Anyone wanting to set up or restructure a business needs to decide on a legal structure. Be careful, as not all legal structures are suitable for all businesses.
This section will provide future entrepreneurs with all the necessary information to choose the most appropriate legal structure for their business.
The three most common structures for SMEs in Switzerland are: the sole proprietorship, the limited company (SA) and the limited liability company (SARL).
Partnerships and capital firms are mainly differentiated by risk-taking. Anyone wanting – or able – to assume risks on their own and take on liability for debts using their own assets can simply register with the trade register as a sole proprietorship. On the other hand, entrepreneurs setting up with colleagues will be served better by setting up a general partnership or a limited partnership.
Anyone wanting to take less financial risk can limit themselves to a certain amount by setting up a capital firm, i.e. a limited liability company (SARL) or a limited company (SA). It is also possible to provide financial backing for a commercial activity within an association or a cooperative company.
Here are a few factors to be taken into account when choosing the legal structure:
- Capital: the set-up costs, necessary funding and minimum capital requirements vary depending on the legal structure. Capital requirements for the current year as well as for the next 3 to 5 years need to be taken into account.
- Risk/Liability: as a general rule, the greater the business risk or the larger the financial contribution, the better it is to opt for a limited liability company.
- Independence: depending on the legal structure, room for maneuver is restricted. It is therefore a question of ascertaining whether the entrepreneur wants to work on their own or with partners, and whether they prefer to include investors or partners in their activity.
- Tax: depending on the company structure, the income and assets of the business and of the owner are taxed separately or together. The tendency is to tax the significant income of capital firms less than a partnership or sole proprietorship.
- Social security: some social insurance schemes are mandatory, optional or non-existent, depending on the legal structure. Owners of a sole proprietorship are not insured against unemployment and signing up for a pension fund is optional. By contrast, in the case of SAs and SARLs, the director of the company is also considered an employee and included in social insurance schemes.
Last modification 09.01.2023