I have been meaning to write about this topic for a long time and can’t wait any longer since I am getting almost daily inquiries on how to start a company in Switzerland. By answering the most frequent questions I hope to be able to help more quickly in the future. So let’s dig in and get to the FAQ around founding a Swiss business.
Basics on how to start a business
I am assuming that you have a business idea and have made (some kind of) a business plan, even if it is just on a napkin. Ideally you have already started and have a pilot version of your product or you have beta-tested your service. In this post I will not cover the importance of a well thought-through business plan, marketing plan and sales plan as well as a clear vision, mission, strategy, goals etc. Just let me say this, that you should have the foundation in place before you start the process of founding a company.
Legal Structures for a business in Switzerland
The biggest decision you take when registering your business is picking the legal structure. There are basically three main legal structures for Swiss businesses.
CLICK HERE to download the “Swiss Business Structures” PDF.
Procedure for starting a Swiss company
Depending on the type of legal structure you choose the procedure is quite different. Here I will only highlight the difference between sole proprietorship and limited liability company.
Most entrepreneurs start with a sole proprietorship (SP) as this is the cheapest and simplest way to start a business. You can later on change a SP into a limited liability company (LLC). The social insurances registry (SVA) assumes that you start your business and then register it after you have acquired a few customers and are earning more than CHF 2’300 per year. As soon as you earn more than CHF 2’300 you are required to pay social insurances from your income. Since the registry works hard to eliminate fake self-employment you have to fill out a detailed form on your business and name a few customers (at least three) in order to prove that you are not just working for one customer. If the registry is in any doubt about your business purpose then they can decline your application. The founder of the SP does not have to live in Switzerland but needs to have a work and residence permit.
Here is an example from Zurich for registering a SP with the social insurances registry of canton Zurich which is the mandatory piece of the registration. Registering with the trade register is optional for SP earning less than CHF 100’000 revenue but it can be beneficial to have your business publicly listed especially if you import any goods.
Documents that may be required to prove that you are not entering a fake self-employment:
- Business plan
- Offers to customers
- Rental agreements
- Marketing material
- Customer contracts
- Supplier contracts
Limited Liability Company
More and more entrepreneurs choose a limited liability company (LLC) as they can choose a name independent of their family name and there is no application process with the social insurances registry. Basically the registry assumes that if you are willing to invest CHF 20’000 capital (or equally valuable assets) you are probably not a case for fake self-employment. Still if you don’t show any profits after three years in business they will inquire about your purpose and you may have to prove that you have at least three customers. The registration process with the official company registry (Handelsregister) is a simple application after you have prepared your documents which include founding documents with company bylaws, all stamped from a notary. Before the notary stamps your documents you will have to have a proof that you paid the share capital into a temporary holding account at your bank (banking fee CHF 200). At least one representative (with signing rights) of the company has to live and have a work and residence permit in Switzerland.
Here is an example from Aargau for registering a LLC with the company registry of canton Aargau.
- Confirmation from your bank on paid share capital and/or confirmation from a notary on the value of your assets
- Founding documents stamped by notary
- Company bylaws stamped by notary
Documents that are good to have but generally not required
- Business plan
If you are an EFTA or EU citizen with a working permit in Switzerland there is no limitation for you founding a company in Switzerland. Coming from an EFTA country myself I founded my LLC very easily just showing my passport and my B EU/EFTA permit and did not have to show any other documents except the ones I have already mentioned above. If you have a B permit then I recommend you found your company while you still have a valid permit. When renewing your permit you may have to proof that you have the financial means to live in Switzerland if you are not employed or married to someone with a valid permit. This may pose a problem if you are renewing your permit in the starting phases of your boot-strapped business.
Non-EFTA/EU citizens who have a C permit or are married to a Swiss citizen have the right to register a company in Switzerland. Everybody else will have to apply for the right to found a Swiss company. You should inquire about the necessary documentation and funds with the migration authorities in your canton. Most cantons require non-EFTA/EU employees (also self-employed) to have minimum salary of CHF 120’000 to get a B permit. Assuming you cannot pay yourself a salary in the beginning you may at least have to prove that you have the funds to provide for yourself. Once you have all the necessary documents together then you should let the migration authorities go through the application with you. The authorities will want you to prove that your intended business will have a “lasting positive impact in the Swiss labor market”. The best way to be accepted is to have a detailed business plan as well as the documents often required for sole proprietorship, see above.
Update: Not living in Switzerland
If you are a foreign national, don’t live in Switzerland, and don’t have a Swiss residence permit then it will be very difficult for you start a company in Switzerland. The only way I know is to find someone else to start the company for you. There are lawyers that can help with this kind of structure but only if you have the funds necessary to pay for very expensive legal services and maintenance of the company.
What to do when I leave the country
This is a question I often hear from expats who want to start a business in Switzerland but are wondering if it is worth registering a business for a limited time. Well, you basically don’t have a choice. If you are earning more than CHF 2’300 from your business, you are required to register and pay social insurances. The best way is probably to register a sole proprietorship and then to close down your business when you leave as you can not sell a SP. If the company is location-independent then you can take the assets/idea with you and start a new business in a different country and your customers will not know that anything has changed. If the company on the other hand is location-dependent, you could either consider selling the assets and/or the idea before you leave or you change it into a LLC and have a representative run it for you, this person needs to live and have a work permit for Switzerland.
For further information I recommend gruenden.ch (in German and English) where the whole spectrum of starting a business in Switzerland is covered in detail (supplied by the canton of Zurich). The Swiss Federation also has good information on its KMU Portal (in German, Italian and French).
If you have a relatively simple business then you can prepare your founding documents and company bylaws online with StartBiz (in German, Italian, French and English). A lawyer will charge you at least CHF 500 for preparing these documents for a LLC and stamping them as a notary. I paid CHF 800 myself for a local lawyer but I had gotten an offer for CHF 500 from another lawyer in a different canton. Today I would prepare these documents myself and only get a notary to stamp them. Here is a list of online notary services.
If you are wondering why I know so much about Swiss startups then here are few facts:
- I have been running companies over 12 years
- I have been managing director for three different Swiss startups
- I was involved in starting one company from A to Z and then 2 years later I started my own company (GmbH).
- I have done a Swiss startup course on top of the startup courses I have done in other countries plus I have an MBA
Are you ready to start your company and want some business mentoring? Then check out my Work with Me page.
Update: Note, if you don’t have Swiss residence permit then I can’t give you any advice beyond what is written here above. I am not a lawyer and cannot help foreigners who don’t have a Swiss residence permit start a company in Switzerland.