Bankruptcy of a sole trader
If you cannot pay the company's debts, you are declared bankrupt. You can apply for bankruptcy yourself or it can be done by someone the company owes money to (a creditor). The application is sent to the district court, which decides on bankruptcy and appoints a bankruptcy trustee.
Important points for bankruptcy of a sole trader
1. When the company starts doing poorly
You are responsible for paying the debts of your sole proprietorship. A company can begin to do worse financially for several reasons. The problems can often be beyond your control, but it is your job as a business owner to try to solve them. By acting early and understanding the problems, you increase the chances of solving the financial situation.
What happens when a company starts to do bad? at the Tax Agency (in Swedish)
2. Apply for bankruptcy
In order to apply for bankruptcy, you need to be in so-called insolvency. This means that the company cannot pay its debts and that it is not just temporary payment difficulties. It is the district court that decides on bankruptcy and appoints a bankruptcy trustee. The bankruptcy trustee takes over and manages your assets and liabilities. This means that you are not allowed to decide over your property yourself, even if you remain the owner of it.
Apply for your own bankruptcy - for a natural person at Swedish Courts (in Swedish)
Debts that have not been paid
The debts that were not paid in the bankruptcy will remain after it is closed. This means that those you owe money (creditors) can still demand payment. If your business has been run in a serious manner, you can apply for debt settlement.
F-debt settlement | Legal guidance at the Swedish Tax Agency (in Swedish)
Debt settlement for business owners at the Swedish Kronofogden (in Swedish)
3. The Tax Agency deregisters
The Swedish Tax Agency receives a notification that the bankruptcy has been initiated. Then your F-tax will be revoked and VAT and employer registrations will be deregistered.
Debited preliminary tax
The Tax Agency will terminate the debited preliminary tax from the bankruptcy date. If you want to change the previous accounting periods, you can request a re-examination by submitting a preliminary income declaration.
Preliminary income declaration 1 for natural persons (SKV 4314) at the Tax Agency
4. Submit declarations
You are required to submit all VAT and employer returns up until the day you were declared bankrupt. The bankruptcy trustee then takes over the accounting. You must continue to submit your income tax return yourself.