Becoming self-employed in Switzerland

Possible statuses

Sole proprietorship

• Simplest: no minimum capital, minimal formalities
• Unlimited liability on personal assets
• Trade register: mandatory if turnover > CHF 100,000/yr
• Personal taxation (income = business profit)
• For: freelancers, craftspeople, liberal professions, small shops

Limited liability company (GmbH / Sàrl)

• Minimum capital: CHF 20,000 (fully paid-in)
• Limited liability to share capital
• Separate legal personality
• Formal accounting mandatory
• For: startups, small businesses, multi-partner projects

Stock corporation (AG / SA)

• Minimum capital: CHF 100,000 (min 50% paid-in = CHF 50,000)
• Limited liability
• More prestige and credibility
• Possible shareholder anonymity
• For: ambitious projects, fundraising, listed companies

Other forms

• General partnership (SNC): 2+ partners, joint liability
• Limited partnership: active partners + passive investors
• Cooperative: collective organisation with equal shares

Sole proprietorship steps (most common)

Step 1: self-employed status recognition

• Request to AVS compensation fund (same as for employees)
• Documents: business plan, client contracts (3+), investment proof
• Granted if autonomous activity and entrepreneurial risk
• Lead time: 4–8 weeks

Step 2: trade register registration

• Mandatory if turnover > CHF 100,000, optional otherwise
• Fee: CHF 200–400 by canton
• Name: your family name (SP) + optional trade name

Step 3: insurance

• AVS/AI/APG: 5.371–10% of net income
• Voluntary LPP: optional for self-employed, strongly recommended
• Accident insurance (LAA): optional for self-employed
• Sickness loss-of-earnings: recommended (private)
• Professional liability: by profession (doctor, lawyer, etc.)

Step 4: VAT registration

• Turnover > CHF 100,000/yr: mandatory VAT registration (VAT 8.1%)
• Turnover < CHF 100,000: optional (advantage if significant recoverable VAT)

Social charges for self-employed

AVS/AI/APG (1st pillar)

• Rate: 5.371% (income < CHF 9,800/yr) to 10% (income > CHF 58,800/yr)
• Minimum: CHF 530/yr
• No unemployment contribution (self-employed not insured)

LPP (2nd pillar) — optional

• Affiliate with a fund for self-employed
• Contributions: 12–25% of income by fund and plan
• Tax-deductible

Pillar 3a

• Higher ceiling: 20% of net income up to CHF 36,288/yr
• Fully deductible

Family allowances

• 1–2% AVS salary contribution
• Right to allowances like employees

Self-employed taxation

Profit taxation

• Profit = turnover − business expenses
• Deductible: office rent, equipment, training, business travel, business car, etc.
• Profit taxed as personal income (SP) or company profit (GmbH/AG)

Specific deductions

• Business expenses actual or lump sum
• Depreciation on equipment and vehicles
• Extended pillar 3a (20% of net)
• Losses of last 7 years carried forward

Risk provision

• Precautionary reserve deductible (10–20% of profit)
• To buffer income fluctuations

Anticipated annual costs

• AVS/AI/APG: 5–10% of profit (CHF 5,000 on CHF 100,000)
• Optional LPP: 12–20% of profit if chosen
• Maximum pillar 3a: CHF 36,288 but tax-useful
• Pro insurance (RC, loss-of-earnings, premises): CHF 1,000–5,000/yr
• Accountant / fiduciary: CHF 1,500–5,000/yr
• Admin fees (compensation fund, VAT): CHF 200–1,000/yr

Tips

• Plan 3–6 months between decision and effective start
• Get your status validated by the compensation fund first
• Budget 6–12 months working capital minimum
• Hire a fiduciary for accounting from day one (CHF 100–300/month)
• Subscribe to LPP: without it you take huge retirement risk
• Don't underestimate social charges: 25–30% of profit in total (AVS + LPP + 3a + insurance)
• Plan for winter: no unemployment benefits if activity stops
• Consider GmbH/AG if you foresee significant growth or legal risks (limited liability)