The reason why Switzerland is the most sought-after country for starting a business is due to its political and economic stability, central European location and liberal legal framework. No wonder there are so many business opportunities in Switzerland. The Swiss constitution allows anyone, including the foreigners, to run a small business in Switzerland or to form a company or have a financial interest in one. Entrepreneurs need to have a clear business idea in Switzerland before they eventually move to start a business there.
Before diving deep, let us first understand the benefits of incorporating your business in Switzerland.
Benefits of Doing Small Business in Switzerland
There are many reasons to start your company in Switzerland; some of them are listed down.
- Strong economy and currency
- Head office of many multinational firms
- Efficient and reliable administration
- Liberal labor market
- Liberal tax system
- Important financial centre
- Infrastructure and management work efficiently and excellently
- A politically stable economy
Steps to Start your Swiss Company
Before you get started, first analyze whether the people are going to like your product/service and buy it. Find out who your competitors are and whether the market can sustain your business. After following these instructions you can continue with the following steps:
1.Start by Researching
Your initial steps must only contain researching the Swiss market. Find out who your competitors are and whether the market can sustain the business you are thinking of doing. You can also look for a company name and whether the name you want is already registered via Switzerland Commercial Registry. Then, conduct a research to see whether your idea is feasible. It involves gathering, analyzing, and evaluating information to help you formulate your goal.
2.Register a Company Name
Once you have researched and decided on the type of business you want to start, the next ideal step is registering your company name. Here, make sure that you abide by the company name registration laws of Switzerland and select the name. After deciding, submit it to the Switzerland Company Registry for approval.
3.Choose a Business Structure
There are a number of things one must consider before registering a business in Switzerland. Firstly, it is essential to understand whether you have a successful business idea and secondly, to choose the right business structure for it. There are six different types of business entities through which you can start your venture in Switzerland:
1. Sole Proprietorship
A sole proprietorship, also called as a one man business is the one where an entrepreneur himself is the owner of the company and does not share any profits or losses. This type of business entity is usually engaged in trade, manufacturing, and commerce and has no legal personality. Anyone can start up a one-man business at any time and begin operations immediately
2. Limited Liability Company
The Swiss “Gesellschaft mit beschränkter Haftung” or abbreviated “GmbH” is a limited liability company established in cases where the founders have access only to the limited amount for the capital invested in the company. The GmbH can be defined as an incorporated company with separate legal personality in which one or more natural or legal persons participate.
3. Limited Partnership
This type of legal structure is particularly suited to small private businesses. It is often preferred after when a general partnership needs to extend the base of its financing. The limited partnership in Switzerland does not require you to have a start-up capital. The Limited partners (investors and creditors) assume subsidiary and joint and several liabilities, up to the total amount of their share.
4. Public Shareholding Company
This legal structure is one of the most popular and widespread one in Switzerland. However, not only the spread of this respective legal form is the highest, but also its reputation. Here, the liability of every partner is limited to the extent of share capital deposited by them. There is also an advantage of 100% foreign ownership for a PSC in Switzerland.
5. Branch Office
An established company in a foreign land can set up their branch office in Switzerland as long as they abide by the Swiss law. They have to register their company at the company register in its Swiss location. The branch office is legally dependent on the head office and therefore does not have a legal personality. It must carry out the same type of commercial activity as the parent company and form a commercial whole with it.
6. Representative Office
The representative office in Switzerland is more flexible than the branch office. But, unlike the branch office, an RO is not allowed to engage in activities of a professional nature and is also subject to territorial economic contribution. They can employ staff and can do market research, other than that they cannot perform any other activities.
For foreigner wanting to setup a business in Switzerland, it is important to note that they must be a Swiss resident or have a Swiss legal entity or a partner who is a Swiss resident. The next step includes registering your business at the Commercial Registry of Switzerland.
4.Register a Small Business in Switzerland
At least one of the directors must be a Swiss resident for your company. The procedure for registering a small business at the Swiss company register is simple as long as you are aware of all the necessary documents that shall be submitted to the registry. The process to open a business in Switzerland involves the following steps:
- Filing out an application form for company registration
- Preparation of necessary documents: corporate charter or articles of incorporation, statutes, application, etc.
- Draft the Articles of Association in the presence of the notary public
- Create an escrow account to hold a paid-up capital
- File the Articles of Association with the Switzerland company register to become a legal entity
- Pay a stamp tax- 1% of capital with the first CHF1 million exempt
- Publication in official journal of the canton
- Register for the VAT in Switzerland
- Enter the employees of your organization into the social insurance schemes on the federal and cantonment level
Once you are done with this, you must also provide all the supporting documents. The Commercial Registry will go through your application and check the authenticity, after which they will approve the application and make your company registration in Switzerland.
5.Register for Tax
Depending on the business entity and the business activity followed by your company, you may be required to register for taxation. An application to the Federal Tax Administration must be sent after the incorporation process is completed
Starting a Business in Switzerland as a Foreigner
Before opening up a company in Switzerland as a foreigner remember that you must be a Swiss resident if you are going to start a sole proprietorship or as a director/employee of a legal entity
It can be overwhelming to start a small business in Switzerland since you will be unaware of the legal framework. At this point, you can look for a consultant/advisor who is well versed with the process and can guide you effectively through it. Business Setup Worldwide can help you start your small business in Switzerland. We will help you right from choosing your business structure to registering your employees with the social insurance scheme. Contact us today – we’d be happy to help.