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Starting a business in Switzerland: the key points
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Starting a business in Switzerland: the key points

Switzerland is internationally recognised as one of the most important business centers in the world. The European ranking of benefits for enterprise creators shows that the conditions are ideal, particularly in finance, the political environment, regulation and physical infrastructure where it scores the best.

Convinced that the Swiss country has many assets, you are wondering how to found a company in Switzerland?

We have gathered in this article a few key points to guide you in creating and identifying the structure that best fits your project.

 

How to start a business in Switzerland?

Before you begin your company, there are a number of things to consider.

On the one hand, it’s important to know if your idea has chances of success and whether consumers will be interested in your products or services. To do this, you can research the market, the competition, the skills you will need, the added value you would like to bring, or your financial capacity. In the Swiss business register you can also consult the names of companies already recorded.

On the other hand, you will have to choose the right commercial legal structure.

And if you are a foreigner, you want to start a firm in Switzerland, it’s crucial to know that you must: be a Swiss resident, have a Swiss legal entity or a Swiss partner. If you are not married to a Swiss citizen or a holder of a C permit, given to foreign nationals. You can apply for this permit after 10 years of continuous residence in the country (five for Americans).

The establishment of a company in Switzerland usually takes between 2 and 5 weeks, but it can also be done in one if the conditions are met and the administrative is properly carried out.

 

What is the legal form of starting a business in Switzerland?

Choosing your structure is an important decision, so you should evaluate the options carefully. For each, there are different advantages and disadvantages to consider. The appropriate form for a foreign organisation in Switzerland depends, among other things, on the type of activity, its duration, the legal and fiscal framework conditions and the strategic objectives of the managers.

There are diverse kinds of companies to select from:

• Individual or Sole Proprietorship

This type of company is most commonly used for the launching of a lucrative independent activity which is carried out on a regular basis and is best suited to the exclusive owners of an enterprise, or to professionals working on their own behalf, such as freelancers, artists, ...

Recording in the trade register is compulsory only if the annual turnover exceeds 100 000.-. However, in all situations, you must have your independence recognised by the AVS (Old-Age and Survivors’ Insurance), proving in particular that you have at least 3 to 5 clients, i.e. you don’t depend on anyone . Liability is unlimited for the manager (personal wealth) and his name must appear in the appellation of the enterprise (e.g. "John Doe Consulting" or "Doe Accounting"). The owner must be a Swiss resident.

The foundation costs are between 700 and 1200 .-. This form can easily be converted into a joint stock company in the case of successful projects.

 

• General Partnership

The partnership is similar to the individual business, but with more than one person involved. It’s an association of persons who jointly operate a commercial organisation. No limited capital is required, all associates must be Swiss residents and the company must also have an address in Switzerland. The name of one of the partners must appear in the denomination of the company (Doe and Co., for example).

The organisation is created by a free-form contract between the participants. It must be registered with the Chamber of Commerce and all associates have unlimited liability (all assets even family). Once the registration is entire, the complete accounts with the statements of losses and profits must be retained.

Like the sole proprietorship, the partnership doesn’t have its own legal personality. So each of the partners is taxed and not the company.

The foundation costs are generally between 2400 and 4400 .-.

 

• Corporation (SA)

The corporation is considered as an independent legal entity, it’s the most widespread form. One of the members of the board or a director must be a Swiss resident, with exclusive rights of signatures. This condition can also be met if two members of the board have joint signatories and live in Switzerland.

Its share capital, determined in advance, is divided into stakes. This form, which corresponds to both large companies and SMEs, is the legal status of use for holding organisations and financial enterprises. It’s often chosen by foreign companies that establish a subsidiary.

An SA may be created by one or more persons, whether legal or natural, but at least one must be a shareholder. Liability is limited to the value of the company’s assets and the minimum amount of equity is 100,000.-, of which 50,000 .- must be paid in full to set up the firm (the rest after a certain period) .

The choice of the name of the corporation is entirely free, but the appellation of the organisation must be indicated. The processing of the registration usually takes between two and four weeks, after which the enterprise is a legally recognised entity. Creation costs can vary between 1900 .- and 7000 .- depending on the channel used (traditional or electronic).

The corporation company is managed by the board of directors, which is composed of one or more members, not necessarily shareholders or Swiss resident.

 

• The limited liability company (LLC-SARL)

The SARL is a legal entity requiring a predetermined minimum share capital of at least 20,000 .-, at least one general manager residing in Switzerland and at least two shareholders. Each shareholder owns shares in the capital according to his contribution and may assign them on simple written agreement.

The limited liability company is particularly attractive to small and medium-sized businesses because no board is necessary which makes the structural costs lower. The manager is fully responsible and the name of each partner must be published when he joins the organisation. As for the SA, the choice of the appellation is free, but the legal form must be indicated there.

The foundation costs vary in general from 1800 to 7000 .-.

 

• Simple partnership

Simple partnership corresponds to a contract between several natural or legal persons whose purpose doesn’t imply the recording of the company in the commercial register. Anonymity is ensured to the outside, and each partner is personally in solidarity with the common project.

 

• The joint venture

The joint venture is becoming more and more frequent as a form of partnership which has no common rules and is favoured by joint activities with a Swiss partner. When it comes to small projects, the joint venture can be used as a simple enterprise. However, this form is often created as a joint participation in the capital of a newly founded capital company.

 

• Branch

The branch corresponds to a subsidiary legally dependent on a head office that operates outside the parent country. However, from a financial point of view, it functions independently. It’s the third most commonly used form of business for a foreign organisation.

In order for an overseas company to set up a branch in Switzerland, it must have an authorised representative domiciled in Switzerland.

At the legal level, the branch is part of the foreign enterprise, whereas in terms of accounting and taxation it’s considered a Swiss company. However, it can carry out interventions, and contracts in its own name.

No particular capital is required to create a subsidiary, whose foundation costs start from 1000 .-. Its name must be the same as the primary firm, special additions are allowed, the legal form must be indicated and if the main organisation is foreign, its location and that of the branch must be specified.

 

• The SCPC Collective Investment Partnership

A less common derivative of the partnership, similar to the Limited Liability Partnership of the Anglo-Saxon countries, SCPC is reserved exclusively for qualified investors as a venture capital investment vehicle. Unlike limited partnerships, in which the partner is responsible [natural person], here the limited partner must be a public limited company.

This legal form was created in 2006 to strengthen the Swiss financial market by defining the conditions for the provision of professional services for specialists in hedge funds, private equity and venture capital.

 

Once you choose your legal status, you will need to find a bank to open a deposit account for your principal and have a current account for your business. The multiplication of regulations and banking requirements can sometimes complicate this step when you are not a Swiss resident. Indeed, our fiduciary saw situations where the trickiest in creating the company was this. Some banks may, for example, agree to open a deposit account, but not a current account ... So be careful not to neglect this phase.

 

 

How to officially register your business in Switzerland?

The company will become a legal entity only after being registered in the commercial register.To record the enterprise, you must file your signed application with all the persons authorised to act on behalf of the organisation having the power to sign, together with the following documents to the Commercial Registry:

• the notarial act of incorporation

• a certified copy of the by-laws

• the declaration of acceptance of the members of the board of directors and the auditors

• confirmation by a Swiss bank that the initial capital has been paid

• the resolution of the board regarding the constitution of the board of directors

 

The entry in the commercial register can be summarised in 6 steps:

1- Drafting of statutes in the presence of a notary to cancel the signatures of the form and authenticate the statutes and the act of incorporation. => about 7 days at the price of about 0.1% of the capital

2- Deposit of capital on a Swiss bank account. => about 1 day

3- Submission of the deed certifying the articles in the register of local commerce => about 9 days for about 600 .- plus 0.2% of the capital

4- After receipt of a contribution by mail, pay the stamp tax to the bank or post. => 1 day for about 1% of the capital

5- Registration with the Federal Tax Administration for VAT. => 1 day

6- Enrolment in the social insurance system. => 1 day

 

What accounting obligations for a company in Switzerland?

All corporations must keep account books, accounting records and associated records for 10 years. However, the structure and quality of accounting depend on the financial size of the enterprise.

The requirement to keep accounts and prepare financial reports applies to:

• Individual properties and partnerships that generated at least 500,000 turnover in the last fiscal year.

• Legal entities.

 

Whereas in the following contexts, it’s not compulsory to take account of receipts, disbursements or financial situation:

• exclusive properties and partnerships with a turnover of less than 500 000.- during the last financial year

• associations and foundations without having to register in the commercial register

• foundations are exempted from the appointment of an auditor under Article 83 para. 2 of the Swiss Civil Code.

 

When you create a business in Switzerland, based on established thresholds, you may have a legal audit requirement. According to this threshold, the usual verification and limited legislative controls are distinguished.

If two of the following thresholds are exceeded in the last two business years, the Company’s ordinary accounts are required to be revised:

> total balance of 20 million .-

> turnover of 40 million .-

> annual average of 250 full-time equivalent employees.

Organisations below these thresholds are subject to a limited regulatory review or may exclude an examination entirely with the consent of all shareholders and if there are fewer than 10 full-time equivalent employees.

 

Each year in Switzerland, thousands of companies are born, more than a third are created by international investors. The most frequently used establishment structures for a foreign organisation are the branch and the subsidiary [as a corporation or limited liability company]. Fiscal aspects play a decisive role in this choice. This is why it’s recommended to be advised by a fiduciary from the start of your business. Knowing all the local, federal and cantonal authorities, you will be able to accompany you in legal and tax matters and avoid unpleasant surprises that can be expensive.

 

Useful links:

- The very complete Guide for Business Creator and the Guide for Investors in Switzerland

- SME portal of the Federal Administration: https://www.kmu.admin.ch/kmu/en/home.html

- Chamber of Commerce: https://www.sihk.ch/

- Trade register: https://www.zefix.admin.ch/en/search/entity/welcome

- Portal dedicated to welcoming internationals: http://www.cagi.ch/