Social insurances (AHV/ IV/ EO/ ALV/ Accident) for a sole proprietorship

Social insurance is an important issue for self-employed individuals from the start of their business. Here is a brief overview of the most important points to consider when starting a self-employment.

AHV (Old Age and Survivors' Insurance)/ IV (Disability Insurance)/ EO (Income Replacement Ordinance)

For employees, the employer takes care of the social insurances. Self-employed individuals, i.e., owners of a sole proprietorship,  must register themselves with the respective AHV compensation fund if they generate more than CHF 2,200 in profit per year (Art. 19 AHV Ordinance). This then clarifies whether one qualifies as self-employed under social insurance law or not. The criteria for this have been laid down by the AHV in a factsheet for the self-employed.Since the profit also corresponds to the salary for a sole proprietor, one pays AHV contributions on the entire profit of the sole proprietorship (as opposed to, for example, a GmbH, which only calculates AHV on the salary, but not on the profit share of the partners). The rate for AHV, IV, and EO is 10.1% plus administrative costs. Reduced rates apply for profits under CHF 54,000.

Pension Provision

Both with the 2nd pillar (BVG) and the 3rd pillar (3a/3b), the sole proprietor is free to choose the most suitable solution for himself or even to waive insurance. It is even possible to pay out the pension fund assets to establish the business (see previous blog post). In the long term, however, a complete waiver of all pension solutions is certainly not recommended.

Unemployment (Unemployment Insurance)

Self-employed individuals cannot voluntarily insure themselves against unemployment, and therefore no premiums need to be paid.

Other Social Insurances

All other insurances are not mandatory for sole proprietorships. Voluntarily, a self-employed individual can take out accident insurance (with SUVA or privately) and daily sickness benefit insurance. This is advisable in most cases, as the sole proprietor cannot continue his business in the event of an accident or illness and must bridge the resulting loss of income elsewhere. Besides, depending on the business, additional private insurances are recommended, e.g., liability insurance or legal protection insurance.