Which form of a company should you choose? Once you have decided to start your business, it is time to think about which company form to choose. Thinking about finances, whether you are planning to start alone or with others and future plans for the business can help you determine the best form of business for your particular business. Start by asking yourself these questions:

  1. How much do you plan to invest in the business directly?
  2. Do you plan to run the business alone or with others?
  3. Do you want the business to act as a separate legal entity?
  4. Who should have financial responsibility if the business goes bad?
  5. Do you want the money in the business to be separated from your private ones?
  6. What are the future plans for the business?

The most common form of a company whose purpose is to generate profit is sole proprietorships, trading companies and limited companies. Depending on how you have answered the questions above, there are different types of companies that suit different needs. Choosing the wrong company form, in the beginning, can be costly if you want to change a company form in the future. The form of company you choose for your business also determines how you tax the profit, take out a salary and whether you are liable to pay or not if the company would go bad. Let’s start with a sole proprietorship.

Enskild firma

Individual company suits you who plan to run your business alone. Starting a sole proprietorship is the easiest and cheapest form of business to run as you only need to apply for F-tax and register VAT for the business. The company’s organization number for the business will then be your own social security number.

Personligt ansvar i Enskild Firma

When running a sole proprietorship, the business does not act as a legal entity and the company can not be included in agreements. Without it, you as an entrepreneur are personally responsible for the business and finances. This means that if things go badly for the business, it will affect your personal finances. Then there is no difference between your personal finances and the finances of your business.

Anställa personal i Enskild Firma

When you run a sole proprietorship, you are not counted as an employee of the company, but you pay tax on the profit you make in the business. Running a sole proprietorship doesn’t mean that you can not hire staff. Bringing employees into your individual company is easy What you need to do to employ staff in your individual company is to register as an employer in connection with the employment with the Swedish Tax Agency.

Starta firma utan kapital

The biggest advantage of a sole proprietorship is that you can easily start your business without investing any major capital. It may suit you who have an interest in an area that you can start charging for doing for others and plan to run the business yourself in the future. The disadvantage of a sole proprietorship is the personal responsibility you have for the business’s finances and litigation. It can also be difficult to distinguish between personal expenses and business expenses. If you plan to expand your business in the future and want the business to be able to act as a legal entity, limited liability companies may be a better form of business for you.


If you plan to run the business with one or more partners, the company from a trading company may suit you! In a trading company, the business acts as a legal entity and can be included in agreements. The people who create the trading company are called partners and can be either private individuals or companies.

Teckna kompanjonsavtal vid start av Handelsbolag

In many cases, when you start a trading company, you sign a partnership agreement that describes each person’s obligations and responsibilities in the business. However, there is no requirement that you must sign a partnership agreement when starting a trading company. But it can be good to have it on paper so you clearly know what applies.

Ansvar och skyldighet i Handelsbolag

The biggest advantage of a trading company is that you do not have to put in any capital when you start the company and that the trading company can enter into agreements and act as a legal entity. But unlike limited companies, which we describe below, you as a partner (owner) are financially obligated in the business. It can therefore be good to sign a partnership agreement where it is clear who will be responsible if the business should end up in a lawsuit or get into debt.


The trading company can also employ staff. If nothing else is written in the partnership agreement, the profit in the trading company shall be divided equally between the partners. You can also choose to acquire a limited partnership, which means that one of the partners has only limited responsibility in the business. This means that the person with limited liability is only liable for as much money as the person has invested. Limited partnerships can suit you who have shareholders who want less responsibility in the company.

Tips för dig som funderar på att starta Handelsbolag

If you are considering starting a corporate trading company, it may be a good idea to sign a partnership agreement, even though there is no requirement that you must do so. The companion agreement doesn’t have to be complicated. Write down the points you think are important and clarify everyone’s responsibility in the business. Once you have signed, you can put the document aside. Anything can happen when you run a business and it can come in handy in the future and protect you all in case something should happen.


When you choose to start a limited company, the business acts as its own legal entity. This means that you as an entrepreneur will not be liable for costs and debts in the business. That is, as long as you, as a shareholder, make sure that the tax is paid correctly, you can be liable for the payment as a shareholder if this is missed. So always remember that the correct amount is paid and payments are made on time.


Limited companies are a good alternative when planning to start a business with others or bring in shareholders at a later stage. But it is also possible to start a limited company on your own. Depending on whether you plan to set up a private or public limited company, you must pay capital to the Swedish Companies Registration Office when registering the limited company. From 1 January 2020, those wishing to establish a sole proprietorship must pay 25,000 SEK. If you want to set up a public limited company where shares can be bought on the stock exchange, you need to invest SEK 500,000 in capital . If you don’t have the funds to invest 25,000 SEK or 500,000 SEK directly in the company, you can use non-cash assets or take a loan from the bank.

Styrelse i Aktiebolag

There are some rules and regulations that must be followed when choosing a company from a limited company. All limited companies must have a board of directors and at least one member and attachment, depending on whether it is a private or public limited company. It is also the Board’s responsibility to ensure that the annual report is prepared at the end of the financial year, is correct and is submitted to the Swedish Companies Register in a timely manner.

Mindre personlig risk med Aktiebolag

The biggest advantage of starting a limited company is the reduced personal risk for you as an entrepreneur. Hiring staff is always a risk for the company. Since the limited company acts as a legal entity, it is the business, not you as the private person, to conclude the employment contract. Limited companies can also be advantageous if you plan to grow rapidly in the future, as you can easily raise capital from other investors in the business.

Lön och vinst i Aktiebolag

When it comes to taxes and salary in a limited company, you as a shareholder receive a salary every month. After that, you can receive dividends on any profit the business makes. Limited companies, however, require more investment from you as an entrepreneur, and you have a board of directors and general meeting each year. Depending on the size of the business, you may also have an audit obligation and it is the responsibility of the Board of Directors to ensure that the annual report is accurate and submitted on time.


We hope that this review of the most common company forms has been used and that you feel more confident about which company form is best suited for your business. If you have more questions about any of the company forms or have questions about accounting and financial statements for each company form, you are welcome to contact us.

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