Accounting method

Last updated: 2021-06-21

According to the VAT Act, there are two different accounting methods, so-called accounting methods.

The two accounting methods are:

• The billing method
• The cash method

The invoicing method is the main method, but there is freedom of choice for some companies to choose between the different methods. This applies, for example, to companies that have less than 3 million in net sales.

When you register your company, you must notify the Tax Agency of the accounting method you have chosen. You also need to inform the Swedish Tax Agency if you intend to change the accounting method. It is always possible to switch from the cash method to the invoicing method, but if you want to switch from the invoicing method, you need to apply for this to the Swedish Tax Agency, which is only granted if there are special reasons.

The billing method

The invoicing method is based on each invoice being booked twice. First, the invoice is posted when it is sent or received, and then it is posted again when the money comes in or goes out of the account.

The advantage of the invoicing method is above all that it gives a better overview of the company’s finances, for example as this method makes it possible to see which invoices have not been paid yet.

The cash method

The cash method is somewhat simpler than the invoicing method. According to this method, you only post the invoice once. It is when the money goes in and out of the company. In other words, you do not post when you receive an invoice or when you send an invoice.

The advantage of the cash method is that there are fewer steps to book, and this method is thus simpler.