Some tips for starting your own business

In order to make your startup easier, we’ve made a list containing practical tips and advice, including points about company liability, insurance, taxes, accounting and pension plans.

To help you make your startup phase go smoothly, we’ve made a list of practical tips and advice, including points about company liability, insurance, taxes, accounting and pension plans:

Liability: As a business owner, you and/or your company can be held liable for compensatory damages in the event of loss. If your company’s a private limited company (AS), you have limited personal responsibility. If your company’s a sole proprietorship (ENK), you have unlimited personal responsibility. The higher the financial risk a company has, the more we recommend that you choose a private limited company (AS) as your organization type.
There’s a distinction between contractual liability and non-contractual liability:
Contractual liability: This results from when a contract hasn’t been fulfilled. For example, you become liable for the other contracting party for losses this individual has suffered because the contract hasn’t been fulfilled in the right way.
We recommend the following with regard to contractual liability:

• Read the contract’s point on liability and try to understand how it might affect your company
• Limited your company’s liability as much as possible, f.ex. to the contract amount, revenue, etc.
• Make sure that you’re not liable for any consequential damages beyond those that are reasonable

Non-contractual liability: This results from when you’re liable for damages and losses caused by your products and services. For example, you provide a service as a consultant, and your actions or advice leads to your client losing money.
Non-contractual liability is normally covered under a liability insurance policy.

Insurance: There are a lot of insurance possibilities for you as a business owner to consider. In our opinion you must have the following types of insurance:

• Liability: Secures you if your organization is ordered to pay compensatory damages. Insurance companies offer many types of policies. Ask for the policy that provides the best coverage for your type of organization.
• Occupational accident insurance: Is required by law for all employers and secures employees if they get work injuries that are caused by a work-related accident.

You should also have the following insurance policies:

• Sickness benefit insurance: Covers payment of sickness benefits during first 16 days if an employee becomes ill (this is called ‘the employer period’). Can be purchased through the Norwegian Labour and Welfare Administration (NAV). Self-employed individuals without insurance aren’t entitled to receive sickness benefits before the 17th sick leave day.
• Sick leave insurance: Normally covers a company’s fixed costs if an employee becomes ill.

Taxes: As a self-employed individual, it’s important that you learn about regulations concerning taxes and fees (Altinn).
What you won’t find in the above link is what the consequences are for not paying your advance tax. According to the Tax Payment Act (section 10-20, 4th paragraph), if you don’t make your quarterly advance tax payment by its due date, “all subsequent installments will become due”. This means in practice that if you don’t pay your advance tax on time, you’ll have to pay all remaining installments at the same time, something that’s impossible (or very financially draining) for most self-employed people. It’s also meant the end of many sole proprietorships.
If you disagree about the amount of your advance tax payments, contact the tax authorities to apply for making changes to it. But in the meantime, make sure to pay your advance tax on or before its due date.
To put it simply, avoid the big “everything at once” bang – pay on time!

Accounting and Auditing: Altinn can answer many of your questions, among others with regard to auditing.

Your type of company determines if you’ll need auditing services. Otherwise, many people who’ve been self-employed for a long time would advise you to at the very least hire an accountant so that you’ll be able to concentrate on doing what you need to in order to produce an income you can live on.
And yet, you are free to prepare your own accounts if you choose to do so.
Today there’s a wide selection of banking services that make it easy for you to keep your finances in order and provide you with the documentation you need for accounting purposes. If you have only a few clients, a clear cash flow and some knowledge of accounting, you can think about preparing your accounts yourself.

Sales: Many people who’ve registered their own company/started their own business soon experience at they’ve also become a potential customer for others who want to offer them catalogue advertising, marketing via web portals, accounting services or systems as well as systems for internal controls, cybersecurity, etc. The salespeople of these kinds of services can be quite persistent.

If you aren’t running a specialty business and know for certain that you don’t need any of the services offered to you, our advice is that you quickly and clearly say “no” whenever you’re approached. This is because if you hesitate, you might end up getting an invoice with an immediate payment due date along with a threat of being turned over to a collection agency.

Catalogues and web listings mean wasted money, and you can wait with internal control systems until they’re requested, or your company has grown to such a size that you yourself see the need for them.

Pension: The National Insurance Scheme alone will provide you with considerably less to live on as a pensioner, and as a self-employed individual, you have to take care of yourself in order to secure an old-age pension beyond the National Insurance Scheme’s payments.

A defined-contribution pension plan may be contributed to with amounts up to 7% of salary/calculated personal income for amounts between 1G and 12G and allow the right to tax deductions for savings.

The deadline for making payments to a pension plan is normally 31 March in the year after the income year.

For incomes above 7.1G, can IPS (Individual Pension Savings) be a supplement.

If you on the other hand have an income under 7.1G, it’s uncertain whether a defined-contribution pension plan will pay off for you. Please contact Gjensidige Insurance for more information: