Setting up a business in Switzerland — Limited Company, Joint Stock Company or Sole Trader

Setting up a business in Switzerland — making the right choice

Are you thinking about setting up a business in Switzerland? Then you face an important question: which legal structure is right for me? The choice between a Limited Company (GmbH), Joint Stock Company (AG) and Sole Trader has major implications for liability, taxes, administration and setup costs. Many foreign entrepreneurs underestimate this decision and make a quick choice they later regret. Our adviser Branislav Hepner helps you find the best structure for your business model.

Sole Trader — the simplest form

The Sole Trader is the most common legal form in Switzerland and the quickest setup option. You can decide everything alone, and all profits belong to you — but there is a downside: you are liable with your entire personal assets for business debts. A lawsuit, an accident with a customer or unpayable loans can therefore endanger your house.

Registration requires little time and costs little money (usually under 500 CHF). You pay income tax on your profit, not corporate tax. This can be advantageous — especially at the beginning. However: to set up a Sole Trader, you must be a Swiss citizen or EU/EFTA citizen (with valid residence permit) or meet special requirements. This form does not offer protection from liability.

Limited Company (GmbH) — the practical compromise

The Limited Company (Gesellschaft mit beschränkter Haftung) is very popular among small and medium-sized enterprises. Here you are only liable for the capital you contribute — typically 20,000 CHF startup capital (minimum 1 CHF, but 20,000 CHF is market standard). Your personal assets are protected. This makes the Limited Company very attractive for startups and founders with risks.

Managing a Limited Company requires more than a Sole Trader: you need a business account, business accounts at the bank, articles of incorporation and an entry in the Commercial Register (costs approximately 2,000–3,500 CHF). You pay corporate tax on profits — this varies by canton but is often between 11–18% (plus local taxes). A Limited Company is also possible for foreigners if you meet the legal requirements and have a business address in Switzerland.

Joint Stock Company (AG) — for larger projects

The Joint Stock Company (Aktiengesellschaft) is the "bigger sister" of the Limited Company and is often interesting for larger projects or companies with multiple partners. The startup capital is typically between 100,000–500,000 CHF, but can also be lower. Liability is also limited here — only to the assets of the Joint Stock Company.

Joint Stock Companies are frequently founded when multiple shareholders are involved or when investors participate. Management is stricter: you need a board of directors, must hold shareholder meetings and maintain detailed accounting. Startup costs are higher (4,000–6,000 CHF and upwards), and taxes are similar to a Limited Company. A Joint Stock Company is also possible for foreigners, but the effort is greater.

New business or company takeover?

In addition to choosing the legal structure, you should also consider: do I want to start from scratch or take over an existing business? A new startup takes more time (3–8 weeks until full registration), but gives you control over structure and contracts. A takeover is faster, but you also inherit debts and obligations — so careful due diligence by an adviser is important.

Many founders also overlook the social security requirements. If you have employees, you must register them with the pension fund (AHV/IV), unemployment insurance (ALV) and accident insurance (UVG). An adviser helps you not to miss any deadlines and pay the correct contributions.

Tax and administrative differences

Tax burden is one of the biggest differences between legal structures. A Sole Trader pays income tax on all profits (your personal tax rate: 8–22%, depending on canton and income). A Limited Company or Joint Stock Company pays corporate tax first (11–18%), and when you withdraw profits, you pay income tax again — this can quickly become more expensive.

On the other hand: Limited Companies and Joint Stock Companies allow profit retention — you can keep profits in the company and withdraw them later. A Sole Trader must pay tax on all profits, regardless of whether you use them or not. For certain industries (IT, consulting), a Limited Company can be financially more advantageous. We calculate the exact figures with you as your adviser.

Checklist: How to set up correctly

• Clarify your business idea: What exactly do you want to offer? How much startup capital do you need?
• Choose a legal structure: Sole Trader for simple, low-risk activities; Limited Company for startups and projects with liability risks; Joint Stock Company for larger or multi-person startups.
• Check the business name: The name must be available — check in the Commercial Register at easygov.swiss.
• Open a business account: You need it for the Commercial Register entry.
• Submit incorporation documents: Articles of incorporation, statutes, identity documents and business plan to the responsible Commercial Register (often the municipality or canton).
• Take out insurance: Employer's liability, occupational accident insurance and any other specialist insurance depending on your industry.
• Register for taxes and pension contributions: As soon as you are active, you must register with the cantonal tax authority and the pension fund.

How your adviser helps you

Setting up a business in Switzerland is certainly possible, but full of details. Many foreigners and newcomers make mistakes because they don't know the requirements — then correcting them costs money and time later. An experienced adviser checks with you the best legal structure, reviews the liability risks, calculates the taxes and ensures that you make all registrations correctly and on time.

We also offer advice on employer's liability and other insurance that you need as an entrepreneur. And after startup, we help you with payroll processing, tax returns and pension planning — so you can concentrate on your business, not on the authorities.

Our tip: Don't be put off by Swiss acquaintances saying "It's easy, do it online" — every startup is different. With professional advice, you save time and costs in the end.