Legal

Which legal structure can I choose?

For entrepreneurs in Switzerland, there are the following forms of companies:

Sole proprietorship
General Partnership
Limited Partnership
Stock Corporation/Public Limited Company (AG)
Limited Liability Company (GmbH)
Branches

The common forms of companies are here below explained in more detail:

Sole proprietorship

Owned by the owner itself (1 person).
No distinct existence from owner, so profit regarded as income of owner.
Sole traders can be personally liable for business obligations, as can their spouse.
Owner is accountable for company’s debts and may affect properties of owner (personal possessions may be used as a guarantee in case of financial difficulty)
Easy to start but difficult to close
Must only register with Commercial Register if turnover exceeds CHF 100.000
Sole proprietors that need to register must include the surname of the owner in the trade name and the register.

General Partnership

Consists of two or more partners
Each partner is responsible for the consequences of the actions of the other partner(s)
All partners manage the business jointly
Partners should sign a partnership agreement and each partner is liable for their own taxes
Closing business goes on terms of the partnership agreement signed by the partners.
Must be entered in the Commercial Register
No minimum required capital

Limited Partnership

Owned and run by two or more persons
It has two kinds of partners: general and limited
limited partner tends to be the financial backer for the company
limited partner tends to allow the general partner to make the day-to-day decisions and is only at legally at risk of losing their financial investment if they are not involved in managing the company in any way
General partner is fully liable for all liabilities of the partnership
General partners are liable to third parties and personal assets (including those of a spouse) are not protected from creditors (though a marriage contract can protect spousal assets)

Stock Corporation/Public Limited Company (AG)

Can be formed by one or more individuals
Separate legal existence from its owners with own corporate name
Liability shareholders limited to the contributed amount to the share capital
Run by the board of Directors, one of whom must be a Swiss resident.
Minimum required share capital of CHF 100,000
Minimum par value of share CHF 0.01

Limited Liability Company

Can be formed by one or more individuals
Separate legal existence from its owners
Board of Directors is NOT required
At least one executive director
Minimum required share capital of CHF 20,000 and may not exceed CHF 2 million
Minimum nominal value of share of CHF 100
Shares are offered to the public via the Commercial Register and are freely transferrable
Public deed of formation by all founders is required
Must be entered in the Commercial Register

For more information on the various forms of businesses and their establishment, please refer to the Swiss Code of Obligations.

How do I set up a company in Switzerland?

Any company in Switzerland is required to register with the Commercial Register. For setting up a stock corporation and limited liability company in particular, the articles of association needs to be drafted and signed by all officials of the new enterprise. Usually it takes on average two to four weeks to incorporate a company; however, it depends on the type of legal form chosen and the location of the canton (state). Generally it takes 21 days to form a limited company which includes registering the company, enrolling employees in the social insurance system and registering for VAT. Once a company is registered in the Commercial Register, it should automatically be registered for income tax and automatically obtain a general business license (certificate). A special (professional) license is required in case of specific factors such as banking, insurance, transport and employment services.

Before choosing a name for the business, it is crucial to check with Commercial Register whether the corporate name is available to use

Below is a quick summary of steps of setting up a company in Switzerland, provided by Doing Business of World Bank:

Place the paid-up capital in an escrow account with a bank (click here for a list of bank in Switzerland)
Draft the articles of association in the presence of a notary public, who notarizes the personal and corporate signatures on the application form and authenticate the articles of association and the public deed of incorporation.
File the deed certifying the articles of association to the local commercial register to obtain a legal entity
Pay stamp tax at post office or bank after receiving an assessment by mail
Register for VAT with the Federal Tax Administration
Enroll employees in the social insurance system (federal and cantonal authorities)

For detailed information on the various steps, please click here. Additionally, gründen is a 2012 publication offering detailed information on how to set up a business in Switzerland (a collaborative effort by the Aargau Services, the Office for Economy and Labor of the Canton of Zurich Business and Economic Development, the Federal Office for Professional Education and Technology, and the State Secretariat for Economic Affairs).

Starting or running a business?