Accounting when ending a sole trader

Report results in your income tax return 

Report final results of economic activities in your income tax return in May of the year after your last financial statement. 

Reverse funds for taxation when the business ceases 

You must reverse all funds for taxation when your economic activity ceases. Examples of funds include provision to tax allocation reserve or expansion funds. The reversal will affect your taxable result. 

In some cases, you can make use of the rules on accumulated income when reversing funds to get a lower national income tax. 

Distribution of interest in final statement 

Even in your final statement of economic activity, you can make interest distribution. Interest distribution can be either positive or negative and is calculated on the capital base. The capital base is calculated on the basis of assets and liabilities at the beginning of the tax year. 

You may make a positive interest distribution if there was a positive capital base of more than SEK 50,000 at the end of the last financial year. When activities cease, positive interest distribution can also be made for reversed tax allocation reserves as well as reduction of expansion funds. 

You must make a negative interest distribution if there is a negative capital base of more than SEK 50,000 at the end of the last financial year. 

If your last financial year is shorter than 12 months, the amount of the distribution must be adjusted to take account of the length of the financial year. 

Commercial property or tenant ownership that becomes a private residence 

If your commercial property is to become your private residential property, you must reverse previously allowed deductions for certain improvement repairs and maintenance, depreciation deductions, etc. The deductions are recorded as revenue in your economic activity, just as if the property were sold. The same applies to commercial tenant ownership. 

Deficit in the last financial year 

If your economic activity operates at a deficit in its last year, you may be able to deduct the loss, under certain conditions, in the capital tax schedule. A final deficit may be used in the income year following the year in which the activity was discontinued. 70% of the deficit is tax deductible. You can spread out the final deficit deduction over up to three years if you wish. 

If you end your activity within the first five financial years, you can also offset the deficit against income from services. This applies if you have carried out active economic activity, if you have not directly or indirectly carried out similar economic activity during the last five years before starting the economic activity, and the first SEK 100,000 in deficit for each of the five years. 

Individual social security contributions and special payroll tax 

In the year in which the economic activity ceases, you can calculate the final individual social security contributions or the special payroll tax and deduct these directly in the last income tax return for the economic activity. Otherwise, you make a standard deduction for the individual social security contributions/special payroll tax in the income tax return for the last year of the activity, but then you must make a final reconciliation of the individual social security contributions/special payroll tax the following year.  

See exact calculation of individual social security contributions at the Swedish Tax Agency (in Swedish)

Keep your tax account 

Keep your tax account. The tax account shows, among other things, your tax payments and your final tax according to the final tax decision. 

External links 

Closing sole traders at the Tax Agency (in Swedish)