Who hasn’t considered starting his own business after hearing the inspiring success stories of Bill Gates or Steve Jobs? In fact, starting a business is a great idea, but in order to concretize it, every Entrepreneur has to consider the legal form of his intended business. In this article, we are going to provide an insight into the main legal forms the Entrepreneur may choose for his Swiss-based company.
There are two types of companies in Switzerland: On the one hand, the Joint-Stock companies which constitute distinct legal entities. On the other hand, the Partnerships (Sole Proprietorship, Simple Partnership, General Partnership) which lack separate legal personality and are thus closely connected to the identity of their founder.
- Partners’ Liability: Unlike Joint-Stock Companies, partners in a partnership are personally, jointly and fully liable for business debts.
- The use of a Notary: Setting up a partnership does not require a Notary. However, when constituting a partnership, it is advisable to contact a Lawyer who will draft a document that outlines the rights and obligations of each party. Such procedure may prevent you from any eventual litigation in the event of a misunderstanding that looks insignificant at first glance.
- Tax declaration: Given that a partnership lacks any separate legal personality, each partner is taxed on both its share of revenue and fortune in the company as well as on both its private wealth and revenue.
- Entry in the commercial register: As long as a sole Proprietorship hasn’t reached an annual revenue of 100 000 CHF, its entry into the commercial register shall not be required. Regarding the Simple Partnership, its entry into the commercial register is not possible. Last, the members of a General Partnership, with or without a commercial activity, are required to register their company in the commercial register.
- Minimum Capital: The law does not require any minimum capital for Partnerships.
PUBLIC LIMITED COMPANY (PLC):
- Minimum Capital: the minimum capital required for the registration of a PLC amounts to 100 000 CHF that can be paid by contribution in cash or contribution in kind.
- Shareholders’ Liability: Private and commercial Wealth are separate. The liability of shareholders is limited to the share capital.
- Minimum number of Shareholders: A PLC may be established by a single person.
- Tax Declaration: Being a separate legal entity, a PLC is taxed separately from its shareholders. It should be noted that the profits and the Share capital of the Company are subject to double taxation: Concerning Profits, a first tax will be levied on the profits of the company, while a second anticipatory tax will be levied on the dividends distributed to Shareholders and resulting from the profits made by the company. With regard to Share capital, the company pays a capital tax, while shares, considered as part of the shareholders’ personal wealth, will also be taxed.
- Notary: In Switzerland, the establishment of a PLC has to be authenticated, that is to say with the assistance of a Notary.
- Entry in the commercial register: A PLC has to be registered in the commercial register of its headquarters. The registration procedure will be taken care of by your Notary.
lIMITED LIABILITY COMPANY (LLC) :
- Minimum Capital: the minimum capital required for the registration of an LLC amounts to 20 000 CHF that can be paid either by contribution in cash or contribution in kind.
- Shareholders’ Liability: Shareholders are not personally liable for Business debts. Their liability is exclusively limited to the Share capital.
- Minimum Number of Shareholders: A PLC may be established by a single person.
- Tax Declaration: As for the PLC, an LLC is taxed separately from its shareholders. Additionally, its Profit and share capital will be subject to double taxation.
- Notary: As for the PLC, the establishment of an LLC has to be authenticated, that is to say with the assistance of a Notary.
- Entry in the commercial register: An LLC has to be registered in the commercial register of its headquarters. The registration procedure will also be taken care of by your Notary.
The establishment of a company in Switzerland: an issue among many
The question of the legal form to choose is only a question among many, to which Entrepreneurs are being confronted during the establishment of their company in Switzerland. Here is a short non-exhaustive list of frequently asked questions:
- Should I pay a value added tax (VAT)?
- How to draft a Shareholder agreement?
- How to draft a labor contract?
- What should I do in case my supplier doesn’t fulfill his contractual obligations?
- How to protect my Trademark and company Name?
- What to do if a client doesn’t pay me?
- In the event of conflicts between shareholders or Partners, what are my rights and how to proceed?
The Legal Team of I-Law Company will advise you on all matters related to corporate Law and will assist you in the process of establishing your own company in Switzerland.
Please do not hesitate to contact us in order to get a price quote for our service at: firstname.lastname@example.org
Our Team is capable of advising you in the following languages: French, English, German, Russian and Arabic