Switzerland is a beautiful country and is considered a haven for starting a new business, thanks to the various benefits entrepreneurs can avail themselves of in the country. The country’s robust business and banking environments attract people from across the world to set up their firms.
Moreover, understanding the types of business entities in Switzerland is essential before Swiss company formation. Our guide walks you through the basics of the structures so you can make an informed decision.
What are the Various Types of Business Entities in Switzerland?
Before starting an offshore company in Switzerland, the first step that every entrepreneur must take is to decide on the type of business structure of the company. The following are the types of business entities in Switzerland:
General Partnership
A general partnership is one of the many legal forms of a company in Switzerland. The Swiss Code of Obligations defines a general partnership as a relationship between two or more natural persons who enter into a partnership to jointly operate a company in accordance with the applicable business regulations. Moreover, the partners in a general partnership have unlimited liability, meaning they are personally liable to repay the company's debts. Aside from this, it must also be entered in the commercial register to carry out business activities.
Limited Company
A limited company is another type of business entity in Switzerland. It can be formed by one or more natural or legal persons. In this pany structures, each member contributes a specified amount of capital, which is divided into shares. Moreover, the shareholders enjoy limited liability. Aside from this, at the time of its foundation, the company must have a share capital of at least 100,000 francs. Moreover, if the capital is in foreign currency, firms' accounts and financial reports must be in the same currency.
Sole Proprietorship
In a Swiss Sole Proprietorship, the business is run by a single person who must also be a resident of Switzerland. This type of business structure suits sole owners and freelance professionals. The people opting for this corporate structure need to register themselves in the commercial register if their annual revenue is at least CHF 100,000. This kind of business has unlimited liability.
Limited Liability Company
A limited liability company (SARL) is a combination of a public limited company and a partnership. It is one of the most common legal forms in Switzerland. Moreover, it has a separate legal identity, and the minimum share capital requirement is CHF 20,000, which can be paid in cash or in kind. The company has limited liability to the extent of its assets. Moreover, Shareholders bear no personal liability unless additional liability is set out in the articles of association.
Limited Partnership
Article 594 of the Swiss Code of Obligation defines limited partnerships. As per the code, a limited partnership is a partnership in which two or more persons come together to conduct a business under a single business name. Moreover, there should be one general partner with unlimited liability, and it must be a natural person. On the other hand, the limited partnership must also have one or more limited partners with limited liability, and they can also be legal entities and commercial enterprises.
Foundations
Foundations are another type of business entity in Switzerland. It is governed by the Article 80 of the Swiss Civil Code. It is a legal entity managed by the foundation board. All private foundations must be entered into the trade register to become a separate legal personality.
Factors to be Considered Before Choosing a Business Structure
Choosing the right business entity in Switzerland requires an in-depth study in the various factors that influence it. Some of the important factors to consider before choosing from the legal forms of company are:
- Ease of Formation
- Associated Risk
- Tax Obligations
- Initial Capital Required
- Cost of Keeping the Business Running
Keeping these five factors in mind would help an entrepreneur choose the right business entity in Switzerland, one that is suitable for the business and flexible enough to adapt to any changes in the business environment.
Each of the above-mentioned types of business entity in Switzerland has its own pros and cons. It is up to the entrepreneur to choose the best structure that suits the needs of the business. These initial decisions are crucial for the business and require extreme care. It is recommended that you take the assistance of a firm that will handle all the work for you, leaving you to worry about other important business matters.
We at Business Setup Worldwide will provide all the necessary support to help you start your business in Switzerland. Our business setup experts are well-versed with all the rules and regulations and will take care of the entire Banking, Visa, Legal, and Licensing formalities, without letting you worry about the bureaucratic red tape and legal formalities. To know more about the various services we provide, do reach out to us.
