Brought to you by Winbiz online accounting for Swiss businesses.
So you have decided to start a business. You have a business plan and are ready to get started. Before you launch you need a name and possibly a company.
Broadly there are two options in Switzerland. One is to set up a company, the other is to work as an independent sole trader or as a group of independents in partnership.
In Switzerland, both options require a fair amount of money, paper work and official approval.
If you decide to set up a company you must choose between two different types. One is called an Societé à Responibilité Limité (SARL), or Gesellschaft mit beschränkter Haftung (Gmbh) in German, and the other a Societé Anonyme (SA) or Aktiengesellschaft (AG) in German.
Choosing a name
Before you can use a name commercially it needs to be officially approved. This ensures that no two businesses use the same name for the same thing. Switzerland’s federal registry lists all registered businesses. Checking here before applying reduces the likelihood of your name being rejected.
Becoming an Independent or partnership
If you want to start a business but would prefer not to set up a company then becoming an independent is the typical path. All commercial activities, or collections of activities, require registration if they generate CHF 100,000 or more annually. Below this level registration is optional.
Registration can be done at your canton’s commercial registry.
Independent
Registration as an independent is done in your name. It is possible to add a trading name too. No setup documents are needed other than completion of the standard registration forms. Most registries offer online registration, although signatures still require verification, either at the registry or by a notary. A base registration fee of CHF 120 is set by the federal government. Cantons then add their own fees on top. In Vaud the all-in fee is CHF 240, in Geneva it’s CHF 190 and in Zurich it’s CHF 80.
Partnership
If a group of people decide to work together in partnership then they will need to register as a société en nom collectif (SNC) or Kollektivgesellschaft (KIV) in German. This process requires a partnership agreement which must be put together with a notary. The base registration fee is CHF 240. Once cantonal fees are added, in Vaud it costs CHF 410 and in Geneva it costs CHF 420. In addition, notary fees are likely to be between CHF 1,000 and CHF 3,000.
Advantages: Easy to set up, no company articles, no capital requirement, less administration.
Disadvantages: No limit to liability – if the business goes bankrupt partners are personally liable.
Company setup
Compared to many other countries, setting up companies in Switzerland is expensive. There are minimum capital requirements and unavoidable fees which must be paid to notaries and the company registry. Companies must be registered in the canton where they are based, and the documentation must be in the local language.
First, you must decide between an SARL (Gmbh) and an SA (AG).
Societé à Responibilité Limité (SARL), or Gesellschaft mit beschränkter Haftung (Gmbh)
An SARL requires less capital. CHF 20,000 must be put into the company when it is officially set up. Shareholders of SARLs are listed in a public register.
The key document required to set up an SARL is the company statutes, also known as articles of association. This document must include information on what the company will do, how it will be governed and the details of founding directors, shareholders and their shareholdings. Notaries and company registries normally provide templates that can be tailored. In addition, a constitutive act is required to bring the company into existence – more information in French and German. Here are model templates for this kind of company in French and German provided by the government.
In addition, proof of funding is required. This is normally a document issued by a bank to prove the required sum is held in trust by the bank and will be transferred to the company’s bank account once it is registered.
Advantages: Limited liability, easier to set up than an SA (AG) (see below), less capital than an SA (AG).
Disadvantages: Harder to set up than becoming independent, company articles needed, capital requirement, shareholders shown in public registry, changes of ownership more administrative than for an SA (AG), double tax on dividends – company profits are taxed and dividends are taxed again as personal income.
Societé Anonyme (SA) or Aktiengesellschaft (AG)
An SA has a minimum capital requirement of CHF 100,000, however only CHF 50,000 must be paid in at the time of company set up. Shareholders are personally liable for the other CHF 50,000 should the company ever run into financial difficulty. Costs of set up are similar to those for an SARL.
Large companies are typically SAs. One of the big differences with an SA is that there is no public registry of shareholders as there is with an SARL.
The key document required to set up an SA is the company statutes, also known as articles of association. This document must include information on what the company will do, how it will be governed and the details of founding directors, shareholders and their shareholdings. Notaries and company registries normally provide templates that can be tailored.
In addition, proof of funding is required. This is normally a document issued by a bank to prove the required sum is held in trust by the bank and will be transferred to the company’s bank account once it is registered.
Advantages: Limited liability, shareholders not listed in public registry, changes of ownership easier than for an SARL.
Disadvantages: Harder to set up than being independent, company articles needed, capital requirements higher than an SARL, double tax on dividends.
Company set up process
At least one director must be resident in Switzerland. If you are planning to move to Switzerland but are not yet there, this can be a problem. There are firms that offer resident directors for hire, however this entails extra cost and administration.
The base federal company registration cost is CHF 600. Cantons then add fees on top and the resulting bill is usually closer to CHF 1,000. Then there are notary fees of around CHF 500 up to several thousand francs depending on the level of complexity and canton. Notaries in Geneva and Vaud are more expensive than in other cantons such as Zurich.
You must use a registered notary. Before 2011, you had to use a notary registered in the canton where the company was being setup. Since then it has been possible to use a notary anywhere in Switzerland. This has made it possible for those creating a company in cantons with expensive notaries like Vaud and Geneva to employ one in a low cost canton like Zurich.
There is a catch though. A notary in Zurich may not speak French, and the documents to register a company in Vaud or Geneva will need to be in French.
The upside of the requirement to use a notary is that they check all of your documents are compliant and take you through the process, typically helping with the documentation.
Information on notaries can be found here:
Notaries Vaud
Notaries Geneva
Notaries Zurich
Notaries Bern
Notaries Basel
Registering for social taxes
Independents and companies with employees must register them with a cantonal compensation fund. These organisations collect compulsory social security payments and pay unemployment benefits (to employees but not independents), disability benefits and pensions. More information is available here in French and German.
Compulsory accident insurance
Companies are legally required to provide staff with accident insurance, known as LAA (UVG). This is provided by private insurance companies. The premiums are a percentage of salary. More information is available here in French and German.
Auditing
All companies with 10 or more employees are required to audit their accounts every year – more information in English.
VAT
All businesses that expect to generate CHF 100,000 or more a year must register for VAT. More information is available here in French and German.
Taxation
In Switzerland, individuals and companies pay three layers of tax: federal, cantonal and communal (municipal). Federal tax is the same across the whole country. Cantonal and communal taxes vary significantly depending on where you and your company are based. When you register your business or company the information is automatically communicated to the relevant cantonal tax office, which deals with all of the company’s tax administration.
Trademarks
If protecting your brand is important you may want to trademark it. In Switzerland this costs CHF 550 and can be done online via the IGE website.
Before applying it is important to make sure no one else is using your trade name for the same product or service. If they are your trademark could later be revoked. If you intend to use your brand beyond Switzerland you might want to consider registering it as a trademark in other locations. The World Intellectual Property Organisation (WIPO) based in Geneva has more information on this.
Once you have applied you may receive fake invoices for fees that you do not need to pay. Check here if you are unsure about an invoice.
EasyGov
In November 2017, Switzerland’s federal government launched a new online tool, called EasyGov to help with company set up and some administration, such as registering for, filing and paying VAT and paying social taxes. Using this requires an ID, which can be set up here. A notary is still required for company set up however.
Administration and accounting
Independents, partnerships and companies need to calculate their profits and value every year. Accounts can be done using spreadsheets, however it can get complicated. Switzerland is administratively intensive and has its own particularities. There are digital administrative solutions designed to fit Switzerland’s administration. Switzerland’s largest provider, Winbiz, offers a cloud-based solution in English that is time saving, simple to use and tailored to Switzerland.
If you have any questions then drop us a line in the comment box below and we’ll try to answer.
More on this:
List of cantonal business registries
Link to Easygov
Switzerland’s trademark organisation
VAT registration in French and German
Compulsory accident insurance in French and German
Federal company registry
Registering for social taxes in French and German
Model company statutes (SARL/Gmbh) in French and German
Audit requirements in English and French
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Brought to you by Winbiz online accounting solutions for Swiss businesses.
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