Switzerland, known for its economic stability, modern infrastructure, and business-friendly environment, is an ideal location for entrepreneurs looking to start their business. However, for the project to be successful, it is essential to follow a series of legal procedures. Here is a detailed guide to help you understand the steps and legal obligations involved in starting a business in Switzerland.
Choosing the Type of Company:
Before embarking on the process of establishing a business in Switzerland, it is crucial to select the appropriate legal structure for your company.
The most common options are:
Limited Liability Company (Sàrl): Recommended for small and medium-sized businesses, the Sàrl limits the liability of its partners to the capital they contribute. It requires a minimum share capital of CHF 20,000.
Public Limited Company (SA): Ideal for larger companies, the SA requires a minimum share capital of CHF 100,000, of which at least CHF 50,000 must be paid up at the time of incorporation.
Sole Proprietorship (EI): This is the simplest form, with no minimum capital required, where the entrepreneur is personally liable for the company’s debts.
General Partnership (SNC): Equivalent to a sole proprietorship but with multiple partners. The partners are jointly and severally liable for the company’s debts.
The choice of legal structure should be based on the size of your business, your financing needs, and the way you wish to manage liability.
Choosing a Name and Verifying Availability:
Your company name must be unique and reflect the nature of your business. It is essential to verify its availability in Switzerland to avoid any confusion with other companies. To do so, you should consult the Swiss Commercial Register, which contains all active companies in the country.
Share Capital:
For Limited Liability Companies (Sàrl) and Public Limited Companies (SA), share capital is required. This capital acts as a guarantee for creditors and reflects the company’s credibility. The capital must be deposited into a Swiss bank account before the company is registered. The bank will issue a certificate of deposit, which will be used to confirm the deposit with the Commercial Register.
Drafting the Articles of Association:
The articles of association govern the operation of the company. They must be clearly written and include, among other things, the following elements:
The company name
The company’s purpose (the activity the business will engage in)
The registered office
The share capital and its distribution
Management and decision-making procedures
The articles must be signed by the founders and comply with legal requirements. Your fiduciary’s notary will assist you in this process.
Social Insurance:
In Switzerland, setting up a business entails several social obligations. Companies must register with:
A compensation fund for Old-Age and Survivors Insurance (AVS), Disability Insurance (AI), and Income Compensation Insurance (APG), among others (mandatory for the self-employed and employers).
A pension fund for the Occupational Pension Plan (LPP) (mandatory for employers under certain conditions).
An insurance company for Accident Insurance (LAA) (mandatory for all employers).
An insurance company for Health-Related Income Compensation (PGM) (mandatory for all employers subject to a collective bargaining agreement that requires PGM insurance).
Tax Obligations:
VAT: If your annual turnover exceeds CHF 100,000, you are required to register with the tax authorities for Value Added Tax (VAT). You will need to charge VAT to your customers and remit it to the tax authorities.
Profit and Capital Tax: Between 8.5% and 15% (depending on the canton) of your profits are subject to this tax, which must be declared and paid to the cantonal tax authorities.
Other taxes exist, such as withholding tax, among others. Our Taxes - VAT page and team will also assist you in navigating these.
Accounting Management:
Accounting is a legal requirement in Switzerland. You must maintain regular accounting records in compliance with Swiss accounting standards. It is advisable to engage a fiduciary to assist with this task and ensure sound financial management of your company.
Licenses and Specific Permits:
Certain activities require specific licenses or permits. This is particularly true in sectors such as healthcare, hospitality, and transportation.
Conclusion:
Starting a business in Switzerland can be a smooth process if you adhere to the legal and administrative steps. The Swiss legal framework is well-structured and provides a stable environment conducive to business growth. However, it is essential to fully understand and comply with the legal obligations regarding taxation, insurance, accounting, and sector-specific regulations to ensure the success of your entrepreneurial venture. For any questions, do not hesitate to consult us for guidance in establishing your business in Switzerland.
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