Accounting is a legal requirement - but how?

As a self-employed person, bookkeeping is not just something you do to keep track of your company's finances (although that is the biggest and best reason). It is also a legal requirement that you must follow under the Accounting Act . Failure to follow these rules can have serious consequences, including fines or other penalties from the Swedish Tax Agency. But what does it really mean to keep books in an "approved" way, and how do you ensure that your books are up to the standard? In this post, we will go through the most important things you need to know.

What does the accounting law say?

The Swedish Accounting Act (1999:1078) is clear that all companies, regardless of size, are required to record their business transactions in a correct and orderly manner. This means that you must:

• Posting continuously : All transactions that occur in the company must be posted continuously and as soon as possible after they occur. Different rules apply to different payment methods.
• Save supporting documents : You should save all receipts, invoices and other relevant documents that support your accounting entries, these days digital is enough.
• Accounting according to generally accepted accounting principles : Accounting should be done in a manner that follows generally accepted accounting principles, which means that it should be clear, accurate and follow generally accepted principles.

This means that you cannot postpone the accounting or do it in a way that makes it difficult to follow or understand. All events in the company must be recorded. The Swedish Tax Agency can request access to your accounting at any time, and if it is not correct, this can lead to both financial and legal consequences.

How do you do accounting in an approved manner?

Keeping proper records means following a series of rules and processes to ensure that your accounting is both legal and fair for your business. Here are some important points to keep in mind when keeping records:

1. Use an accounting system
   The first step to ensuring that your accounting is accurate is to use a reliable accounting system. There are several programs and apps that can help you keep your accounts both easily and accurately. Popular options for small businesses include Bokio , Fortnox , and Visma . These tools make it easier to comply with accounting laws and ensure that all transactions are recorded correctly. (There is no requirement for special systems, you can also make your own system in Excel or similar - but this is not recommended because it increases the risk of mistakes significantly.)
   
   
2. Create a clear chart of accounts
   A chart of accounts is a list of all the accounts used in accounting, and it is a fundamental part of keeping your finances in order. Make sure your chart of accounts is tailored to your business's operations and follows accounting standards.
   
   
3. Keep records regularly and accurately
   Bookkeeping should be done as soon as possible after a business event. This means you shouldn't wait until the end of the year to do your bookkeeping. By keeping your books on an ongoing basis, you can avoid an overwhelming workload and keep track of your finances throughout the year.
   
   
4. Save all documents
   For every business transaction, there must be supporting documentation - this can be an invoice, receipt or other documentation that proves that the transaction has taken place. These must be stored securely for at least seven years by law. There are digital services for storing receipts and invoices if you want to avoid piles of paper. Remember that the supporting documentation must be approved (a receipt is not always a valid receipt).
   
   
5. Follow good accounting practices
   Good accounting practice is about following the rules and practices that exist to keep accurate records. This means that you must be careful to record both income and expenses correctly, and that you do the right thing for VAT, taxes and other deductions.
   
   
6. Make accruals when necessary
   In some cases, it may be necessary to make accruals to allocate costs and revenues over the correct period. This is especially true if you have long-term contracts or payments that are not made all at once, such as rent or insurance.

What happens if you don't post approved?

Failure to comply with accounting laws can lead to a number of problems:

• Tax surcharge : If the Swedish Tax Agency discovers that you have not kept correct records, they can issue a tax surcharge, which means that you have to pay extra tax on the incorrect information, this can lower any self-employed person.
• Fines or imprisonment : In serious cases, you can be fined or even imprisoned if you deliberately avoid filing or submit false information.
• Audit difficulties : If your accounting is not accurate, you may face problems during an audit. This can lead to a loss of credibility with customers, suppliers or lenders.

Summary

Bookkeeping is a legal requirement and something every small business owner must take seriously. By following the accounting law, using the right accounting system, and ensuring that all transactions are recorded correctly, you can both avoid problems with the Swedish Tax Agency and keep track of your company's finances. If you feel that bookkeeping is too complicated or time-consuming, it may be a good idea to hire help from an accountant or accounting expert to ensure that everything is done correctly.

If you want to learn more yourself to gain control over your company's finances, you can take a look at the accounting course that is completely online, you can do that here.

So, even though bookkeeping can feel like a burden at times, it will pay off in the long run - both to avoid legal problems and to get a better overview of your company's finances! Plus, it becomes as easy as running water once you've done it a few times!