For many people setting up as freelancers or consultants, or launching small businesses in Norway, one of the first questions is whether to structure their venture as a sole proprietorship (Enkeltpersonforetak or ENK) or as a limited liability company (Aksjeselskap or AS).
Each has its own advantages and disadvantages and the answer will generally depend on how much you expect to earn from business, how risky it is as a venture, how much time you have for administration, and whether you want to enjoy full social benefits as an employee.
What's the difference?
Liability
With an ENK there is no legal separation between the business and your personal finances. This means you are personally liable for all the debts and obligations, so if the business goes bankrupt, your home and your savings are at risk.
With an AS, your liability is limited to the value of the shares you have in the company, which must be 30,000 kroner or more. Your personal assets are protected, unless you've provided a personal guarantee when taking out a loan.
This difference in liability shouldn't much matter if you are, for example, a social media consultant or freelance journalist, and your business assets are limited to a laptop.
But if, for example, you are buying up old Norwegian farm machinery for export elsewhere and have millions of kroner worth of assets on your books at any one time, it could matter a lot.
Taxation
With an ENK, there is no distinction made between salary and profit: everything is taxed as personal income.
With an AS, your company pays corporate tax at 22 percent on any profits, and you pay personal income tax on any salary you pay yourself, as well as dividend tax on any dividends your company pays to you as a shareholder.
This means having an AS gives you much greater flexibility in planning your tax, and more opportunities to reduce your tax bill.
If you have an ENK, you pay 22 percent in municipal tax, then a trygdeavgift of 10,8 percent, covering social security contributions, then increasing levels of marginal tax on any income above 226,100 kroner a year.
This means your effective tax rate will go from as low as 33 percent if you earn just 300,000 kroner a year up to as high as 48 percent if you earn 5 million kroner a year.
Regardless of whether you have an ENK or AS, it's possible to subtract business costs like office spaces, computers, car use etc. from your income, reducing your tax bill.
With an AS, the tax burden can potentially be a little higher, going as high as 52 percent for a company earning 5 million kroner a year if all earnings are taken out as salary.
But if you keep earnings in the company and pay yourself a much smaller salary, you can potentially reduce your annual tax bill substantially.
If your company earns 5 million kroner and you limit your salary to just 1 million kroner, you can end up paying as little as 27 percent in tax.
Social Security
Sole proprietors in Norway have slightly worse entitlement to social security than full employees (or owners) of limited companies.
With an ENK you get lower sick pay, with payments delayed until you have been sick for 17 days and covering only 80 percent of your normal earnings.
However, it is possible to buy voluntary insurance through NAV (the Norwegian Labour and Welfare Administration) to increase this to 100 per cent coverage or to receive payments from the first day of illness.
Parental benefits for ENK owners are paid at 100 per cent; however, the calculation is different than for employees. The amount is typically calculated based on the average of your pensionable income from the last three years.
For an AS, the situation is a bit more complex. If you are registered as an employee of your own company, you are entitled to 100 percent sick pay. However, your company must cover your full salary during the first 16 days of illness, known as the employer period. NAV only takes over the payments from day 17 onwards.
Costs and bureaucracy
An ENK is easy to set up.
It used to be free; however, as of 2026, electronic registration in the Register of Entities (Enhetsregisteret) costs 2,181 kroner.
If you choose to register in the Register of Business Enterprises (Foretaksregisteret), which is optional for most sole proprietorships, the electronic fee for registering in both registers at the same time is 3,883 kroner.
An ENK has minimal accounting requirements, no need to have an external auditor, and no restrictions on how you can withdraw money.
An AS is a lot more complicated with a requirement to submit annual accounts and to have an external accountant if you have revenues of over 7 million kroner, assets with 27 million kroner or more, or more than 10 employees.
Electronic registration in both registers currently costs 6,825 kroner for an AS. Additionally, you require a minimum of 30,000 kroner in share capital.
Paper-based applications are considerably more expensive for both registration types.
Credibility
While an ENK is fine for freelancers or consultants, it is seen as less formal and professional, meaning for some types of business, structuring yourself as an AS will increase credibility.
So which should you choose?
In general, an ENK is the best option if you have few assets or liabilities, a limited income and are not dealing with clients who prefer to work with an AS.
Freelancers and small-scale consultants might choose to run their business as an ENK.
If you earn a higher salary, perhaps as an IT consultant or independent management consultant, you might opt to structure your business as an AS, even if you lack employees, because of the greater flexibility in tax management.
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