Frequently asked questions when registering a company
There is no formal requirement to have an auditor in a newly started limited company, as long as it is not part of an existing group with mandatory audit. If you work with an accountant or an accounting firm that you trust, we think that there is no reason to pay approximately SEK 10 - 30,000 per year for auditing if your company does not meet the requirements for mandatory audit. If you handle the accounting and the annual financial statements yourself and have a certain complexity in the business, we think that there may be an idea in getting an auditor to minimize the risks in the company even if your company does not meet the requirements for auditing. In most cases, it will probably be more cost-effective to get an accountant or an accounting firm that handles accounting and financial statements for you, than to get an auditor who audits what you have done yourself.
If you are starting a business yourself, Simple Registration is probably most appropriate. Also if you are more than one person starting the company but you will only have one member of the board of directors.
The more often you declare VAT, the more often you get a better idea of the company's finances, and the greater the demands placed on always having everything in order. We believe that declaring VAT on a quarterly basis is usually most suitable for start-ups. It is a good compromise between being able to have a good overview of the company's finances and avoiding too much bureaucracy. Declaring each month would mean that you have even better control of the company's finances, but it creates a certain lack of flexibility as you have to make sure that everything is in phase every month all year around. For many, it is nice to not have to think about VAT during the holiday months. Declaring once a year would create a great deal of flexibility, but could mean an unpleasant wakeup call when it's time to pay VAT for the year if you have not planned well. Another perspective to consider is how the frequency of the VAT return will affect your cash flow. If you will invest heavily in the beginning, a more frequent VAT return can be positive because you can get VAT back for your purchases faster. If you predict very strong profitable growth, a less frequent VAT return can be positive because you can keep the cash flow from VAT on your sales for a longer period of time.
Although many seem to prefer the invoicing method, we are a strong advocate of the year-end method. The difference between the methods is that with the invoicing method you bookkeep invoices on the invoice date, and with the year-end method on the payment date. The latter is much easier to handle in practice because you can use bank statements from the company's bank accounts as the source of truth to know if everything that belongs to a period has been booked or not. With this method, you also only need to bookkeep each invoice once, compared with the invoicing method where you both need to post the invoice on the invoice date and then the payment of the invoice on the payment date. The biggest advantage of the invoicing method is that it is better for being able to produce accurate financial reports on a monthly basis instead of looking at the whole year.
This decision usually does not matter much. What affects most is the availability of external help and what time of year it is easiest for you to spend more time on accounting matters. Most companies have December as the closing month, so if you choose this month, it will probably be most difficult to get quick help with the closing work from an accountant or an auditor. If your business is strongly seasonal, it can be a good idea to choose a year-end month that is during your low season, so it will be less stressful with the annual closing procedure.
The reason why this is requested when you register your company is that it is used to calculate a preliminary tax to pay each month. As it is usually quite uncertain about how well the company will do in the first year, we recommend giving a very conservative estimate here. If you enter a figure that is too low, it will mean residual tax at the end of the year, but this can easily be predicted during the year. If you enter a figure that is too high, you will pay money that you may not have in advance on a tax that will not have to be paid. If you start a limited company where it is not certain that there will be any profit in the first year, you can enter 0 in surplus. If you start a sole trader company, you should not enter 0 in surplus unless it is a reasonable estimate, as the compensation to yourself is not considered an expense. In a limited company, the compensation to yourself is counted as a salary cost, so you can withdraw salary all year round and still have no profit in the company to pay corporate tax for.
If you are starting a limited company, it is a big advantage to start the company before the turn of the year. This is because it means that you get access to another full year for which you can withdraw low-tax dividends.
If you have any further questions, please contact us and we will try to help.