Articles

In cooperation with Bokio

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Running a successful business requires a good understanding of how your business is performing. Which products or services are generating the most money, or which area is most profitable? Get a better handle on your business finances with cost centers!

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What are cost centres? 

A cost center is a place within an enterprise where costs are incurred. It can be, for example, different departments, functions or units within a company. Depending on your company's size and industry, you may benefit from different numbers of cost centers. 

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By assigning costs and revenues to specific cost centers, your company can see where and how money is spent. This makes it possible to identify areas that are performing well and areas that are performing poorly, which can help you manage your business. 

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If your business consists of two areas, renting out flats and renovating flats, the renting out part might be generating a high profit while the renovation part is breaking even. If your business doesn't use cost centers, you won't be able to see these figures in black and white - but if you were to use cost centers, you could get accurate figures on how the different parts are performing separately! 

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Example of how cost centers are used 

Cost centers and other economic concepts can sometimes be difficult to understand, so let's make cost centers concrete with an example. 

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Benny runs a clothing store. He has different departments in his business, including purchasing, sales and marketing. When Benny does his accounting, he treats each department as a cost center and assigns costs and revenues to the correct area. This way, Benny can get a good overview of the costs and revenues of each department.

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Benny can choose how he wants to divide his cost centers. He can choose to divide the cost center "sales" into even smaller parts, for example by "children's clothes", "women's clothes" and "men's clothes". 

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If he wants to get insights at a detailed level, he can break down cost centers by brand or by category of garments. Instead of getting a picture of the whole business performance, he can get a more detailed picture of his performance, which can be used as a basis if he needs to tighten the budget or make an investment. 

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Who benefits from using cost centers? 

As a self-employed person, you can make great use of cost centers to get a better understanding of where your strengths and weaknesses lie in your business. This will allow you to make more informed decisions to develop your business further. 

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Companies with different areas 

If you run a business that has different areas, it is particularly useful to be able to break down the income and costs of the different areas. But even if you are, for example, a consultant, you can choose to distinguish between different types of services to know what is most profitable for you. 

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The project 

For someone who does a lot of project work, it can be useful to use cost centers to get figures on how different projects are doing financially. It can be particularly useful for someone who runs several parallel projects. 

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A company with few employees 

In a company with few employees, each employee can be a cost center, this way you can see how much each employee generates. 

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In conclusion, most companies have something to gain from using cost centers in their accounting.

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Take full control of your business with Bokio! 

With Bokio, you can create as many different cost centers as your business needs. With bookkeeping, invoicing, payroll, business accounts and automatic reports, it's easier than ever to get full control of your finances! 

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Read more about Bokio

The holiday season is in full swing and summer has so far brought a mix of sun, rain and positive macroeconomic news. But what does it really mean for you as an entrepreneur and what can you expect going forward?

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Inflation is finally falling

Inflation in Sweden has fallen continuously since the peak in December 2022. However, May was disappointing when the inflation figure was unchanged from April and higher than estimated. June, on the other hand, offered really positive news. After being above the Riksbank's target of 2 percent since August 2021, inflation ended up at 1.3 percent according to the CPIF, which is the measure the Riksbank uses. A figure that was lower than both the Riksbank and the market's forecast.

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This is positive news for business owners on several fronts. Inflation puts customers at risk of cutting back on business as their overheads increase. But it also affects business owners in the same way it affects consumers, with high inflation leading to cost increases on purchases of both goods and services. Having more price-sensitive customers while suffering cost increases yourself is a difficult balancing act, but the fact that inflation is now falling will hopefully bring things closer to normal. 

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Bankruptcies are declining

Another piece of positive news from the summer was that the credit reference agency UC reported that bankruptcies fell for the first time in two years. However, bankruptcies remain at record highs for the year as a whole, but a decline gives us optimism for the second half of the year. Just as inflation has several effects, so do bankruptcies. Reducing the number of bankruptcies therefore has a positive impact throughout the supply chain. 

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Key interest rate likely to be cut

So far this year, the Riksbank has cut the policy rate by 0.25 percent in May and in its latest monetary policy decision it signaled that there may be three more cuts this year. The consensus among economic analysts is that there will be between two and four cuts this year and the majority of the major banks believe that the first will take place as early as August. The cut in the policy rate is a relief for both households and companies, which have been squeezed by the high interest rate levels. 

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What does it mean for entrepreneurs?

The fact that inflation is falling, bankruptcies are decreasing and the key interest rate is being lowered is positive for the whole of society. As an entrepreneur, it also means that you can hopefully start to breathe out after the tough period that has been. When the policy rate falls, purchasing power in society increases and as an entrepreneur you can expect sales to pick up again. The cuts will also have an impact at several levels. As interest rates are lowered, your suppliers' costs will fall, which is likely to have a positive impact on your purchase prices.

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In the long run, cuts in the key policy rate will also reduce the cost of financing for businesses, which has a certain lag effect compared to variable-rate mortgages. The cost of investing in your business will therefore fall too. All in all, this summer's positive news means that you, as an entrepreneur, can start to look more hopefully to the future and enter the fall with optimism.

Right now, there is a scam going on where someone is calling from a hidden number, pretending to be Froda and asking you to settle your loan early. The calls are not from Froda and we urge you to hang up if someone calls and asks you to settle your loan early. 

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It happens that Froda calls you as a customer. However, when we call, we never do so from a hidden number. We will also never ask you to identify yourself when we call or urge you to settle your loan early. If you receive a call or text message asking you to settle your loan early, we encourage you to contact our support.

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Want to learn more about how you can work to avoid fraud? Click here for more information

In 2020, the Swedish Tax Agency introduced a temporary possibility to defer tax payments to support entrepreneurs who were financially affected by the pandemic. The support has been extended in stages, but on September 12 this year it is time to start paying the tax. This could cause problems for businesses that don't apply for an installment on time. 

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The coronavirus pandemic was tough on society at large, but one group that was hit particularly hard was the country's entrepreneurs. While revenues slowed down or, in the worst case, stopped altogether, costs persisted. Therefore, a number of measures were introduced to help entrepreneurs financially during a vulnerable period. One of these measures was the introduction by the Swedish Tax Agency of a temporary deferral of payment of employer contributions, deducted taxes and VAT.

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How the respite worked

The deferral could be applied for accounting periods January 2020-January 2021, October to December 2021 and April to June 2022 and was divided into several stages. In the first stage, businesses could apply for a deferral for up to 12 months but no longer than September 12, 2023 (January 17, 2024 for businesses reporting VAT once a year). Thereafter, businesses could apply for an extension of up to a further 12 months until September 12, 2024 (January 17, 2025 for businesses that account for VAT once a year). Thus, depending on when they applied, businesses have been able to obtain a deferral of up to 24 months for tax payments.

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What happens when the grace period expires

Once a company has had a temporary deferral for 24 months, or less if limited by the end date, it will have to pay the deferred tax. The Swedish Tax Agency will send out information about 30 days before the end date of the deferral with information on when the money must be paid and how much interest and fee will be added (the deferral was not free of charge, but there is an additional interest and a deferral fee). For all companies with monthly or quarterly accounts that have applied for an extension of the deferral beyond September 12, 2023, this will be done around August 12. 

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The remission can be paid in installments 

Fortunately, the vast majority of businesses do not have to pay the full amount in one go. When the extended grace period expires, businesses can apply to extend the grace period for up to 36 more months, provided that an installment plan is set up. However, to be able to apply for an installment plan, the company must have been in temporary forbearance for 24 months, or as long as possible if limited by the end dates. 

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The installment plan can be divided into a minimum of two installments and a maximum of 36 installments over a maximum period of 36 months. However, the bulk of the repayment must be made during the first part of the installment plan. 

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Read more about the temporary deferral of tax payments and how to apply for an installment plan on the Swedish Tax Agency's website.

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Starting a business is an exciting but demanding journey. With preparation, planning and a well-balanced strategy, you can navigate the challenges and build a successful business. Sweden, with its supportive business climate and strong culture of innovation, offers great opportunities for entrepreneurs to establish and grow businesses. This guide gives you an overview of what you should consider when starting a business.

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Formulating a business idea

The first step in starting a business is to have a clear and feasible business idea. Identify the needs and behaviors of your potential customers, current trends and potential niches. An effective method is to conduct market research or focus groups to test the impact of your idea. Don't be afraid to adapt your idea based on feedback and new insights. A flexible and responsive approach can be the difference between success and failure.

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Choose your company form

Your choice of legal form when starting a business affects everything from tax management to how you can scale up. So it's not just a matter of making a sensible choice - you should choose the form that best suits your business. A sole proprietorship is suitable if you run the business yourself and if the business is small to begin with. A sole proprietorship offers simplicity and full control, but carries personal liability for debts and risks. Limited companies offer legal separation between the business and personal finances, but require more administration and an initial capital. Understand the differences and risks of each business form to choose the one that best suits your company's long-term goals. 

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Your choice of business form affects everything from tax management to how you can scale up your business. Understand the legal and financial implications of each form, from sole trader to limited company. Consider your long-term business goals and choose a structure that supports both your current situation and future growth.

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The choice of company form is one of the first decisions prospective entrepreneurs face and affects everything from administration and tax management to boundaries between the company and you as an entrepreneur. 

In Sweden, there are four main forms of company if you want to start a business. Each form has its own advantages and disadvantages and is therefore suitable for different types of business. 

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• Sole proprietorship: For the lone entrepreneur running a small business. It is easy to start and does not require any initial capital. However, you are personally liable for all the company's debts and legal obligations, which may involve a higher personal risk.
• Limited liability company: Suitable for larger businesses that have a higher level of risk, if you need to raise external capital or if you want to separate the company's finances from your personal ones. To set up a limited company, you and your possible co-founders are required to provide a minimum share capital of SEK 25 000.
• Partnership: Suitable for companies where two or more people want to run the business together. All partners are jointly and severally liable for the debts of the company. 
• Limited partnership: Similar to a partnership but with two types of partners: general partners who are active in the company and have full liability, and limited partners who are co-financiers but only risk their stake in the company. This is a good option for those who want to have investors without giving them full responsibility.

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Consider which business form best suits your business objectives, risk tolerance and long-term plans. For some, it may be beneficial to start the business as a sole proprietorship and then convert the business into a limited liability company as the company grows, while for others, a limited liability company from the start may be more suitable. It may also be wise to consult a legal or financial advisor before deciding which form of business to choose. 

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Register your company

After you have chosen your business form, the next step is to register your company. This includes registering with the Swedish Companies Registration Office and the Swedish Tax Agency, as well as making sure you have any licenses and permits in place. It is also important to establish solid bookkeeping and accounting from the start and may be beneficial to bring in a bookkeeper or accountant to handle the company's finances if you do not want to or cannot do it yourself. Also, pay attention to trademark protection and intellectual property rights if your business idea involves unique products, services or technologies when you start your business.

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Set a financial plan

Thoughtful financial planning is essential when starting a business. This includes not only securing initial funding but also creating a sustainable financial strategy for the future that includes pricing strategy, cost control and investment. Set a realistic budget that includes both fixed and variable costs as well as potential sources of income. Keep track of your cash flows and be prepared to make adjustments if necessary. A robust accounting system and regular financial reviews are recommended to help you better understand the financial health of your business and make informed decisions.

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Developing a marketing strategy

Marketing is crucial for building your brand and attracting customers. Like anything else, it's easier to succeed with marketing if you have a set strategy for how you want to approach it from the moment you start your business. A marketing strategy aims to build a strong brand that communicates your unique value proposition and should include a combination of digital marketing, content marketing, keyword optimization, and if possible, traditional marketing. Be consistent in your marketing across all platforms and try to build a strong social media presence to interact directly with your target audience. Evaluate and adapt your strategy based on measurable results and customer feedback.

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Plan for scalability

The long-term success of your business depends on your ability to scale and adapt your operations. To do this, you need to have a clear vision of how your business can develop over time. This includes not only product development and market expansion, but also investing in people, technology and scalable processes to handle increased demand and complexity. Being proactive makes it easier to react quickly to market changes and new opportunities.

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Starting a business is a process that requires patience, perseverance and a willingness to constantly learn and evolve. By planning ahead, being persistent and continuously evaluating and adapting your strategy, you can build a strong foundation for your business and achieve long-term success.

Pandemic, high electricity prices and inflation. Running a business is hard enough as it is, and it hasn't gotten any easier as external events change the landscape. Flexibility has always been important for entrepreneurs, but it becomes even more important in times like these - especially when it comes to business finances and funding.

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As a business owner, you are often forced to make decisions without having all the information available and there is often a degree of trying to predict and plan for what is to come. Although events are not usually as disruptive as they have been in recent years - especially not at the interval they have been - change is more the rule than the exception. Businesses grow, unexpected events occur and opportunities arise. 

What was once optimal for your business may not be so one, two or twelve months later. That's why we've made it easy to make adjustments so you don't get stuck with something that doesn't fit the here and now. Has an investment opportunity come up, has the revenue flow changed or do you need some extra liquidity for a period? At Froda, you can easily log in and adjust your loan to fit the needs of your business today.

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Adjust your repayment rate 

Choose between repaying the loan every weekday, once a week or once a month. The frequency of repayment has no impact on the total cost of the loan, but different repayment rates suit different businesses depending on preference and revenue flow. If your company's sales have become more continuous and ongoing, you can change to a higher frequency repayment rate to have less volatility in liquidity. Similarly, if your business gets paid for its products and services at specific times, you can lower the frequency to match the repayments to when there is money in the till.

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Make an additional payment

You can always pay off parts of your loan with Froda without any additional costs. You choose how much you want to repay and the repayment is done automatically by logging in and triggering an extra payment. By making an extra payment, you can reduce your company's running costs. You also lower the total cost of your loan as you reduce the loan amount, which means that your interest costs also go down. 

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Extending your loan

By logging in to Froda, you can always see your available borrowing capacity and increase your loan when you need to. The limit is updated in line with your company's turnover, allowing you to continue investing as your business grows and have an available buffer in case something unexpected happens. Since you are not tied to the amount you apply for, you can also start by borrowing a smaller amount if you want to make an investment, and increase the investment if it turns out well, thus keeping the risk down.

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Extend the maturity

Do you want to reduce the size of your repayments or do you need the money a little longer? You can easily log in and extend the maturity of your loan. This way you can both reduce your company's running costs and have access to financing for longer. 

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Pause amortization

Sometimes you simply need a break. That's why you can always pause the repayment of your business loan with Froda. You can pause repayments whenever you want and as often as you want for up to 6 months. When you pause the repayment, you only pay interest during the pause and thus free up liquidity that can be used for other purposes and reduce the company's expenses for a period.