When founding a business, at least one of the people involved must have right of residence in Switzerland. EU/EFTA citizens have the right to freedom of residence and work in Switzerland, while citizens from third countries require work and residence permits to conduct business in Switzerland on a permanent basis.

Many entrepreneurs favour sole proprietorship, which is ideal for business activities that are closely linked to the owner and where only one natural person is involved in the activity. The only requirement for set up is an entry in the trade register. However, the owner is held liable up to the amount of both their business and private assets.

Sole proprietorships with turnover of less than CHF500,000 only need to keep simplified accounts that list income, expenses and assets. If turnover exceeds CHF500,000 during the previous fiscal year, accounts must be kept and presented in accordance with the rules set forth in the Swiss Code of Obligations.

The principal types of company providing limited liability in Switzerland are the:

• Company limited by shares – Société Anonyme (SA) or Aktiengesellschaft (AG).
• Limited liability company – Société à Responsabilité Limitée (Sàrl) or Gesellschaft mit beschränkter Haftung (GmbH).

Limited Company (SA/AG)

The SA/AG offers businesses many benefits in terms of liability and regulation of capital. Only the corporate assets are liable in a limited company. The establishment of a SA/AG requires:

• At least one shareholder, who may be a natural person or a legal person, or another trading company.
• A minimum capital requirement (share capital) of at least CHF100,000, which must be at least 20% paid-up (but at a minimum of CHF50,000) in cash or covered by contributions in kind at the time of incorporation.

Limited Liability Company (Sàrl/GmbH)

The Sàrl/GmbH is a combination of a limited company and a joint partnership, which lends itself to family businesses or small and medium-sized enterprises. The establishment of a Sàrl/GmbH requires:

• A minimum capital of CHF20,000, which must be fully paid up in cash or covered by contributions in kind at the time of incorporation.
• A company name can be chosen freely but Sàrl/GmbH must be added to the name.

Branch Offices

Foreign companies entering the Swiss market can decide upon opening a subsidiary or a branch office. A Swiss branch office is allowed to conduct any operation that would represent the parent company and is within the parent company’s business purposes.

A Swiss branch does not have a separate legal personality but is required to be registered with the Swiss Commercial Register and must have at least one Swiss resident on its management board and must have a registered office in Switzerland.

Partnerships

The general partnership is ideal legal structure for a small business set up by two or more individuals who join forces in carrying out their activity. Establishing a general partnership does not require any start-up capital and the instrument of foundation is relatively simple. However, the partners assume unlimited joint and several liability.

The members of a general partnership, with or without a commercial activity, are required to ensure that it is registered in the Commercial Register. The management function is the responsibility of all partners unless the partners decide differently. At least one partner must be authorised to represent the partnership.