The financial year

A financial year is the annual period for which a company is required to prepare annual accounts or an annual report.

A financial year should contain 12 months. When starting up your business the first financial year is allowed to be shorter than 12 months or extended up to 18 months. When the company terminates its business, the financial year may be shortened but not extended.

Sole traders and trading partnerships

Sole traders and trading partnerships in which no partner is a legal person may only have the calendar year as their financial year.

Limited companies and economic associations

Limited companies and economic associations may choose either the calendar year or a split financial year. A split financial year begins on the first day of any calendar month, covers 12 full months, and ends on the last day of a calendar month, such as 1 October to 30 September.

Annual accounts

The annual accounts are a compilation and closure of the financial year's accrual accounting. The compilation takes the form of a profit and loss account and a balance sheet.

The profit and loss account must show correct details of income and expenditure for the period, i.e. the financial year. The balance sheet is a summary of the company's wealth, assets, liabilities and equity at the balance sheet date.

Annual report

An annual report consists of a profit and loss account, a balance sheet and a directors' report. The auditor, if the company has one, then examines the annual report and submits an audit report. The profit and loss account must show correct details of income and expenditure for the period, i.e. the financial year. The balance sheet is a summary of the company's wealth, assets, liabilities and equity at the balance sheet date.

Unlike the annual accounts, the annual report is a public document. The Swedish Companies Registration Office (Bolagsverket) is the authority where companies' annual reports are filed and registered. On payment of a fee, you can obtain annual reports and other public information from the authority's Trade and Industry Register.

Different types of companies

Sole trader

Sole traders are required to prepare annual accounts at the end of the financial year. Sole traders with an annual turnover which does not exceed SEK 3 million are permitted to prepare simplified annual accounts.

Trading partnership

Trading partnerships in which the partners are all natural persons are required to prepare annual accounts at the end of the financial year.

Trading partnerships in which one or more legal persons are partners are always required to prepare an annual report which is submitted to the Swedish Companies Registration Office. In some cases they must engage an approved or authorised auditor.

Limited companies

Large limited companies must always engage an approved or authorised auditor, and are required to prepare an annual report which is submitted to the Swedish Companies' Registration Office. However, small limited companies may choose not to have an auditor but they must submit an annual report.

Annual reports for limited companies

Economic association

Economic associations must always engage an auditor, and are required to prepare an annual report. The auditor should possess the knowledge and experience of accounting and finance which are required to perform the audit. The annual report should be submitted to the Swedish Companies Registration Office if the authority so requests.