Types of Swiss Business Structures

If you made up your mind to set up company in Switzerland the following information will surely be useful for you.

Switzerland is an acknowledged leader as far as the economy is concerned. It has become a central hub for worldwide companies acting as one of the best performers in the pharmaceutical and financial sectors. One of the distinguished peculiarities about the country is that prosperity is achieved there not only by huge companies. More than 95% of enterprises in the country are medium and small. On average, the number of employees in such companies is less than 250 persons. About three-quarters of startups still proceed with their business one year after their foundation. Moreover, almost half of them continue to work after 5 years from the moment of start. 

An important detail about the country is that Switzerland has certain limits for the number of workers from abroad who want to work in the country and at the same time Switzerland is eager for new enterprises and innovations. Those entrepreneurs who are ready to introduce any brand new ideas about the business, perform their market research, and have some funds to invest will be always welcome and supported in any possible way. According to the Global Innovation Index, this country is in top positions with its cantons that provide businesses with relief packages and tax concessions. 

About 15% of workers in Switzerland are registered as sole proprietors reflecting almost the same number in the whole Europe. The World Bank states that when it comes to ease of doing business Switzerland holds the 36^th rank in the world. The general business environment in the country is tolerant and free. However, the business structure has a hierarchical system, and conservatism prevails over many issues pertaining to deeply-rooted values. It is proved by statistics that states the fact that women still drop behind men as far as the vanguard role is concerned.

Peculiarities of doing business in Switzerland

Any Switzerland law firm will confirm that foreign citizens can found their enterprise in the country if they are compliant with the requirements and settled all legal details. European Free Trade Association nationals can act as sole entrepreneurs or perform any startup relatively easily. In the beginning, one must make a registration for permission at a canton and provide the materials that prove his or her sole proprietor activity. For instance, it can be a business plan or a commercial register entry.

A third-country national must have a valid residence permit. If there is no then you must apply via the local cantonal authority. You need to comply with all requirements when applying for a work visa in Switzerland. Another important moment is that you have to show that your startup has long-lasting advantages for the local labor market. For instance, any detailed business plan or solid interdependence and relationship with actual local companies will do.

All financial requirements are not the same for everybody and differ in terms of the type of business you start including the legal structure and if you require a special license.

Swiss business structures: how to choose the appropriate one

Before starting your business, we strongly advise you to study every alternative since there are different legal business structures in Switzerland:

• Sole proprietorship. One of the most widespread types and is most appropriate for private entrepreneurs who work for themselves. Such an enterprise is not registered as a legal entity and is featured with unlimited liability where the entrepreneur pays taxes on his or her enterprise profit. The foundation of such a business is rather simple. Just submit your business into the trade register, arrange all necessary social security issues, and perform the registration for value-added tax if required. Your accounting will be done in simplified mode if your turnover is less than 500 thousand Swiss francs.
• General partnership. The main difference with the previous point is that there are more than one person introduced in the ownership. All owners have the same unlimited liability. Each member of the enterprise pays his or her tax individually depending upon the amount of the agreed share. The business must be present at the trade register as well. The accounting, social security, and tax obligations are the same for all members.
• Limited partnership. Almost the same as the latter one but the main feature that differs is that one member of the enterprise has unlimited liability and another one has limited. It means that their assets except those invested into the business will remain untouched in case of bankruptcy or any type of debt. Such a partnership has limited rights and responsibilities.
• JSC Limited company SA/AG. This type of business is considered to be the most widespread. Such a corporation is introduced as an independent legal entity. This business structure requires at least one director who must be a citizen or resident of Switzerland. Such enterprises must pay separate corporate taxes. This company needs to meet the requirements of procedures in terms of formal incorporation and registration.
• Limited liability company (LLC – GmbH). A similar feature to the point above is that such a structure also must have a director who is a citizen or resident of Switzerland. The difference is that this type of company is more public than private liability structure. All its shareholders are present in the commercial register. LLC is featured with a lower startup amount in comparison with JSC. The initial share must be at least 20.000 Swiss francs. There is no limit for the quantity of shareholders.
• Cooperative business structure. This type of company has more social status despite a profit-focused target. Such companies are more transparent in their decisions and have at least seven partners with equal power influencing any decision. This business structure does not have minimum capital requirements.

As a conclusion we must admit that Switzerland rightfully holds one of the leading positions in terms of running a business with advantages that prevail over the drawbacks.