Advantages and disadvantages of a limited liability company (SARL)

Opting for the limited liability company structure lowers the amount of initial capital invested to start the company. There are, however, disadvantages. 

Advantages

  • The minimum initial capital required is relatively low (at least CHF 20,000).
  • Liability: limited to the share capital (paid in full).
  • Company name: the name can be chosen freely but “SARL” must be added to the name.
  • Founder: only one founder is necessary.
  • Progressive taxation: the splitting of the profits (salary of the partner considered as an expense for the SARL) could tip the point of progressive taxation into a higher tax bracket.
  • Sale of shares: profits made from shares are not taxable.
  • A SARL can be transformed into a limited company without liquidation. 

Disadvantages

  • Double taxation on the SARL’s yield and on its capital as well as on the partner’s income and assets.
  • Establishment: higher start-up costs than for a sole proprietorship.
  • Publication: the public can freely consult the makeup of corporate bodies, capital and shares at the trade register.
  • Higher management fees: protocols, shareholder meetings, tax forms, etc. are costlier.
  • The managers of a SARL are not entitled to unemployment benefits, unless they definitively leave the company or their job; this also applies to spouses working for the SARL (See article "Unemployment insurance and position comparable to an employer’s").

Last modification 02.08.2018

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