Receiving remuneration or salary

Depending on the type of business you conduct, there are different regulations for receiving remuneration or salary.

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Sole trader

If you conduct business as a sole trader, trading partnership or limited partnership, you may not draw salary from your business. If you deposit or withdraw money from the business, the profit is not affected. Consequently, it also does not affect how much tax you must pay.

As a sole trader, you make a standard deduction from the profit in order to calculate the surplus from business operations. Income tax and social security contributions are calculated based on this surplus. The surplus is also used by the Swedish Social Insurance Agency to calculate the income on which your sickness benefits are based, and by the Swedish Pensions Agency to calculate your pensionable income.

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Trading or limited partnership

In a trading partnership or limited partnership, the partners (co-owners) share the profit or loss. Based on each partner's individual share of the results, a standard deduction is made to calculate the surplus. This surplus is then used when calculating each partner's income tax and social security contributions. The partners' surplus is also used by the Swedish Social Insurance Agency to calculate the income on which their sickness benefits are based, and by the Swedish Pensions Agency to calculate their pensionable income.

You pay national income tax on income over a certain amount. Keep in mind that national income tax is calculated on the total income from your employment and from your business activities.

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Limited company/economic association

In a limited company or an economic association, as an owner or member, you are also viewed as an employee if you are active in the company or association. The remuneration you withdraw from the company is thereby considered to be salary. This salary and your employer's contributions are deductible expenses for the company or association.

The fact that you, as an owner or member, are viewed as an employee means that you must register the company or association as an employer with the Swedish Tax Agency. The company or association is your employer and must therefore pay employer's contributions and preliminary income tax for you and other employees.

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