Freelancing in Sweden 2025: Enskild Firma vs. Aktiebolag (AB)

So, you’ve fallen for Sweden. You came for the job, the studies, or maybe for love, and now you’re captivated by the fika, the forests, and the refreshingly sensible approach to work-life balance. But the entrepreneurial spirit is calling. You’ve got a skill, a client list, and a dream of being your own boss in the land of lagom. Welcome to the club!

Taking the leap into freelancing here is an exciting journey, but it starts with a very Swedish, very practical decision that can feel a bit daunting: choosing your business structure. For most expats, this boils down to a head-to-head battle between two main options: the Enskild Firma (sole proprietorship) and the Aktiebolag (AB) (limited company).

This isn't just a box-ticking exercise. The choice you make will impact your taxes, your personal liability, and your administrative workload for years to come. As we navigate 2025, let's break down exactly what each of these options means for you, the expat freelancer, so you can make a smart, informed choice and get back to what you do best.

The Swedish Freelance Scene in 2025: What to Expect

Sweden has a thriving ecosystem for freelancers, especially in sectors like tech, design, marketing, and consulting. The culture values expertise and independence, and tools like BankID and digital invoicing make running a business incredibly smooth once you're set up.

Before we dive into the business types, a crucial point for my fellow expats: your right to work is everything.

• For EU/EEA Citizens: You have the right of residence and can start a business relatively easily. Your main first step is getting your personnummer (personal identity number) from the Swedish Tax Agency (Skatteverket), which is the key to… well, everything.
• For Non-EU/EEA Citizens: You’ll need to apply for a self-employment residence permit from the Swedish Migration Agency (Migrationsverket). Be prepared for a thorough process. As of 2025, you still need to prove you have relevant experience, a solid business plan, and enough funds to support yourself (and any family members) for the first two years. The bar is high, so get your ducks in a row.

With that sorted, let's get to the main event.

Enskild Firma: The Simple Start

Think of an Enskild Firma (often called Enskild näringsidkare) as the Swedish equivalent of a sole proprietorship or sole trader. It's the most straightforward way to start freelancing.

What it really means: You and your business are the same legal and economic entity. There’s no separation. Your business registration number is simply your Swedish personnummer.

The Good Stuff (Pros)

• Easy and (Almost) Free Setup: Registration is done online with Skatteverket for F-skatt (F-tax), VAT (moms), and as an employer if needed. The process is quick and, best of all, free.
• Minimalist Administration: The bookkeeping (bokföring) requirements are simpler than for an AB. If your turnover is under 3 million SEK, you generally don't need a formal, audited annual report. You’ll file a simplified annual return (NE-bilaga) along with your personal income tax declaration.
• Total Flexibility: You can easily inject or withdraw money from the business without complex legal procedures. Profits are yours to use, though you must set money aside for taxes. It's also simple to pause or dissolve the business if your plans change.
• No Initial Capital: You don’t need to invest a lump sum of money to get started.

The Not-So-Good Stuff (Cons)

• Unlimited Personal Liability: This is the single biggest drawback and a dealbreaker for many. Because you and the business are one, you are personally responsible for all business debts. If a client sues you or the business fails, your personal assets—your savings, your car, your home—could be at risk.
• Higher Taxes on Higher Income: All your business profit is taxed as personal income. Sweden has a progressive tax system, and in 2025, once your total income (from all sources) exceeds the threshold for state income tax (around 615,000 SEK per year), you’ll pay an additional 20% on top of your municipal tax. This can make an Enskild Firma less tax-efficient for high earners.
• "Egenavgifter" (Social Fees): On top of income tax, you pay your own social security contributions, called egenavgifter. For 2025, this rate hovers around 28.97%. This covers your future pension and access to the social safety net, but it's a significant chunk of your profit.

Verdict: An Enskild Firma is perfect for freelancers who are just starting out, have a low-risk business (e.g., writing, consulting), expect modest initial earnings, or are running a side hustle alongside employment.

Aktiebolag (AB): The Professional Power-Up

An Aktiebolag (AB) is a limited liability company. This is a separate legal entity from you, the owner. It can sign contracts, own assets, and incur debt, all in its own name.

What it really means: You are typically an employee of your own company. The business's finances are completely separate from your personal finances.

The Good Stuff (Pros)

• Limited Liability: This is the headline advantage. Your personal assets are protected. If the company goes into debt, creditors can only claim the company's assets, not your personal ones (barring serious negligence or illegal activity). This peace of mind is invaluable, especially if you work with large contracts or in a field with potential liabilities.
• Tax Efficiency for Higher Earners: An AB offers significant tax planning advantages. The company first pays corporate tax on its profits, which in 2025 remains a flat and competitive 20.6%. From the post-tax profit, you can then:
  • Pay yourself a reasonable salary (which is taxed as regular income).
  • Pay out dividends, which are taxed at a much lower rate (typically 20% under the favorable 3:12 rules for small business owners). This structure allows you to optimize your income and significantly lower your overall tax burden compared to an Enskild Firma once you're earning well.
• Professional Credibility: An AB is often perceived as a more stable and serious business. Some larger companies and government agencies prefer or even require contracting with an AB. The "AB" suffix adds a layer of professional legitimacy.
• Built for Growth: It’s the only real option if you plan to hire employees, take on investors, or one day sell your business.

The Not-So-Good Stuff (Cons)

• Complex and Costly Setup: You need a minimum share capital of 25,000 SEK to start a private AB. While you can use this money to pay for business expenses, it's a significant initial barrier. There are also registration fees with the Swedish Companies Registration Office (Bolagsverket), typically a couple of thousand SEK.
• Heavy Administration: The rules are much stricter. You must maintain detailed accounting, hold an annual general meeting (even if you're the only shareholder), and submit a formal annual report (årsredovisning) to Bolagsverket each year. Most AB owners hire an accountant (redovisningskonsult), which is an ongoing business expense.
• Less Flexibility with Money: You can't just take money out of the company account. It must be formally paid out as either salary (with payroll taxes) or a shareholder dividend (following specific legal rules). Taking money out improperly is illegal.

Verdict: An Aktiebolag is the go-to choice for serious, full-time freelancers with established income streams, those in higher-risk professions, or anyone with ambitions to grow their business beyond a one-person operation.

At a Glance: Enskild Firma vs. Aktiebolag (AB)

Here’s a simple table to help you visualize the key differences:

How to Make Your Choice: A Practical Guide

Still on the fence? Ask yourself these questions:

1. What is my realistic annual revenue for the next 1-2 years?

   • Under 500,000 SEK: Enskild Firma is often simpler and perfectly adequate.
   • Over 600,000 - 700,000 SEK: This is the territory where the tax benefits of an AB really start to outweigh its complexity. You should seriously consider an AB.

2. What is the financial risk in my line of work?

   • Low Risk (e.g., content writing, translation): You could be comfortable with an Enskild Firma.
   • High Risk (e.g., software development with liability clauses, consulting with major financial impact): The limited liability of an AB is almost non-negotiable.

3. How much time am I willing to spend on admin?

   • "As little as possible!" Enskild Firma is your friend.
   • "I'm willing to hire an accountant and do things by the book." An AB is manageable with professional help.

4. What are my long-term goals?

   • "To have a flexible side income." Go with an Enskild Firma.
   • "To build a brand, hire a team, or maybe sell the company one day." You need to start with an AB.

Final Takeaway: Start Smart, and Don't Be Afraid to Evolve

For many expat freelancers in Sweden, the journey is a natural progression. It’s incredibly common to start with an Enskild Firma to test the waters, build a client base, and keep things simple. Then, once your income is stable and growing, you can convert your Enskild Firma into an Aktiebolag to protect your assets and optimize your taxes.

The Swedish system is logical and well-supported, but it has its own set of rules. Don't let the paperwork intimidate you. Websites like Verksamt.se (a collaboration between Skatteverket, Bolagsverket, and other agencies) provide a fantastic, streamlined portal for registering and managing your business.

My most important piece of advice? When your income starts to get serious or you feel unsure, invest in a consultation with a Swedish accountant (redovisningskonsult). Their fee will pay for itself many times over in peace of mind and tax savings. They can look at your specific situation and give you the tailored advice you need to thrive as a freelancer in your new Swedish home.

Good luck, or as they say here, lycka till!