Business structures in Switzerland: sole proprietorship, partnership, LLC or SA?

Swiss business structures compared

These are Swiss legal forms. A Swiss LLC is not the same tax arrangement as a US LLC, and an SA does not have to be listed on a stock exchange. French-speaking Switzerland uses Sàrl and SA; their German equivalents are GmbH and AG.

Use the comparison to make an initial shortlist. Personal guarantees, articles of association and a founder’s individual circumstances can change the assessment. The cheapest business to register is not necessarily the most suitable to operate.

Sole proprietorship: one owner, personal responsibility

A sole proprietorship, called a raison individuelle in French and an Einzelunternehmen in German, is not legally separate from its owner. There is no minimum capital and, in principle, no notarised incorporation deed. It can suit an individual starting a business with manageable commitments.

The key trade-off is liability. Private assets can be exposed to business debts. Even a low-turnover business can carry significant risk through a long lease, employees, borrowing or potential claims for damages.

Commercial Register registration is generally compulsory once the previous financial year’s turnover reaches CHF 100,000. Liberal professions and farmers are exempt where they do not operate a commercially organised business. Voluntary registration may be possible in other cases.

Recognition as self-employed is a separate decision made by the social insurance compensation office. An entry in the Commercial Register does not itself establish self-employed status for Swiss social insurance.

A sole proprietorship can employ staff, but it has only one owner and no shares to offer an investor. If you want another person to own part of the business, you need a different structure. Explore Karpeo’s support for starting a sole proprietorship for help with the registration process.

General partnership: shared business, shared exposure

A general partnership, or société en nom collectif (SNC), brings together at least two individuals. No statutory minimum capital applies. Commercial Register registration is required without waiting for turnover to reach CHF 100,000.

It does not have legal personality, although it can acquire rights and enter into obligations under its business name. Partnership assets answer for debts first. Partners then bear personal, joint and several liability under the conditions set out by law.

Your exposure is not necessarily limited to your agreed percentage of the business. A creditor may claim the full debt from a partner who is liable. An internal agreement can govern reimbursement between partners, but cannot reduce the creditor’s rights.

Before choosing this form, agree on signing authority, profit allocation, contributions and what happens if someone leaves. Compare it carefully with an LLC if your business will take on long-term commitments: straightforward formation can come with substantial financial interdependence.

Swiss LLC: a separate company with CHF 20,000 capital

A limited liability company can have one or more founders, including individuals and legal entities. Its minimum share capital of CHF 20,000 must be fully paid up. It is a separate legal person and is normally liable for its debts with all its assets, not just the original share capital.

Limited liability does not remove personal guarantees, directors’ or managers’ liability for breaches of duty, or valid additional contribution obligations in the articles of association.

Members and their holdings appear in the public Commercial Register. Management is organised through the company’s managers. The company must be represented as required by law by a manager or director resident in Switzerland.

An LLC often suits an owner-managed business with a relatively stable group of founders. Investors can join, but membership interest transfers and governance arrangements should be planned in advance.

The capital remains company money. After registration and the bank’s release procedure, it can fund genuine business expenditure. Budget separately for the notary, registration, banking and operating costs. See our Swiss LLC formation service for the scope of support and current terms.

Swiss corporation: planning for investors and ownership changes

A corporation, or SA/AG, is also a separate legal person and can have a single shareholder. Minimum share capital is CHF 100,000. At incorporation, at least 20% of the nominal value of each share must be paid up, and total paid-up capital must be at least CHF 50,000.

Any unpaid balance remains owed by the shareholders. Paying CHF 50,000 into a corporation with CHF 100,000 subscribed capital does not eliminate the remaining contribution obligation.

The share structure is often chosen for investment rounds or evolving ownership. Transfers may still be restricted by law, the articles or a shareholders’ agreement. An SA does not guarantee funding or an easy sale.

Shareholders are generally not listed as such in the public Commercial Register extract. This is not absolute anonymity: the company, banks and competent authorities obtain ownership information under the applicable rules.

The board of directors manages the company and may delegate management within the legal framework. Representation by a director or board member resident in Switzerland must be ensured. An SA can suit an SME or family business as well as a larger group. Explore our Swiss corporation formation service.

Simple partnerships, cooperatives and holding companies

A simple partnership is an arrangement between at least two people pursuing a common purpose. It has no legal personality and cannot be entered in the Commercial Register. It may arise without a written agreement. It is not a way to avoid the obligations of another legal form where the activity falls within that form’s rules.

A cooperative generally serves members’ shared economic interests. At least seven members and a public deed are required at formation. It does not have a fixed capital determined in advance; its funding and governance need to fit the collective project.

A holding company describes what a company does—holding interests in other businesses—not a separate legal form. A holding company may be an SA or an LLC.

Associations, foundations and limited partnerships require a separate assessment of their purpose and rules. Do not choose one solely because its initial capital requirements appear lower.

Tax, social insurance and accounting: the practical differences

Personal taxation or a separately taxed company

A sole proprietor’s profit is attributed to the owner, and partnership profit to the partners. An LLC or SA is a separate taxpayer. Owners report their own income and assets under the applicable personal tax rules.

No structure is automatically the most tax-efficient. Compare the same operating profit, personal cash needs, residence, salary and distributions. Include annual administration costs. An apparent saving can disappear once the assumptions are aligned.

Social insurance needs planning

A person recognised as self-employed contributes under that regime. The activity is not insured against unemployment. Accident cover, income protection during illness and retirement provision should be assessed separately.

Someone employed by their own LLC or SA falls under the employee system for that work. Paying contributions does not guarantee unemployment benefits while they retain an employer-like position. The company’s budget must include employer contributions and occupational pension costs where applicable.

VAT is a separate question

VAT liability depends on activities and the relevant turnover rules, rather than legal structure alone. The ordinary CHF 100,000 threshold is assessed using relevant worldwide turnover. It must be considered separately from the Commercial Register threshold. Karpeo provides Swiss VAT registration and return support.

Legal entities keep full accounts. Sole proprietorships and partnerships below CHF 500,000 annual turnover can use simplified records, but must still track income, expenditure and assets. Our accounting services for Swiss SMEs and freelancers cover the ongoing work after launch.

Six questions to choose your business structure

1. What personal risk can you accept? List leases, loans, employment contracts and potential claims. A low-cost launch is not the same as a low-risk business.
2. Who will own the business? A sole founder can use a sole proprietorship, LLC or SA. Multiple owners rule out a sole proprietorship. A general partnership is unsuitable where a partner is itself a company.
3. What funding is actually available? Separate statutory capital, incorporation expenses and working capital. Meeting the legal minimum does not guarantee enough cash for the first month.
4. What will each founder do? Distinguish investors, people working in the business and decision-makers. Equal ownership does not automatically allocate work or responsibilities.
5. Will ownership change? Plan for investors, employee participation or succession before the structure becomes difficult to change.
6. What is the full annual cost? Compare formation, bookkeeping, payroll, any audit, taxes and insurance using both a realistic forecast and a lower-revenue scenario.

Example: two professionals with CHF 30,000 available and a substantial lease commitment may consider an LLC to separate the business from their personal assets. A general partnership requires less statutory capital but creates more personal exposure. They still need to assess the lease, any guarantees and the cash needed after incorporation.

Can you change legal structure later?

Yes, but it requires a genuine legal and financial transaction. Assets, liabilities, contracts and sometimes employment relationships need to be addressed. The legal and tax treatment depends on the starting point and destination.

A sole proprietorship may be contributed or transferred to a company; an LLC may be converted into an SA subject to the relevant conditions. Tax neutrality is not automatic. This is more than a change of business name.

Keep reliable accounts from the outset and revisit the structure before a major investment, significant hiring or a new business partner joining.

Finally, company ownership and permission to work in Switzerland are separate issues. A founder living abroad must check work and residence requirements and the actual operating arrangements before incorporation.

Related practical guides

Compare an LLC with an SA, follow the SA incorporation steps, or prepare bookkeeping for a sole proprietorship. Whatever the structure, assess Swiss VAT registration separately.

Frequently asked questions