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The joys of self-employment: Which legal form would you like?


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Partnership or corporation, personal or limited liability and how much capital do you need to bring in? Questions over questions, all (really all) of which I have asked myself.


It's the beginning of April 2024 and I want to start my business. I want to work as a freelance IT consultant for various clients. Maybe work on a project here and there for a longer period of time. The individual mandates should not take up more than 60% of my capacity. I am a small but mighty one-woman show. It will stay that way for the time being. So what legal form should it be?

After studying business management a few years ago, where I mainly learnt about the legal situation in Austria, I decided to do some research. The good news first - setting up a company in Switzerland is surprisingly easy.

I inform myself online, pore over books, laws and guidebooks, and take part in start-up seminars. There is a lot of free advice available in the form of webinars. It should be mentioned that although this type of advice provides a good overview, it is always aimed at the general public. Individual cases cannot be discussed (sufficiently) in this context. So I'm going through more books and guides.

Here are my favourites:

  • "Ich mache mich selbständig!" by Norbert Winistörfer

  • IFJ Institut für Jungunternehmen AG, www.ifj.ch

Both sources provide numerous helpful insights, advice and checklists on all relevant topics relating to setting up a company.

Nonetheless, good advice is expensive and nobody can help you decide which legal form you should choose.

There were two options for me at the time. The sole proprietorship and the limited liability company (GmbH).

In the interests of completeness, I will list all possible company forms below.

Comparison of legal forms Switzerland
Comparison of legal forms Switzerland
Comparison of legal forms Switzerland

In the end, I decided in favour of a sole proprietorship. In the following, you can find out the reasons for my decision and what you should look out for when choosing the legal form.

As I mentioned at the beginning, it was clear to me that I would be working alone. I wanted to keep the bookkeeping as simple and pragmatic as possible.Many people say that you have a better overview with double-entry bookkeeping. That may be true for many businesses. For me as a one-woman show, it represents, in my view, avoidable extra work.I am a very meticulous person (some would say almost pedantic 🙈) and I know my finances at all times. I don't need a chart of accounts for that. So why should I burden myself with double-entry bookkeeping? A good income and expenditure statement is enough for me -> Sole proprietorship

Completing tax returns is not my favourite thing to do either. But who am I telling?...Sorry, to the tax consultants and trustees out there. In any case, you only have to complete one tax return for a sole proprietorship. Namely the one that you have to do anyway as a private individual. With a corporation, you are employed by your own company. So you have to make two tax returns. One for the company, i.e. for the legal entity, and one as a private individual. This can quickly become complicated and you often have no choice but to commission a fiduciary office to do it. Of course, this costs money, which I would like to invest elsewhere at this point. -> Sole proprietorship

And that brings us to the next topic: capital or the necessary start-up capital.

If you set up a partnership, there are no specific regulations regarding the starting capital for the company. However, to be on the safe side, you should always make as precise a financial plan as possible in advance.

In the case of corporations, between CHF 20,000 and CHF 100,000 must be contributed to the company when it is founded, depending on the legal form.

I wrongly assumed that this money is tied up for the long term. This is not the case, at least with a GmbH (Ltd.). The start-up capital is only blocked in a bank account during the formation process, i.e. for a few weeks at most. As soon as the formation is complete, the new GmbH (Ltd.) can operate with the capital. -> Sole proprietorship (due to my mistake)

Let's move on to liability. Many people have great respect for personal liability when setting up a partnership. I can well understand that and I can only say - it depends.But first the good news - your partner is not normally liable for your business debts.Generally speaking, married couples in Switzerland are subject to what is known as joint ownership. This means that each person is liable for their own debts. In the event of divorce or death, any accrued assets (acquired assets) during the marriage are divided equally. If a couple has agreed on separation of property, the liability for debts does not change. In the case of acquired assets, however, there is no division in the event of separation or death. This can be very unfair under certain circumstances. Keyword: unpaid care work.Particular caution is required in the case of joint property. This can quickly become confusing and both spouses are liable to third parties.

My personal liability is no obstacle for me. In addition, the legal guidelines apply (see the Swiss Code of Obligations) and you really have to behave badly or act with intent or gross negligence. The most important thing for me was that my partner could not be asked to pay. -> Sole proprietorship

Finally, the crux of sole proprietorship. Just because you have set up your company does not mean that you are recognised as self-employed. This must first be confirmed by the SVA (Social Insurance Institution). This confirmation by the SVA in your canton is intended to prevent so-called bogus self-employment. Switzerland wants to protect employees and hold companies accountable. Companies are not allowed to pass on their legal obligations to freelance employees. So far, so obvious.

But if, like me as a sole trader, you mainly work with larger companies, the whole thing becomes a real challenge.You can't work for just one company, otherwise you're considered a bogus self-employed person. In the worst case scenario, this means that your clients will be asked to pay your social security contributions afterwards.It is therefore best to work for several (at least 2-3) companies and at different percentages. As soon as you can prove that you are economically independent, you can register with the SVA for verification. You can find out more here: https://svazurich.ch/formulare/2000_ak/2800_vb/2802_vb2_ahv_anmeldung_fuer_selbstaendigerwerbende/hinweise.html

I still have to take this test. Keep your fingers crossed that everything goes well!

What happens if I am not recognised as self-employed?

Well, I'll either have to set up a limited company or go back to being an employee. I don't fancy the second option at all, so in my case it will be a limited company.

With a GmbH (Ltd.), nobody has to confirm that you are self-employed. With a limited company, you set up a legal entity and are an employee with your own company. Sounds complicated, but somehow it is and somehow it isn't.

I first try to get my self-employment confirmed by the SVA. I'll take it as it comes, or as they say in my home country, Austria: "Schau ma mal, dann seh ma schon”, which roughly means “we’ll cross that bridge when we get there”.

You can find out how the Swiss insurance system works and how I found my way through this jungle in the next part of "The joys of self-employment: The Swiss insurance system".


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