How to Register a Business in the US from Sweden

Step 1: Benefits of starting your US business from Sweden

Starting a US business from Sweden offers a myriad of benefits that can pave the way for international success and growth. One of the primary advantages is the vast market potential of the United States. As the world's largest economy, the US provides unparalleled access to a diverse and affluent customer base. This can significantly enhance the scalability of your business, allowing you to tap into new revenue streams and expand your brand’s footprint globally.

Moreover, the robust legal framework and well-developed infrastructure in the US create a conducive environment for business operations. Entrepreneurs can benefit from the comprehensive support system, including access to venture capital, a skilled workforce, and advanced technology. Additionally, Sweden's strong diplomatic and economic relations with the US further ease the process of entering the American market, offering numerous bilateral agreements and incentives that can be leveraged for smoother business establishment and operation.

Step 2: How to start your US business from Sweden

If you're in Sweden and looking to start a business in the United States, there are several key steps you'll need to follow. First, it's crucial to determine the type of business entity you want to establish, such as a corporation, limited liability company (LLC), or partnership. Each structure has its own advantages and requirements, so it's essential to research which will best suit your needs. Once you’ve made your choice, you need to select a state in which to incorporate. States like Delaware and Nevada are popular due to their business-friendly regulations and tax benefits.

Secondly, you will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), which is similar to a social security number for your business. This can typically be done online. Additionally, ensure you have all the necessary licenses and permits required to operate your particular business in the chosen state. It is also advisable to open a US bank account to handle business transactions more efficiently. Furthermore, consulting with a legal advisor familiar with both Swedish and American business law can help you navigate this process smoothly and ensure compliance with all relevant regulations.

Step 3: Opening a Business Bank Account

A business bank account is a separate account that is used exclusively for business transactions. But why is it important to open a business bank account?

Keeping your personal and business finances separate is crucial. A dedicated business bank account allows you to do just that, making it much easier to track your business’s income and expenses. This clear separation translates to simpler tax reporting come tax season.

But the benefits go beyond bookkeeping. Having a separate account can provide legal protection. It establishes your business as a distinct entity from yourself. In the unfortunate event of a lawsuit or bankruptcy, this separation can help shield your personal assets from business liabilities.

Furthermore, a business bank account can boost your credibility and project professionalism.

It demonstrates to clients and vendors that you take your business seriously and are committed to maintaining accurate financial records. This can be especially important in establishing trust with potential partners.

Finally, a business bank account is essential for accepting payments, even if you utilize a merchant account. Whether you use doola or another service, funneling those customer funds into a dedicated business account is necessary.

doola partners with banks that allow you to open a bank account remotely from anywhere in the world, like Mercury. Shop around and compare different banks’ fees and services.

Look for a bank that offers the features you need, such as online banking, mobile banking, or overdraft protection.

You may also want to consider working with a bank that specializes in small business banking.

Step 4: Understanding Your Compliance Requirements in Sweden

Understanding Compliance Requirements for Running a US Business in Sweden

Expanding a US business into Sweden involves navigating a complex landscape of compliance requirements. Understanding these regulations is crucial for success. Below, we have outlined key considerations that will help guide your efforts in establishing and operating a business in Sweden.

1. Business Registration and Legal Structure

To start, you must choose the appropriate legal structure for your business. The common structures include:

• Aktiebolag (AB): Limited liability company, often chosen by larger businesses.
• Enskild Firma: Sole proprietorship, suitable for small ventures.
• Handelsbolag (HB) and Kommanditbolag (KB): Partnerships with varying liability commitments.

The chosen structure will affect taxation and reporting obligations. Register your business with the Swedish Companies Registration Office (Bolagsverket).

2. Taxation

Sweden has a comprehensive tax system. Key taxes include:

• Corporate Tax: The current rate is 20.6% on profits.
• Value-Added Tax (VAT): Generally 25%, with reduced rates for specific goods and services.
• Payroll Taxes: Employers must contribute to social security, which includes pension and insurance premiums.

Regular tax reporting and compliance are crucial. Businesses must register with the Swedish Tax Agency (Skatteverket) for appropriate tax obligations.

3. Employment Law and Labor Relations

Sweden has stringent labor laws designed to protect employees. Key aspects include:

• Employment Contracts: Must outline working hours, salary, and other terms.
• Working Hours: Generally, a 40-hour work week with strict regulations on overtime pay.
• Union Presence: Strong labor unions influence negotiations and workplace conditions.
• Termination Policies: Can be stringent, requiring just cause and notice periods.

Compliance with these laws helps foster a fair and productive workplace.

4. Data Protection and Privacy

Sweden adheres to the European Union's General Data Protection Regulation (GDPR). Key mandates include:

• Data Handling: Secure and lawful processing of personal data.
• Consent: Obtaining clear consent from individuals before data collection.
• Data Breaches: Prompt reporting to authorities and affected individuals.

Familiarize yourself with GDPR requirements to avoid significant fines and legal issues.

5. Environmental Regulations

Sweden enforces robust environmental laws. Businesses must consider:

• Sustainability Practices: Implementing eco-friendly operations and reducing carbon footprint.
• Waste Management: Proper disposal and recycling of waste materials.
• Compliance with Local Laws: Meeting specific environmental standards and obtaining necessary permits.

Environmental compliance not only avoids penalties but also enhances corporate reputation.

Conclusion

Navigating the compliance landscape in Sweden requires a thorough understanding of various regulations and proactive management. By addressing these key considerations, US businesses can successfully establish and thrive in the Swedish market.

doola offers a Total Compliance package, including bookkeeping services, to help you stay on top of your compliance requirements. This ensures your business operates smoothly and adheres to all legal and regulatory standards.

Step 5: Understanding Your Tax Obligations in Sweden

Understanding Tax Obligations for US Businesses in Sweden

Starting a US business in Sweden can be a lucrative opportunity, but it also involves navigating a range of tax obligations. Here are some key considerations to help you understand what’s required.

1. Corporate Income Tax

Sweden imposes a corporate income tax on the profits of companies operating within its borders. As of 2023, the corporate tax rate in Sweden is 20.6%. This tax applies to all profits generated from business activities in Sweden.

2. Permanent Establishment

One critical factor is whether your US business creates a permanent establishment (PE) in Sweden. A PE is a fixed place of business such as an office, branch, or factory. Having a PE in Sweden means your business is subject to Swedish tax laws.

3. Double Taxation Treaty

Sweden and the United States have a double taxation treaty in place to prevent businesses from being taxed twice on the same income. This treaty can benefit US businesses by providing tax relief and clarifying tax obligations in both countries.

4. Value-Added Tax (VAT)

Sweden requires businesses to charge a value-added tax (VAT) on goods and services. The standard VAT rate is 25%, although reduced rates apply to certain goods and services. Businesses must register for VAT and regularly file VAT returns.

5. Employment Taxes

If your US business employs staff in Sweden, you’ll need to handle employer contributions to social security. These contributions are collectively known as employer payroll taxes and are a significant part of remuneration costs.

6. Transfer Pricing

Transactions between your US parent company and its Swedish subsidiary must follow the arm’s length principle. This means that intercompany transactions should be priced as if they were conducted between unrelated parties. This is vital to ensure compliance and avoid tax adjustments by Swedish authorities.

7. Reporting Requirements

All businesses operating in Sweden must adhere to local reporting requirements. This includes filing annual financial statements and tax returns. Ensuring accurate and timely submissions can help avoid penalties and legal issues.

8. Seeking Professional Advice

Understanding and navigating tax obligations in a foreign country can be complex. It’s advisable to seek professional advice from tax consultants or legal experts familiar with both US and Swedish tax laws to ensure compliance and optimize your tax position.

By considering these factors, US businesses can better understand their tax obligations when operating in Sweden and make informed decisions to ensure compliance and financial efficiency.

It’s a good idea to consult with a tax professional or an accountant (or to hire these roles in-house) to make sure you’re not missing anything.

doola's Total Compliance package can handle your tax filings for you, ensuring you remain compliant with federal, state, and local tax requirements.

Step 6: How doola Can Assist

doola simplifies the incorporation and setup process for your company, ensuring you’re ready to charge customers, hire your team, and raise funds as quickly as possible.

Fill out your company details in the doola form in less than 10 minutes. Then, we’ll incorporate your company in any of the 50 US states, get your IRS tax ID (EIN) for you, and file your 83(b) tax election if needed. 

doola can also help you open a bank account and start accepting payments even before the IRS assigns your tax ID.

doola founders also gain access to exclusive discounts at leading software partners, one-click onboarding with select partners, and free CPA consultations.

The doola Application

It takes less than 10 minutes to fill out the details of your new company. You’ll choose your company structure (C corporation, limited liability company) and pick a company name.

Our instant company name checker will let you know if it’s available before you submit your application. You’ll add an address and phone number and review and sign your EIN SS4 letter in one click.

Forming the Company

doola will review your application and file your formation documents in the state within one business day. doola charges $297 for our Starter Plan and your first year of registered agent services (a state compliance requirement), and $297 each year thereafter to maintain your registered agent. 

You can also opt for our Total Compliance plan.

Getting Your IRS Tax ID (EIN)

After your formation in the state is complete, doola will file for your company’s IRS tax ID. Founders who provide a US Social Security number, US address, and US phone are eligible for expedited processing. All other users will receive standard processing. 

For standard orders, doola will fax your form SS4 to the IRS and then call the IRS to retrieve the EIN for you to expedite the process if we can, using real-time IRS data to determine when your filing is likely to be available.

Filing Your 83(b) Tax Election

Many startup founders choose to file an 83(b) tax election to potentially save on future personal taxes. doola can file and mail your 83(b) tax election in one click for both US and non-US founders — no trip to the post office required.

We’ll file it using USPS Certified Mail with tracking, and you’ll get a copy of your signed 83(b) election and proof of filing in your Dashboard.

Partner Perks and Discounts

doola partners with a range of third-party tools to offer special pricing or access to founders. We offer discounts on engineering, tax and finance, compliance, and operations tools, including Amazon Web Services.

doola also partners with Mercury to provide faster, automatic onboarding using your doola company information so you can get ready to bank and fundraise even faster.

Founders may also access discounts on other doola products, including up to one year of free credits toward payment processing.

Read our guides for startup founders, or learn more about doola and how we can help you set up your new business quickly and easily.

Turn your entrepreneurship dream into reality today!

We do our best to provide accurate and up to date information, however the information provided here are just guidelines. Please speak with a tax and compliance professional in your country