tax return, although you will need to make a preliminary self-declaration at the start of the year, stating how large you expect your business's turnover to be. The tax authority will then tell you how much to pay in tax every month.
If you want to go into business with a partner you can do so as a trading partnership (‘Handelsbolag’). This shares most of the characteristics of a sole trader arrangement, in that the partners share personal responsibility for the company’s debts.
You can apply for either of these certificates online at the Swedish Tax Authority’s website or at any tax office. You can get help filling in forms by calling the tax authority’s helpline – staff are usually helpful and are generally willing to speak English.
Another alternative is to start an Aktiebolag (AB). This kind of company structure, similar but not identical to a UK limited company, means that the owners are a separate legal entity from the company, and are in most cases not personally responsible for the company’s debts. However, in order to start an AB you must invest at least 100,000 kronor of capital and you must file a monthly tax return. This means this kind of company structure is unnecessarily complex for most consultancy work.
Certain financial benefits are sometimes available to help people starting companies in Sweden. ‘Starta Eget Bidrag’ is a benefit available to a limited number of people every year who have been unemployed for some time before starting their companies. It is intended to help cover living costs while setting up the company. You can apply for this from the job centre (Arbetsförmedlingen).
Financial help in the form of loans is also available from Almi, a state-run organization intended to help establish small companies.
For foreigners there is also IFS, which can help foreign-born entrepreneurs who need help contacting banks and authorities, or who need assistance with business plans, calculations or market research.
“Language difficulties, cultural differences, and differences in the legal system can make starting a company harder for an immigrant. They can also find it hard to get loans or a rental contract. We can help them with these problems,” says Maroun Aoun.
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