What is a few man company?

A few-member company usually refers to a limited liability company in which four or fewer owners hold more than half of the shares, and thus control the company. The vast majority of limited liability companies in Sweden are small companies.

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Small businesses and their owners are controlled by special tax rules, which are often referred to as The 3:12 Rules. These rules govern, in particular, the possibility of converting normal-taxed labour income into low-taxed capital income. Thus, they decide how and when you, as the owner, have the right to withdraw money from the company through dividends at a lower tax rate.

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What are qualifying shares?

In few-man companies, there is such a thing as qualifying shares. A qualifying share is a share in which the owner of the share or his/her relatives have been active in the company to a significant extent. According to the Swedish Tax Agency, this is defined as that the work efforts must have been of great importance for the company's results.

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What are unqualified shares?

Your shares do not count as qualifying if outsiders (shareholders who do not own qualifying shares)

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• Owns at least 30% of the company's shares
• Has the right to dividends corresponding to its holdings

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Thus, your qualifying shares may become unqualified, for example, if you raise outside capital and these investors own more than 30 percent of the shares in the company.

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Do you and your small business need help to move up to the next level?

At Saldo we know everything about accounting. We have worked, and work with both large and small few companies and know both the problems and the solutions. Do you have any questions? Want to ball ideas? Do not hesitate to contact us, and our accounting consultants will help you take your company to the next level.

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