Who May Prepare Simplified Annual Accounts?

All those who operate individual business activities are required by the Bookkeeping Act to keep books and prepare annual accounts. If the turnover in the individual company normally amounts to a maximum of 3 million kronor, the company may prepare simplified annual accounts.

Illustration Example: Berit Gårdin

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Meet Berit Gårdin

She is skilled at sewing curtains. Since she has received several inquiries from friends and acquaintances, she decides to start a sewing business on a small scale.

In this guide, we'll follow how Berit keeps books and makes her annual accounts.

Choose Your Bookkeeping Method

💰 Cash Method (Kontantmetoden)

When to use: Suitable for smaller businesses with simple transactions

How it works:
  • Record income when payment is received
  • Record expenses when payment is made
  • Simpler to understand and implement
  • Good for businesses with immediate payment cycles
Limitations:
  • May not reflect true business performance
  • Less suitable for credit-based businesses
  • Limited insight into outstanding obligations

📋 Accrual Method (Faktureringsmetoden)

When to use: Better for businesses with credit sales and purchases

How it works:
  • Record income when service is provided/goods delivered
  • Record expenses when incurred, not when paid
  • More accurate picture of business performance
  • Shows true profitability by period
Benefits:
  • Better matching of revenues and expenses
  • More accurate financial statements
  • Better for business decision-making

Simplified Annual Accounts Process

1

During the Year: Ongoing Bookkeeping

  • Record all business transactions systematically
  • Organize receipts and invoices chronologically
  • Maintain accurate records of income and expenses
  • Regular reconciliation of bank accounts
2

Year-End: Verify Bookkeeping

  • Check that all transactions are recorded
  • Reconcile bank statements
  • Verify VAT calculations and payments
  • Review and correct any errors
3

Prepare Simplified Annual Accounts

  • Create Income Statement (Resultaträkning)
  • Create Balance Sheet (Balansräkning)
  • Complete supporting schedules
  • Include required notes and disclosures
4

File Tax Declaration

  • Use annual accounts as basis for tax return
  • Complete NE form for sole proprietors
  • Submit by required deadline
  • Archive all documents for required period

Separate Private and Business

Since only what belongs to the business should be recorded in the business, you must keep your private economy and the business economy separate. This applies to both which assets and liabilities belong to the business and which income and expenses during the year should be recorded in the business.

Assets

Own/Rent Rule

Only assets that you own may be recorded in the business. A leased car or a rented copier may therefore not be recorded as an asset in the business.

Which assets should be recorded in the business?
  • Assets that are completely (or largely completely) used in the business, or
  • Assets that are necessary for you to be able to run the business, e.g., a boat in a fishing company.

Equity

Equity is total assets minus total liabilities. Equity is also your claim on or debt to the business. The balance can therefore be either positive or negative.

Own Contributions (increases equity)
  • Private deposit of money into the business bank account
  • A private asset is transferred to the business
  • Payment of business expenses with private money
  • Business use of private asset (e.g., car or room in private home)
Own Withdrawals (decreases equity)
  • Withdrawal of money from business bank account for private use
  • Payment of private asset with business credit card
  • Business assets used privately
  • Withdrawal of goods for private use

Liabilities

All debts that arose in the business should be recorded in the business. This also applies to the part of a loan that is used in the business if you borrowed money that is used both in the business and privately. You may not record your private debts in the business.

Taxes

If you use the business money when paying F-tax, you should record the payment as own withdrawal. F-tax includes, among other things, preliminarily calculated income tax and self-employment contributions.

Taxes that belong to the business should be recorded in the business:
  • VAT
  • Employer contributions and tax for employees
  • Special payroll tax for employees' pension costs
  • Property tax for commercial property