1. When the company starts doing poorly

The partners in a trading partnership are jointly and severally liable for the debts of the company. In a limited partnership, the general partner has unlimited liability and the limited partners have limited liability.

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 doing poorly? at the Swedish Tax Agency (in Swedish)

2. Apply for bankruptcy

To file for bankruptcy, the company needs to be in a state of insolvency. This means that the company cannot pay its debts and that these payment difficulties are not temporary. The person who represents the company, can apply for bankruptcy as well as someone to whom the company owes money (creditor).

The application is sent to the district court in the place where the company is registered. The district court decides on bankruptcy and appoints a bankruptcy trustee. The district court notifies the Swedish Companies Registration Office, which registers that the bankruptcy has been initiated.

The bankruptcy trustee takes over and manages the company's assets and liabilities. It is the bankruptcy trustee who decides whether the business should continue.

Apply for your own bankruptcy - for a legal person at Swedish Courts (in Swedish)

3. The Swedish Tax Agency deregisters

When the district court has decided that the company should go bankrupt, they send a notification to the Swedish Tax Agency, that then will revoke the company's F-tax and deregister for VAT and as an employer.

Debited preliminary tax

The partners must submit a preliminary income declaration if the debited preliminary tax for the current calendar year needs to be changed.

Preliminary income declaration at the Swedish Tax Agency (in Swedish)

4. Submit tax returns

As a representative of a company, you are obliged to submit all income tax returns, VAT returns, and PAYE returns until the day the company was declared bankrupt. Then a bankruptcy trustee takes over the accounting.

Reporting on the partners' income tax return

If a partnership has been declared bankrupt but the partners have not, the partners retain the right to deduct their unused deficit that arose in the partnership before the bankruptcy.

Restrictions for limited partners

Limited partners and other partners who have limited their liability for the partnership's debts may not deduct more from the deficit than what the partner has contributed or undertaken to contribute to the partnership.

Closing a trading company at the Swedish Tax Agency (in Swedish)

5. The Swedish Companies Registration Office deregisters

The district court notifies the Swedish Companies Registration Office that the bankruptcy is completed. The Swedish Companies Registration Office deregisters the company.