(edit title) Question regarding taxes. Breakdown of employment taxes Options

[Mahmoud.Suleiman]

Folks,

I wonder if someone can help me with this issue.
If I'm considering opening a business and i want to hire an employee with a salary of 20k, what exactly is the breakdown of that salary and is there any extra fees shall I pay as an employer?
Will that salary be deducted from my earning taxes?

Help will be appreciated.

[Darwinder]

I dont understand this "my earning taxes".

But the quick breakdown is the following:

Salary + Arbetsavgift (See below...31.42%) + Vacation Pay (12%)

The more complicated breakdown is this:

Salary +

Ålderpensionavgift 10.21%
Efterlevandepensionavgift 1.17%
Sjukförsäkringsavgift 5.02%
Föräldraförsäkringsavgift 2.60%
Arbetsskadeavgift 0.30%
Arbetsmarknadsavgift 2.91%
Allmän löneavgift 9.21%
Vacation Pay 12%

[Mahmoud.Suleiman]

Thanks for your reply Darwinder.
I meant by earnings that I'll not pay taxes on that salary so it will be deducted from the company's total profit which is taxable.

[MeaCulpa]

Mkay, I've registered simply because I like people who embark on new ventures so; so here we go.
Assuming:
1. That the company will be a legal entity that is taxed separately, in this case a the equivalent of a US C-Corporation, UK Limited company by shares or German GmbH. In this case a Swedish Privat Aktiebolag (AB).
2. For the sake of clarity that you have no other expenses besides one month of pay for one employee
3. That the company's revenue is 100 000sek (but not taking into account any special tax brakes or tax code provisions for small businesses)
4. That your company does not receive any subsidies or tax incentives for the employee.

Income/revenue
100 000
Expenditure/cost
Salary/wages 20 000
Vacation pay 20 000*12%=2400
Social security contributions 22 400*31.42%=7 038
=22 400+7 038=29 438
Gross profit
=100 000-29 438=70 562
corporation tax
=70 562*26.3%=18 557.80
Net Profit/Net income/Earnings after taxes
=70 562-18 557.80=52 004.20

Now if you want to spend that profit on something, as one likes to do, the company will have to make a distribution/pay dividend to you, you'll be taxed for the dividend you receive, but those rules are a bit more complicated. Naturally you can chose to have the company pay you salaries, in that case your salary will be just as deductible as the wages you pay the other employees. Depending on revenue and ownership the way you chose to compensate yourself (salary or dividend and the ratio between the two) will have slightly different effects on the total amount of taxes you pay. The intention of the tax code is that it shouldn't matter if you chose to operate you business as sole proprietorship (enskild firma/with f-skattesedel), General partnership (Handelsbolag/Komanditbolag) or Aktiebolag, in reality it does matter as no one in the known universe has been able to write a tax code that is transparent, fair, short or consistent .

The short answer to your question is: Yes salaries, social security contributions and vacation pay is deductible/considered an expense.