Change the business type of your undertaking

Are you considering changing your business type?

There can be many reasons why entrepreneurs want to change their company form. These are the most common:

• You have an individual business that is doing well and that you want to expand. You now want to switch to a limited liability company to reduce the risk to your personal finances.
• You have a sole proprietorship and several people who work in the company want to become co-owners. It is only possible if the new company changes its form, for example to a limited liability company or trading company.
   

Find out about the different conditions of different forms of business

Different forms of business have different prerequisites, requirements and rules. You need to know how to register your new company and which rules apply to that particular form of company. A new company form can also affect which company name you can choose to have.

Choose business type
 

Get help from an accountant

It can be difficult to decide which business type is most beneficial for your particular business. If you are thinking about changing the business type of your undertaking, it may be a good idea to talk to your accountant to find out how it would affect the business and you as the owner. You can also talk to an advisor.

Decide what to do with your current business

Start by deciding what will happen to your current business. Should it remain or should you phase it out? If you keep your current company, you will therefore be running two companies. If you decide to liquidate the company, you need to do it the right way.

Close down your business

Keep the same company name or choose a new one?

It is not certain that you can keep your current business name. It depends on the type of company you are switching from and to.

You can keep your company name if you change from a sole proprietorship to a trading company or limited partnership and remain in the same county. However, you must deregister your individual company.

If, on the other hand, you want to change to a limited company, it is not certain that you can keep your company name. This is because sole traders, trading companies and limited partnerships only have protection for their company name in the county where they are registered, while a limited company has nationwide protection. This means your business name must be approved in all counties. If there is a similar name in another county, your business name may not be approved.

Only change the company form when the name is ready

When you transfer from a sole proprietorship to a limited company, you should wait to deregister your sole proprietorship until you have had your limited company registered and you have transferred most of your sole proprietorship, such as bookkeeping and inventory. If you deregister the name of your current business first, you run the risk of someone else taking the name.

Don't close your business before you start the new business. Then you can book your income and expenses without interruption.​
 

Complete your accounting correctly

Regardless of what type of company you have, it is important that you complete the accounting correctly when you terminate the undertaking. You must draw up a final statement of accounts even if you finish the financial year in the middle of the business year. This means that the final financial year can be shorter than twelve months. Remember to enter the final transactions in the accounts, and keep the accounting information for at least seven years. Which tax rules that apply depends partly on what form of undertaking you have now, and partly on what form of undertaking you intend to change to.

Rules in the Accounting Act (1999:1078) (in Swedish)

Transfer liabilities and assets to the new company

If you need to transfer assets of tax value to the new business, you need to contact the Swedish Tax Agency. The rules differ depending on the company form you have today and what your new company form will be.

Contact the Swedish Tax Agency