Legal Overview of Sole Proprietorship in Switzerland
Those who dare to take the step towards self-employment mostly choose to do so in the form of a sole proprietorship (also known as a one-man business, self-employed person, or individual enterprise). This means that a single person manages the business and does not create a company (such as a limited liability company, GmbH, for instance) for this purpose. This person provides capital, represents the business to the outside, and bears the entrepreneurial risk.
Creation of a Sole Proprietorship
When creating a sole proprietorship, there are no mandatory statutory provisions to consider (for instance minimum capital requirement), and no formal act of foundation is required. A sole proprietorship originates quasi-automatically when a person begins an independent commercial activity. Therefore, the costs of foundation are correspondingly low (with STARTUPS.CH approximately CHF 500 including consultation).
Liability in a Sole Proprietorship
The sole proprietor is always liable without limitation. This means that he is personally liable for all of the business’s debts. This does not change even if private and business assets and liabilities are strictly separated in the accountancy. In some cases, even the entrepreneur’s spouse is liable for the business’s debts.
Commercial Registry Requirements
If a sole proprietorship generates a turnover of CHF 100,000 or more, it is subject to inscription in the Commercial Registry. For businesses staying below this threshold, an inscription on a voluntary basis is possible. Liberal professions (such as medics, lawyers, etc.) are generally exempted from this registration duty.
Choosing a Firm Name
On the occasion of the application for the Commercial Registry inscription at the latest, one has to work on a firm name. You will find more information in the corresponding topic.
Accounting Requirements
A sole proprietorship that is obligated to register in the Commercial Registry is also subject to follow the commercial bookkeeping rules. This means that one has to keep double-entry accounts with balance, inventory, and profit and loss statement. However, this does not imply that self-employed people who are not obligated to register in the Commercial Registry do not have to keep any accounts. Especially taxation law (direct taxes and VAT) imposes so-called documentation and storage duties. Furthermore, tax authorities require the business figures to be traceable. It is therefore a good idea to keep at least simple accounts.
Auditing Requirements
Self-employed people are not subject to any auditing duty.
Conversion to AG or GmbH
A sole proprietorship can be converted into an AG or GmbH at any time. Please check out the details in the specific topic. Preferably, you establish or convert your company with STARTUPS.CH. STARTUPS.CH will provide you with professional guidance before and after the foundation.Here you will be able to apply for a counselling interview and to request free documentation.
