Legal Forms – An Overview
Young companies and SMEs in Switzerland opt most frequently for the following legal form: sole proprietorship, general partnership, limited liability company (GmbH) and public limited company (AG). Together these make up almost 90% of all companies entered in Switzerland’s federal commercial register.
The choice of suitable legal form is a decision that is both important and difficult for anyone setting up a company. Not every legal form is suitable for every company. The pros and cons need to be weighed up. Legal, fiscal and operational factors need to be considered. Financial resources, marketing aspects, family dynamics and geographic specifics also play a role.
The main legal forms in Switzerland are:
Partnerships
- Simple partnership
- General partnership
- Limited partnership
Capital Companies
- Limited liability company (GmbH)
- Public limited company (AG)
Partnerships such as a sole proprietorship or general partnership stand and fall with the owners and are inseparably linked to their personality. The owners themselves work in the company. If you are prepared to bear all the risks alone and be liable with your personal assets for any claims, you can have yourself entered in the commercial register as a sole proprietorship. If you would like to set up a company together with other people, then a general partnership or a limited partnership would be a more suitable form.
Membership in capital companies is based on a capital participation by the partners. If you are willing to accept a small financial entrepreneurial risk, then you have the option of limiting this risk to a specific amount by setting up a capital company (GmbH or AG). Important: The company itself has unlimited liability with its entire assets.
Before you decide in favour of a legal form, you should be clear about the following points:
- Founder: Depending on the legal form, a natural person (sole proprietorship), two or more partners (general partnership) or one or more natural or legal persons or commercial partnerships (GmbH and AG)
- Costs/capital: Set-up costs and start-up capital differ according to legal form
- Liability: In the case of a sole proprietorship, the owner has unlimited personal liability with his/her entire business and personal assets. The maximum liability of partners or shareholders of a GmbH or AG respectively is limited to their capital contributions or shares, while the company itself is liable with all its assets.
- Taxes: Depending on the legal form, taxes are payable exclusively on a private basis or by the company (self-employed tax subject)
- Insurance and pension provision: Certain social insurance plans are obligatory, voluntary or non-existent, depending on the legal form
