The choice of legal form for companies in Switzerland

The choice of the appropriate legal form is one of the first important decisions when starting a business in Switzerland. It affects management, liability, tax burden, and financing options. In this article, we will explore the most common legal forms in Switzerland and their respective advantages and disadvantages.

Sole Proprietorship

The sole proprietorship is the simplest and most commonly chosen legal form, particularly suitable for individual entrepreneurs. The owner runs the business alone and is liable without limit with their entire assets.

Important facts:

- Incorporation: No minimum capital requirement, easy to establish.

- Liability: Unlimited liability with personal assets.

- Taxes: Income is taxed as personal income.

- Company Name: Must include the name of the owner.

The advantages of this legal form include easy establishment and full control by the owner. However, it carries a high financial risk due to unlimited liability and complicates the transfer of the business.

Partnership

The partnership is suitable for small to medium-sized enterprises run by several individuals together. All partners are jointly liable with their entire assets.

Important Facts:

- Incorporation: No minimum capital requirement, established through a partnership agreement.

- Liability: Personal, unlimited liability of the partners.

- Taxes: Income is attributed to the partners as personal income.

- Partners: At least two natural persons.

The partnership is flexible and easy to establish; however, personal liability is a significant disadvantage as it represents a high financial risk for all parties involved.

Limited Liability Company (GmbH)

The GmbH combines elements of both capital and personal companies and is ideal for small and medium enterprises. The liability of the partners is limited to the contributed capital.

Important facts:

- Incorporation: Minimum capital of 20,000 CHF required.

- Liability: Limited liability to the company capital.

- Taxes: GmbH is taxed as a legal entity.

- Partners: Can be established by one or more individuals.

The GmbH offers protection through limited liability and flexibility in management; however, the establishment costs are higher, and there is double taxation.

Public Limited Company (AG)

The AG is the preferred legal form for large companies and offers extensive opportunities for capital raising. The liability of the shareholders is limited to the share capital.

Important Facts:

- Incorporation: Minimum capital of 100,000 CHF, of which at least 50,000 CHF must be paid in.

- Liability: Liability limited to the share capital.

- Taxes: Taxed as a legal entity.

- Shares: Free trading of shares possible.

The AG is ideal for large companies as it can raise capital through shares and the liability is limited. The downside is the high establishment costs and complex administrative requirements.

Cooperative

The cooperative serves the economic self-help of its members and is particularly suitable for community projects. Each member has equal rights, regardless of capital contribution.

Important Facts:

- Incorporation: At least seven founding members required.

- Liability: Limited to the cooperative's assets.

- Taxes: Taxed as a legal entity.

- Members: Equal decision-making by all members.

Advantages of the cooperative include democratic decision-making and limited liability. The disadvantage is the limited financing options and often complicated decision-making process.

Conclusion

The choice of legal form depends on various factors, such as the number of partners, the liability risk, and the required capital. While the sole proprietorship is simple and cost-effective, GmbH and AG offer more protection and flexibility. The partnership is suitable for close partnerships, and the cooperative for community projects. Thorough consulting is advisable to make the optimal decision.