From recognition of self-employed status with the compensation office through to registration with the trade register, including checking liability to VAT: here is a checklist of formalities to be completed in order to become your own boss.
1. What does being self-employed mean?
In terms of social insurance, persons working for and on their own behalf, who are independent in their work and who assume the financial risk are self-employed. Self-employed persons have a company name (sole proprietorship, SA, SARL, etc.), their own infrastructure, draw up invoices in their own name, assume the risk of collection and work out their VAT. They decide on their organization, their method of working and outsourcing work to third parties. They work for more than one client (Die Selbstständigerwerbenden (BSV) (in German only)).
2. Is this activity subject to authorization?
Some activities or professions are regulated and must form the subject of an application for authorization. For regulated activities, no specific qualifications are required: the granting of the authorization depends on criteria such as reputation, setting up audits (wealth manager) or the existence of a numerus clausus (itinerant trade). For regulated professions (notary, doctor) however, specific training must have been completed or experience in the sector must be proven. Some activities are regulated at federal level, others at cantonal level. Contact the relevant offices or departments (Liste des professions/activités réglementées en Suisse (in French only)).
3. How do you get your self-employed status recognized and with which agency?
People wanting to be self-employed must have their new status recognized with the compensation office. The compensation office checks whether the status can be granted according to the criteria set out above, which stem from the Federal Law on Old-Age and Survivors' Insurance (LAVS) (in German only), the guidelines of the Federal Social Insurance Office (FSIO) and from the case-law of the Federal Court (TF).
4. Which documents are necessary for recognition of this status?
To become self-employed, an affiliation form must be completed; this is available on the compensation office website. Documentary evidence must be attached, such as copies of invoices already drawn up, agreements concluded, offers made, headed paper, a lease or a certificate of civil liability (RC) insurance (Cantonal compensation office).
5. Do you have to have already worked as a self-employed person for this status to be recognized? Do you have to already have invoices?
Yes. You must be able to prove to the compensation office that you have already started your business using invoices, contracts and other proof requested at the time of affiliation. It is recommended that you get your self-employed status recognized in the first few months of activity so that you can benefit from cover as promptly as possible.
6. How do you become self-employed as a cross-border worker?
To become self-employed in Switzerland, cross-border workers must file an application for a cross-border work permit (Permit G) with the Cantonal Population Office. This permit allows workers to work in Switzerland and reside there on the condition that they return to their main place of residence at least once a week. Further information is available from the Cantonal immigration and labour market authorities.
7. How do you become self-employed as a foreign national?
All nationals of Member States of the EU/EFTA, with the exception of Croatians, can start gainful self-employment in Switzerland. An application to do so must be filed with the Cantonal Migration Office. If this application is approved, a residence permit (Permit B) valid for five years and renewable, is issued. For nationals from other countries, only those holding a Permit C (residence permit for nationals of non-Member States) or the spouses of holders of a Permit C or the spouses of Swiss citizens are entitled to carry out self-employment. Other nationals must file an application with the canton (Cantonal immigration and labour market authorities).
8. Is it mandatory to register a business with the trade register in order to get self-employed status? What are the resulting rights and obligations?
No, because the Compensation Office grants self-employed status. However, businesses are required to register with the trade register. For sole proprietorships, registration is mandatory only once turnover reaches CHF 100,000 and above. The company's name is then protected in the scope of its sector. Registration also entails obligations, such as keeping accounts and being subject to debt collection under bankruptcy proceedings (Handelsregister: Rechte und Pflichten für KMU (in German only)).
9. Is there any public financial support for becoming self-employed?
The Confederation and the cantons first of all focus their efforts on the creation of framework conditions and only support the financing of businesses on a subsidiary level. You can find information about this in the section entitled “Public assistance for financing” on the SME Portal (Staatliche Unterstützung bei der Finanzierung (in German only)).
10. Which social security contributions do self-employed persons have to pay?
Self-employed persons must register with a compensation office in order to contribute to the 1st pillar of the pension system (Old-Age and Survivors’ Insurance (OASI), Disability Insurance (DI) and Loss of Earnings Insurance (APG). The total of the contributions varies depending on turnover. And unlike salaried employees who share payment of their contributions with their employer, self-employed persons pay all of them. Self-employed persons who form part of a professional association must register with the association’s social security office. And lastly, persons who employ salaried staff must provide full cover for them (OASI, accident insurance – UV, family allowances, maternity insurance, etc.) (Cantonal compensation office) (Professional fund associations).
11. Which social security contributions are self-employed persons recommended to pay?
Unlike salaried employees, self-employed persons are not subject to the mandatory professional insurance scheme and are therefore free to determine how they handle their social security protection. Therefore, contributing to the 2nd pillar of the insurance system is not mandatory. Nevertheless, it is recommended that they do contribute to this pillar in order to ensure a certain standard of living on retirement. Self-employed persons can recover the capital accumulated when they were salaried employees, then register with the pension fund of their choice. As for the 1st pillar, they pay the contributions in full. The 3rd pillar is also optional (Sozialversicherungen (in German only)).
12. How do you insure yourself when you are self-employed?
A distinction should be made between insurance for yourself, for your employees and for the business. Apart from basic insurance, which is mandatory, self-employed persons are free to cover themselves or not against the risks of loss of earnings in the case of illness or accident. It is recommended that self-employed individuals take out accident insurance, covering work accidents, non-work accidents and occupational illness. They should also take out insurance for loss of earnings in the case of illness, which means collecting their salary in the case of illness and reimbursing the employer all or part of the salary that it has to pay its employees taking sick leave. As for the risks associated with the business, some types of insurance are mandatory (RC, fire insurance); others are optional (legal protection, theft, etc.). Self-employed persons may not contribute to unemployment insurance (Insurance and social security).
13. What type of accounting is required?
Registration with the trade register entails keeping accounts. For turnover of under CHF 500,000, self-employed persons can keep summary accounts (statement of assets and liabilities, statement of income and expenditure, statement of deductions, private contributions). Above this limit, they need to keep full accounts (balance sheet, profit and loss account and appendices). The accounts of capital companies (SA, SARL) also need to be audited. Business documents must be kept for at least 10 years. Accounting can be subcontracted (Alles über Buchhaltung und Revision. Finanzen unter Kontrolle (in German only)).
14. At what point do self-employed persons become subject to VAT?
Self-employed persons making revenue of more than CHF 100,000 are subject to VAT, except in certain sectors (for example, insurance, health or farming). They must inform the Federal Tax Administration (AFC). They can register for VAT or ascertain whether the conditions of liability are met directly on the AFC website (Anmeldung bei der MWST (in German only)).
15. Which taxes have to be paid?
Self-employed persons do not, in principle, have regular income forming the subject of a salary certificate, which constitutes the basis for calculation of employees’ tax. They must file a tax return based on the business accounts and on personal wealth. For private companies and sole proprietorships, results are declared as income. In the case of a limited company however, self-employed persons keep their employee status, given that the SA is a legal entity independent from its owner, and that it is therefore taxed separately. SAs and SARLs pay tax on profits (Le système fiscal suisse (in French only)).
16. Can staff with self-employed status be hired?
Yes. The fact of being able to hire staff and delegate completion of tasks to those staff is actually a criterion for self-employed status.
Last modification 09.04.2021