Starting and running a company – different company structures
Which company structure is right for me? What taxes do I pay as a company owner? How does social security work for company owners?
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- Starting and running a company – different company structures
© Helena Shutrick
Many artists are company owners. Some decide to start a company during their education, others after working for a while. Among professional artists, it is common to both have your own company and be employed.
Here we provide information about different company structures and how the tax and security systems work for you as a company owner. We also discuss how you can collaborate with other freelancers in the form of an association, and what you can do if you want to take on individual freelance assignments.
Common types of company structures
The most common company structures for artists are sole trader and limited companies. If you have a sole trader company, you are personally responsible for the entire company’s operation, finances and business activities. If you have a limited company, you are considered an employee of your own company. If you collaborate with others, an economic or non-profit association is an option. An invoicing company can be a temporary solution for people without a company who need to bill clients.
What are F-tax and FA-tax?
If you have a sole trader company, you should apply with the Swedish Tax Agency (Skatteverket) to be approved for F-tax (tax on self-employment income). In this case, you must pay income taxes and your own social security contributions as a self-employed person on the profit from your business activities.
If you have both business activities and income from employment, you can apply for F-tax while retaining your A-tax status (for employees). In this case, you will be approved for F-tax with a special condition – known as FA-tax. This means that your employer pays preliminary tax and employer’s social security contributions on your salary, while you yourself pay income tax and social security contributions on the income you generate in your company.
Managing companies and associations
The website Verksamt.se enables you to start, manage or liquidate your company or association. The website is a collaboration between the Swedish Tax Agency, Swedish Agency for Economic and Regional Growth (Tillväxtverket), (Swedish Companies Registration Office (Bolagsverket) and Swedish Public Employment Service (Arbetsförmedlingen). It also contains a wealth of helpful information about running a company.
Sole trader
A sole trader (enskild firma) is the most common business structure among professional artists. It is not a legal entity like a limited liability company, but instead your Swedish personal identity number becomes the company’s registration number. This means that you are personally liable for all of the company’s obligations.
Economic and non-profit organisations
If several of you will be running an artistic activity together, you can start up an economic association or a non-profit association. Examples include a studio association, music studio or theatre association. An economic association is formed by at least three people who become members.
Invoicing companies
A mix between being self-employed and being an employee is to hire an invoicing company to manage your billing. As an artist, you get the commission and the invoicing company signs a business agreement with the client. If you have extensive artistic activities, it is better to bill through your own company.