Guides

#The quick version: which one should you choose?

Short answer: choosing between light entrepreneurship and a sole proprietorship mostly comes down to volume and commitment. Light entrepreneurship suits you if you invoice occasionally and want to skip all the admin: you invoice through a light entrepreneurship company and get paid a salary with tax and fees already handled. A sole proprietorship suits you if you invoice regularly, have costs you want to deduct, and are willing to handle bookkeeping and tax returns yourself or pay someone to do it.

It's not a permanent choice either. Many start as light entrepreneurs to test demand, and only set up a sole proprietorship once assignments become frequent and stable enough. Going the other way works fine too.

#Administration: who does the work?

As a light entrepreneur, you handle almost nothing administratively. The light entrepreneurship company sends the invoice, follows up on payment, reports VAT, pays employer contributions, withholds preliminary tax and gives you a payslip. Your job is to do the work and report the assignment.

With a sole proprietorship, you're responsible for the entire chain yourself. You register the business and apply for F-tax status, usually via verksamt.se. You invoice in your own name, keep ongoing bookkeeping of every business transaction, file VAT returns, pay preliminary tax and self-employed contributions, and submit an NE appendix with your income tax return. It's entirely doable, and good bookkeeping software helps, but it requires time and diligence all year round.

Be honest about the value of your own time. If the admin takes hours every month that you could otherwise have billed, that cost is at least as real as the light entrepreneurship company's service fee.

#VAT and VAT registration

As a light entrepreneur, you don't need to register for VAT. The light entrepreneurship company applies the correct VAT rate on the invoice, 25 percent for most services, and reports the VAT to Skatteverket (the Swedish Tax Agency). You never have to file a VAT return.

With a sole proprietorship, you're generally required to register for VAT when you run a VAT-liable business. You add VAT to your own invoices, deduct input VAT on purchases, and report the difference to Skatteverket in your VAT return. The rules on VAT liability, VAT rates and exemptions are gathered at skatteverket.se.

Being able to deduct input VAT on purchases is a real advantage of having your own business if you have significant VAT-bearing costs. If your purchases are few, it matters less.

#Deductions: this is where a sole proprietorship has the edge

With a sole proprietorship, you can deduct costs needed for the business according to Skatteverket's rules: equipment, software, work-related travel, office costs and other operating expenses. The deductions reduce the taxable result, which can make a big difference if the business has real costs.

As a light entrepreneur, the scope is smaller. Some light entrepreneurship companies can handle assignment-related costs, such as materials or travel the client is meant to cover, but you don't make your own business deductions in a tax return the way a sole proprietorship does. If your work requires expensive equipment or a lot of materials, this weighs heavily in the calculation.

At the same time, be realistic: many service businesses have low costs, in which case the deduction advantage is mostly theoretical. Exactly what qualifies as deductible is determined by Skatteverket's rules, see skatteverket.se.

#Risk and responsibility

With a sole proprietorship, you're personally liable for the business's debts and commitments, since the business isn't a separate legal entity. You're also responsible for making sure taxes and fees are correct, and for taking out the insurance the business needs.

As a light entrepreneur, the light entrepreneurship company is the contracting party toward the client and your employer toward you. The company is responsible for handling tax withholding and employer contributions correctly, and insurance cover during assignments is often included. Your responsibility is mainly to carry out the work professionally. Always check what insurance cover is included before taking on assignments, and check with your unemployment insurance fund (a-kassa) how your entitlement to benefits is affected under each option.

#When does a sole proprietorship pay off?

A sole proprietorship usually pays off when the business is regular and growing. Signs it's time: you invoice many times a month, you have significant costs that would be deductible, your clients want a long-term contracting partner with F-tax status, or you want to build a brand under your own name. In that case, the light entrepreneurship service fee can end up costing more than running the business yourself, and the deductions tip the calculation further.

#When is light entrepreneurship the right choice?

Light entrepreneurship is right when you value simplicity and flexibility: occasional assignments, a side gig alongside a job or studies, or an idea you want to test without commitments. You can start right away, take no risk with registrations, and stop whenever you want without winding anything down. Truster offers light entrepreneurship where you invoice without your own company and get paid a salary with tax and fees handled, built by a payment institution authorized by the Finnish Financial Supervisory Authority (FIN-FSA). Truster is launching in Sweden by invitation, and the waitlist is open.