Setting Up A Business In Switzerland, blog post NewCo
Setting Up A Business In Switzerland

Flamur Ademi

Feb 28, 2022
·
10
minute read

Setting up a business in Switzerland requires a lot of organization. In order not to miss any crucial step and give your business every chance at maximum growth, you have several important choices to make before you start: choice of legal form, the business plan, market analysis, taxation, insurance, administrative procedures... A whole new world awaits you. So if you wanna open the doors to success, here is what you need to know.

Why start a business in Switzerland?

There are many good reasons for setting up a business in Switzerland.However, what attracts entrepreneurs in the first place is the stability of the country's economy —thanks to the strength of its labor market and its low unemployment rate,Switzerland has a high GDP compared to its neighboring countries.

 

You should also considerSwitzerland's geographical position.Located in the heart of Europe, it stands out due to its openness to foreign markets and, therefore, to the commercial opportunities it fosters.

 

On the tax side, the advantages are also considerable. In Switzerland, taxes are levied at the federal, cantonal, and municipal levels.Moreover, certain companies can benefit from a partial or total tax exemption on the direct cantonal and municipal tax, for a maximum period of 10 years.

Want to know more about company taxes in Switzerland? Check out our podcast episode with Peter Kempin and Patrick Arnold from the UBS Wealth Management Team.

Switzerland offers optimal conditions for developing new technologies and innovations with highly developed IT infrastructure and modern technological means. But that's not all:the country's real estate market allows entrepreneurs to take advantage of building land and real estate that will support them in their new business activities.

 

Switzerland's skilled workforce also attracts entrepreneurs. Although the salary level looks pretty high, it's essential to note that labor costs are significantly lower than costs in other competitive economic spaces. The reason? Indirect labor costs and social insurance costs are particularly low.

 

Furthermore, there are inSwitzerland many organizations which can accompany and support business creators in launching their activities.

Want to know more about Accelerators and Incubators in Switzerland? Check out our podcast episode with Nicolas Bürer from DigitalSwitzerland.

 

Who can start a business in Switzerland?

Any person over 18 years old can set up a business in Switzerland.If you are not a Swiss national, you can start a business if you have the right of residence and work in Switzerland.

 

If you want to open an AG/SA or a GmbH/Sàrl in Switzerland and live abroad, at least one director authorized to sign must be domiciled in Switzerland. A local nominee director can fulfill this obligation.

The main legal entity types in Switzerland

 

To create your company, you will have to choose between several legal forms. Each of them is adapted to a particular type of project and has advantages and disadvantages. Let's look at each of the legal structures available to you.

 

 

 

The Limited Liability Company

 

The Limited Liability Company (GmbH in German / Sàrl in French) isa prevalent legal form in Switzerland. So if you plan to open a family business or an SME, theGmbH/Sàrl can support your project and offers many advantages.

 

 

Advantages of the GmbH/Sàrl

 

1.     The GmbH/Sàrl does not impose personal liability for the debts: the liability is only guaranteed by the assets and the share capital or the shares of the company;

2.     A low share capital: creating a GmbH/Sàrl requires a relatively low initial investment capital of CHF 20'000.-;

3.     When creating a GmbH/Sàrl, you can freely choose the company's name, unlike a sole proprietorship, which requires you to mention your name.

 

Conditions for creating a GmbH/Sàrl

 

The creation of a GmbH/Sàrl requires a capital of CHF 20'000. Note as well that the minimum value of a share is CHF100. In addition, to create this type of legal form, it is required that at least one director resides in Switzerland. Finally, the name of the company you create must be distinguishable from any other company name in Switzerland. You can check the availability of the name on Zefix. The choice of this company name is free, but you must add the indication of the legal form (in this case, GmbH or Sàrl).

 

 

 

The Limited Company

 

The Limited Company (Aktiengesellschaft(AG) in German / Société Anonyme or (SA) inFrench) can be created by one or more natural or legal persons. It is one ofSwitzerland's most famous legal forms, thereby carrying a strong reliability factor. Let's take a look at the advantages of AG/SA.

 

 

Advantages of the AG/SA

 

1.     It does not require personal liability: just as with the GmbH/Sàrl, the shareholders are only liable for their share of the share capital;

2.     Thanks to the AG/SA, the anonymity of the shareholders is preserved;

3.     The AG/SA may freely prescribe the transfer of shares. There is no restriction linked to the legal or statutory transferability of this type of legal form.

 

 

Conditions of the AG/SA

 

First, it is essential to note that a capital of CHF 100'000is necessary to create this legal form. This is certainly a prohibitive amount that can hold back some entrepreneurs. The minimum value of a share is CHF 0.01.

In addition, to create anAG/SA, it is also required that at least one director resides in Switzerland. Finally, in the context of creating anAG/SA, the company's name must be clearly distinguished from any other company name in Switzerland.

 

 

 

The sole proprietorship

 

The sole proprietorship ("Einzelunternehmen" in German / "Raison individuelle" in French) is the most common legal form in Switzerland. It is recommended when a single natural person carries out commercial activity. The liberal professions, artisans, consultants, architects, doctors, and traders often use this legal form, since they exercise their activity alone.

 

 

Advantages of the sole proprietorship

 

1.     The creation of a sole proprietorship requires few formalities. Only registration in the Commercial Register is necessary when the company is operated in commercial form, and the annual income exceeds CHF 100'000. It will suffice for the entrepreneur to notify the social organizations (AHV/AVS, accident insurance, etc.) of his project;

2.     To create a sole prop., no minimum capital is required, unlike AG/SA and GmbH/Sàrl;

3.     Sole proprietorships do not have to face the double taxation contrary to AG/SA andGmbH/Sàrl.

 

 

Conditions for creating a sole proprietorship

 

When creating a sole proprietorship, you have limited freedom regarding the choice of your company name — it is required that you mention your last name.

In addition, to create this legal form, you must register with the OASI (AHV/AVS) and must have a work permit.

 

 

 

Procedure for setting up a business in Switzerland

 

1.     Find a business name: If you have a sole prop., your last name should be included in your business name. If you have an AG/SA or a GmbH/Sàrl, you have complete freedom regarding the choice of your company name. As soon as you've made up your mind on it, check that the chosen name is not already taken, and register your domain name to create a website that will carry your brand;

2.     Choose the legal form: this choice will depend on your initial capital, the anonymity you wish to take advantage of, the level of responsibility you want to assume, and also the reputation you want your company to have;

3.     Choose the canton where your company's head office will be located: here you should check the taxation enforced in the canton you are targeting, and also pay attention to its geographical location, its proximity to your suppliers, your customers, and its commercial interest;

4.     Open a consignment account: if you launch a GmbH/Sàrl or AG/SA, you will have to open an account in which you deposit the capital necessary to create your company. This is a transitory account: the funds in it will be released and transferred to the company's current account as soon as you have registered with the Commercial Register;

5.     Prepare the constitutive documents: to create a GmbH/Sàrl or an AG/SA, you must draft your constitutive documents and articles of association, which must contain a great deal of information (legal form, company name, head office, amount of share capital or capital, purpose of the company, associates, shareholders, signature rights, powers of the members, conditions for holding general meetings, appointment of directors, appointment of the auditor, etc.).To ensure that these documents contain all the essential information, you can delegate their creation to dedicated companies, such as NewCo: this company drafts the legal documents you need in just 24 hours;

6.     Register the company in the Commercial Register: this step is mandatory if you want to forma Limited Liability Company (GmbH/Sàrl)or a Limited Company (AG/SA).

 

 

 

Costs of creating a business in Switzerland

 

There are several costs to consider when setting up your business. These costs strongly depend on the legal form and the related services.

If you wish to launch a Limited Liability Company (GmbH/Sàrl) or a LimitedCompany (AG/SA), doing so by using NewCo's services will cost you CHF 490, and this would include legal advice and notarization. In addition, you will also need to include the cost of registering with theCommercial Register, which is approximately CHF 600, as well as bank costs, which will be approximately CHF 250.

If you wish to create a sole proprietorship, NewCo's support would cost you CHF 190. The costs to be allocated to the Commercial Register would amount to approximately CHF 150.

 

 

 

Timeframe for setting up a business in Switzerland

Setting up a business takes a total of 2 to 3 weeks — that is, if you do it all yourself. If you leave it up to NewCo, the preparation of the constitutive documents and articles of association takes a maximum of 24 hours. The partner notaries then send the documents to the CommercialRegister within 48 hours.

 

The opening of the deposit account with a bank and the transmission of the certificate takes about a week, if the payment of the capital is made immediately.

Registration in the Commercial Register takes approximately 1 to 2 weeks, depending on the canton you are applying for.

 

 

Things to know before starting a business

 

Official documents are not the only ones you need to support you in building your business. To make the best decisions and keep your company aiming towards the growth you dream of, two other documents must be considered: the business plan and the market study.

Market analysis is the work of collecting and analyzing essential information for your business. It helps you understand the needs of your market so that you can meet them accurately. Thanks to this crucial document, you reduce the risk of failure and offer a helpful product or service that meets a real customer's needs.

Furthermore, the analysis also helps you reassure the financial partners by proving that your project meets a real need and that your activity has every chance at sustainability.

 

Market analysis gathers information such as:

●      The history of the market, its evolutions;

●      The actors who form the competitive territory, their strengths and their weaknesses;

●      Information on the target: buying behavior, habits and motivations;

●      Supplier information;

●      The regulations.

The business plan is also a critical document when creating your business. It helps you understand whether your project can be profitable by combining a lot of information:

●      The area of ​​the activity;

●      Markets and customers;

●      The marketing strategy;

●      The characteristics of your product or service;

●      Direct and indirect competitors;

●      Business objectives;

●      Prices, manufacturing costs;

●      Distribution channels;

●      Standard controls;

●      Expenses, such as human resources, equipment, rent, etc.

With all of this crucial information, you will make financial forecasts regarding a period of 3 to 5 years, and that's what will make it easier for you to find investors.

Do you want to start a business but lack a good idea? Check out our podcast episode with Christian Hirsig from Powercoders.

 

 

 

Things to know after the creation of a company

 

When your company is created, you must carry out administrative formalities that protect your workers, like registering with the OASI (AHV/AVS) and with a pension fund (BVG/LPP).

You will also need to takeout accident insurance. All salaried workers employed in Switzerland must be insured against accidents at work and occupational diseases. And to ensure that your business is well covered, you should also consider loss of earnings insurance.

 

Finally, companies with their headquarters in Switzerland will have to register for VAT. Note that the registration of a company for VAT is only compulsory if your annual turnover meets a minimum of CHF 100'000.

 

Final Checklist

1.     Find a company name

2.     Choose the legal form

3.     Choose the canton of the head office

4.     Appoint the directors

5.     Open a bank account

6.     Register the company in the Commercial Register

7.     Register the company for compulsory insurance

8.     Register the company for VAT

 

 

 

For all questions related to the creation of your business, you can seek out advice and support from NewCo. NewCo has already supported thousands of entrepreneurs in Switzerland — why not you?

 

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