Sole trader? Keep this in mind before the year-end!
The year is drawing to a close and 2027 is just around the corner. If you run a sole proprietorship, the new year means both wrapping up the current financial year and preparing for the next. Here are some important things to keep in mind.
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Record transactions in the correct accounting period
If you use the cash accounting method, meaning that invoices are recorded when payments are made, you should review whether you have any unpaid customer or supplier invoices at year-end.
If you do, these must be recorded as accounts receivable and accounts payable, respectively, on the last day of the financial year. This ensures that your sales, purchases, and VAT are reported in the correct accounting period.
Annual accounts
When the year ends, you complete your ongoing bookkeeping by preparing annual accounts. These include both an income statement and a balance sheet. The income statement shows the company's income and expenses, while the balance sheet shows the company's assets, liabilities, and equity.
If your annual net turnover is no more than SEK 3 million, you may prepare simplified annual accounts. These then form the basis for your tax return.
It is a good idea to prepare your year-end accounts early, as this will make it easier when you later complete your NE appendix in connection with your income tax return.
Annual accounts for sole proprietors
Preliminary tax
Before each new calendar year, you can submit a preliminary income tax return to the Swedish Tax Agency (Skatteverket), where you estimate the profit your business is expected to generate during the coming year. In other words, you estimate the difference between your income and expenses.
Submit it no later than 27 November so that the Swedish Tax Agency has time to process it before the year-end.
If you do not submit your own preliminary income tax return, the Swedish Tax Agency will calculate how much preliminary tax you should pay. Their calculation is based on your final tax assessment and previous preliminary tax payments.
If your expected profit changes during the year, you can submit a new preliminary income tax return at any time. There is no charge for doing so.
Submit your preliminary income tax return
Make an extra pension contribution
As you review the year's results, it may also be a good opportunity to look at your pension savings. You may be able to make an additional contribution before the year ends.
If you have income from an active sole proprietorship, you may contribute to and claim tax relief for private pension savings. You can deduct up to 35 percent of your income from business activities.
To qualify for the deduction, the savings must be made through a pension insurance policy or a pension savings account. The deduction may not exceed 10 income base amounts, corresponding to a maximum of SEK 592,000 (2026).
Closing down a sole proprietorship
If you are considering changing your business structure, selling your business, or closing down your operations entirely, it may be a good idea to do so before the year-end. This means that you only need to file a tax return for 2026.
It is important to close your business correctly. Some steps are the same for everyone, while others depend on your specific circumstances, such as whether you have employees.
The Swedish Tax Agency has produced a new video explaining the process.
Watch the video: Closing a sole proprietorship – Swedish Tax Agency (in Swedish)
On verksamt.se, you can read more about what you need to do, such as:
- Deregister your business with the Swedish Companies
Registration Office. - Deregister for VAT and F-tax with the Swedish Tax Agency.
- Change your debited preliminary tax to SEK 0 for the coming year.
Selling or closing a sole proprietorship
Ending and deregistering a sole proprietorship