Sole proprietorship in Switzerland

There are many people in Switzerland who have started an independent lifestyle through a one-man company also called sole proprietorship. The process is not complicated once you get the right advisor. Before the establishment commences it is however recommended to observe the points below.

Make a business plan
By drawing up a business plan you are forced to examine a number of important matters before a start-up. These may be matters such as: sales channels, personal network, cash position, budget, marketing, cost levels and so on. If you start a business without a plan you quickly lose overview and control. Furthermore, a business plan is often a necessary tool in terms of negotiating with and convincing authorities and banks.

Start-up capital
In Switzerland it is possible to use your pension funds as a start-up capital for a one–man company. However, it may prove to be to score an “own goal” since the money intended for retirement thus disappears (provided you fail with the business). It also means limited or no coverage in the event of incapacity or death. There are although also certain tax advantages in this form of financing for the person seeking to start a sole proprietorship.

The establishment of the sole proprietorship in Switzerland
Each firm/company needs a legal form of enterprise. The most common form is the sole proprietorship, followed by the GmbH and AG. The criteria for the choice of type of company include the character of liability, working capital and taxation. In companies like GmbH and AG you are only liable for the capital invested. With a sole proprietorship, you stitch to all your personal assets in the event of bankruptcy.

Trade registry
The registration of a sole proprietorship in the Trade Register is not required before reaching a revenue of CHF 100,000 per year. It is recommended to notify yourself early since the acknowledgment from the Trade Register (“Handelsregisterauszug”) often must be presented to the bank, post office, telephone company, etc. in the event of a start-up.

Value added tax (VAT) in Switzerland
From an annual turnover in excess of CHF 100,000, a VAT accounting must be made in Switzerland. It is recommended to examine the advantages and disadvantages of a voluntary subscription dependent on activities, acquisitions and purchases.

Insurance in Switzerland
In an emergency situation, it is important that a recent start-up business is optimally insured. It is therefore recommended to budget a reasonable amount for insurance of various risks. Some insurances are mandatory, depending on the legal form of the company. In Switzerland, the owner of a sole proprietorship is considered to be among other things responsible for the holder’s own social insurance. At a GmbH or AG, the company is responsible for the employees’ social insurance. That means, as an independent in a sole company you have several social contributions to pay when you are both an employer and an employee. This among other things applies to a registration at the SVA (“Sozialversicherungsanstalt”).

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