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Being both employed and self-employed

It is common to run your own business alongside your employment. Starting a business alongside your employment can be a good way to finance your business start-up and get your business going without taking too many risks. At the same time, there are several things you need to keep track of regarding tax, SGI (sickness benefit qualifying income), and pension.

Starting your own business as an employee

If you want to start your own business alongside your employment, you need to inform your employer. It is common for workplaces to have rules about what you can work on in your business while being employed. It's called a duty of loyalty and may involve not engaging in competitive activities. You may also need to report your business as a sideline, even if your workplace approves of your activities. Sometimes you may also need to fill out a form or register the sideline in the payroll system, for example, as proof that the employer approves of your activities. One requirement to be able to have a business alongside your employment is that your activities do not have a negative impact on your job.

Three steps when starting a business alongside your employment:

  1. Talk to your employer and find out what rules exist in your workplace.
  2. Consider if you need to reduce your working hours to manage your business.
  3. Learn how being both employed and self-employed affects your personal finances.

Leave of absence to start a business

You have the right to take a full-time leave of absence for up to six months to start a business if you have:

  • been employed by your employer for six consecutive months or
  • at least twelve months in the last two years

However, your business must not compete with, or significantly inconvenience, your employer's business.

Law (1997:1293) on the right to leave of absence to conduct business activity at riksdagen.se (in Swedish)

How taxes work

If you operate a sole proprietorship and have employment, you need to be approved for F-tax and have A-tax, called FA-tax.

FA-tax means that your employer pays preliminary tax and employer's contributions on your salary to the Swedish Tax Agency. You are responsible for paying your preliminary tax and social security contributions on compensation for work performed in your business, known as debited preliminary tax.

If your sales, excluding VAT, are under 80,000 SEK and you do not purchase or sell outside Sweden, you do not need to be registered for VAT.

Registering a Business at the Swedish Tax Agency

VAT Registration at the Swedish Tax Agency

How sick leave, parental leave, and vab (care for sick child) work

Many benefits you can receive from the Swedish Social Insurance Agency are based on your qualifying income for sickness benefits (SGI). When you are both employed and self-employed, the Swedish Social Insurance Agency looks at both your salary and what you earn in your business when calculating your SGI.

Entrepreneurs with FA-tax at the Swedish Social Insurance Agency (in Swedish)

How pensions work

As an employee, you earn into your general pension through the taxes you pay. You may also have an occupational pension that your employer pays. If you work part-time for your employer to devote time to your business, pension contributions will be lower.

As an entrepreneur, you need to draw a salary or have a surplus, and pay fees and taxes to earn into your general pension from the state. You may also need to have your own pension savings to accumulate the same pension as you would have received as solely employed.

Pension for entrepreneurs at the Swedish Pensions Agency

Most employees have some form of insurance through their employer. If you reduce your working hours, it may affect your insurance coverage. Check what applies with your employer and see if you need separate insurance for your business.

Insurance for your business