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").
