Start-up

A limited company (SA) is the legal structure that is best suited to companies that have the potential for high growth.

Who creates what?

Two entrepreneurs create an active start-up in the area of passenger flow.

Scope of activity

The company develops and sells a detection system that identifies and lists travelers and records their movements in order to provide data that will help direct passenger flow. The objective is to shorten the waiting period so that planes can take off on time and passengers do not miss their connecting flights.

Selected Legal Structure/Financing

The entrepreneurs created a limited company because this legal structure is the most suitable for a company with a high potential for growth. For the second time, the company was able to finance the start-up thanks to companies that specialize in venture capital. In the second instance, it is necessary to find financial backers for production and marketing.

The entrepreneurs must take the following points into consideration, primarily:

Intellectual Property

The entrepreneurs themselves established their planned development and patented it. The patent gives them the right to prevent the financial use and marketing of an invention. The patent holder can market the invention themselves, or transfer the rights to a third party. The Swiss Federal Institute of Intellectual Property (IPI) is responsible for examining Swiss patents.

Legal Structure

The company develops a costly technological product, supported by a company that specializes in venture capital. This is why the entrepreneurs have selected the limited company (SA) legal structure. Given that multiple parties are involved in the company, it is necessary to establish clear conditions via a shareholders’ agreement. This type of contract regulates the relationships between the shareholders outside of the articles of association and is therefore not required by law.

Value-Added Tax (VAT)

The limited company is predicting first annual revenue of CHF 400,000. For this reason, the entrepreneurs must register the company in writing with the Swiss Federal Tax Administration (FTA) within 30 days from the start of the tax period (art. 66, LTVA - Federal Act on Value-Added Tax).

Duties

On creation of a limited company, it is generally necessary to pay stamp duty (tax on issue) if the share capital exceeds CHF 1 million (the tax-exempt amount) (art. 6, LT - stamp duty law). The two entrepreneurs make CHF 1.5 million in capital. Therefore they must pay 1% stamp duty on CHF 500,000.

Labor Law

The two entrepreneurs want to employ foreign IT staff. Before they can hire this staff, they need to apply for work permits from the canton administration:

For nationals of an EU or EFTA member state, the work permit must be requested after a period of three months. It is not necessary if the duration of the assignment is less than three months (art. 4, OLCP - Ordinance on the Introduction of the Free Movement of Persons).

For nationals of a country that is not a member of the EU or EFTA, the first work permit can only be obtained in exceptional cases, e.g. for specialized functions and where there is a valid reason (art. 23, LEtr - Federal Act on Foreign Nationals).

Economic Development

As the company is a start-up, the entrepreneurs can benefit from the economic development agency in their canton. It can offer general advisory services and direct them towards useful contacts, such as guarantee organizations and innovation parks.

As the two entrepreneurs have developed a new technology, they have been granted financial assistance from the Swiss innovation agency, Innosuisse.