Being an entrepreneur means you have a good deal of freedom to develop your business and your future. But running a company comes with more responsibilities than you may have been aware of, such as the responsibility to archive the company’s accounts in accordance with the Swedish Accounting Act. This article contains the key points that everyone should know about archiving.
What does the Swedish Accounting Act say?
The Swedish Accounting Act isn’t that extensive, actually. It’s really just a few pages that you could read during your lunch break. Accounting is not described in detail in the act, but rather when it should happen, who needs to file accounts, what constitutes accounting material, and what an accounting obligation involves. You can read about the financial year, under what circumstances a correction can be made, the documentation that’s required, and how the accounts should be closed for the year.
This article looks at archiving, which is dealt with in Chapter 7 of the act, and in particular at what is required of companies in this regard. In short, all accounting material must be securely stored by the company in an orderly manner for seven years so that it can be taken out of the archive if needed at any time during this period. The company has a duty to comply with these legal requirements. But how?
What is accounting material and why does it need to be archived?
Accounting material is what you have recorded – i.e. verifications and supporting documents, reports such as day ledgers and general ledgers, sub-ledgers and stock lists, annual accounts or annual reports, and specifications of the items included in them. There may be other documents that you may not think are of any relevance to your accounts, such as agreements, shipping documents, system documentation and processing history, or anything else that’s needed in order to understand the company’s accounts.
The reason for archiving the accounting material is that the company may need to demonstrate how it has performed its accounting duties and the documentation used to reach various financial decisions. It’s also important to retain the documentation should discussions arise later on in relation to your customers, suppliers, employees, or other stakeholders.
How should the archive be stored?
The act states that the company’s archive must be stored in Sweden in an orderly, permanent, and easily accessible manner for seven years after the end of the calendar year in which the financial year ended. That is to say, accounting material for accounts relating to a closing date of 30 June 2020 must be archived until 31 December 2027.
Exemptions from the requirement to store the accounts in Sweden may be made in certain circumstances. The archive must be stored securely. This does not have to be a safe – a locked office space is fine. “Orderly” and “easily accessible” mean that it should be easy to find what you’re looking for if needed, and that it should be capable of being retrieved without delay.
You must also have an archive plan and description as part of your system documentation that clearly outlines the structure, management, and storage of your accounts. The system documentation describes the systems used in your accounts, including a chart of accounts, cost centres, automated coding, sub-ledgers, etc. The archive plan, which is part of the system documentation, describes how and where the accounting information is archived, what’s kept on paper and what’s kept digitally, and where it can be found.
Setting up an archive plan and description of a company’s accounts is often the trickiest aspect of the system documentation, as accounting system suppliers often provide only a description of the system itself and how it works.
Digital archiving
If your accounts aren’t on paper, then there’s nothing to archive, right? Wrong! Even digital accounting material is covered by the Swedish Accounts Act, so there is a duty to archive it also. Since the act is from 1999, it’s not particularly well adapted to modern business, where accounting is largely digitalised and automated.
Nonetheless, the act applies to all accounting material, including digital material. The format in which the material was received by the company is the format in which it must be stored. However, although it is possible to transfer accounting material from one format (e.g. paper) to another (e.g. PDF), if you have a supplier that claims you can throw away the receipt once you’ve scanned it into an app, they’re wrong. That said, the Swedish Accounting Standards Board (BFN), which is the authority responsible for good accounting practice in Sweden, has issued advice on how to apply the Swedish Accounting Act. It states that if you transfer accounting information from one format to another, such as by scanning a receipt, the original must be kept for at least three years. It may be destroyed only from the fourth year after the end of the calendar year in which the financial year ended, and the scanned material must be retained for the entire archive period.
If your digital material, such as PDFs, is stored on CDs or USB sticks, you must also ensure that the equipment required to read this information is available throughout the archive period.
A few words about the GDPR
Finally, here are a few words about the GDPR. There can’t be anyone who has missed the pan-EU regulation on the protection of personal data that was the talk of the town in 2018. Before, we could just store everything “just in case”, but now the GDPR has put an end to all that. Personal data that you have no duty to store must not be stored.
As an entrepreneur, this means that you have to walk a tightrope to ensure that you are storing complete accounting information (which may include personal data in the form of payslips, invoices, etc.) pursuant to the Swedish Accounting Act while not storing unnecessary personal data in order to ensure compliance with the GDPR. Unsure if you’re doing things right? At Azets, we can help you keep your balance.
We’re here to help!
We hope this answers your questions about archiving and that, as a customer, you will not hesitate to get in touch if you would like our assistance. We help our customers ensure that their accounting material is complete when archived and can review your processes to ensure your compliance with the requirements of both the Swedish Accounting Act and the GDPR. In addition, we can look at your archive plans and create system documentation if this is missing, as well as put you in touch with our partner to take care of your physical archiving needs.
Get in touch with us here at Azets for the best advice on these issues.