Finally self-employed: how to start your own company in Switzerland

Realize your dream of having your own company – it’s really not that complicated to do. What do you need to taken into account when becoming self-employed? We have compiled the most important tasks and helpful tips for starting a company in Switzerland for you here. From the business idea and selecting the right legal form, to insurance and pensions – we go through the most important steps in founding a company together with you. Let’s get started!

How to become self-employed

Founding a company in Switzerland is comparatively easy. Special permits are only required for industries that are regulated by the federal government (professions in healthcare, education, or the social sector) or the cantons (e.g. professions in architecture, transportation, or the law). This guide will lead you step by step with knowhow and recommendations through the various phases of becoming self-employed.

Does your business idea have potential?

A good business idea is the basis for founding a successful company. Despite this, you don’t necessarily have to have a new business idea that is uniquely your own to start your own company. The majority of founders start with products and services that are known. The big advantage here is that if you have worked successfully for many years in a certain field, then you know the central needs and problems of the market. Close contact with customers is a revealing source of information when it comes to improvements, product innovations, and gaps in the market. Industry insiders also have the right network and know potential customers and suppliers. Ideally, you also work in an ambitious team which supports you in growing your company.

Find a company name

Do you already have some initial ideas for a company name? Does the company name you have in mind breach any copyrights? You also need to make sure that a corresponding domain (e.g. www.axa.ch) is available. Depending on the marketing concept, you should also check whether you can create social media profiles with the name. Important to know: Depending on the legal form you choose, you may have to include certain elements and observe certain requirements for the company name.

The most important rules for creating a company (name of the owner of the company) can be found in the following provisions:

• Principles for founding a company: Art. 944 et seq. of the Swiss Code of Obligations (SCO)
• Commercial Register Ordinance: Art. 26 CRO
• Instructions and directive to the commercial registry authorities for the creation and review of companies and names (in German)
• The Federal Act on the Protection of Names and Emblems of the United Nations and other Intergovernmental Organizations (in German)

If your company name violates the rules on company founding, then it cannot be entered in the commercial register. You want to check before you start your company whether your company’s name complies with legal provisions? Submit your proposal to the responsible cantonal commercial registry office for a preliminary review.

Determine your need for capital

How is it going with the financing of your company? Have you considered money from investors or business angels? Would you like to take out a loan from a bank? Are you starting your company with equity, for example through a withdrawal of assets from your pension fund? Start-up founders have many options at their disposal for financing their business model. Determine your need for capital and obtain advice. You can get professional advice from business coaches, start-up platforms like startups.ch , or your preferred bank, for example. The Swiss government does not grant any direct financial support for the founding of new companies. The only exception is unemployment insurance. It provides support measures for unemployed persons who would like to start their own company.

Is your financial cushion sufficient if orders dry up? Since you cannot rely on any unemployment benefits, we recommend you budget a bridging reserve for at least six months. Too scarcely planned finances can be devastating: in the case of bankruptcy, self-employed persons are liable with their total assets.

Choose a suitable legal form

Here, there is a range of options to choose from – whether it be a sole proprietorship, partnership, or corporation. If an individual is managing a business in the commercial sense under his or her own name and on his or her own behalf, this constitutes a sole proprietorship. This legal form is popular in Switzerland and the gateway to self-employment for many start-ups. It can be changed to a corporation at any time. 

As the owner of a sole proprietorship or partner of a partnership, you are considered to be self-employed:

• A sole proprietorship consists of a sole business owner. To have a sole proprietorship, you must be recognized as self-employed by your compensation fund. Founders of this legal form remain natural persons.
• A partnership is a commercial association of at least two persons. These persons are referred to as owners or partners . They run a business under a joint company name. It may take the form of a limited partnership or general partnership. The self-employed partners are liable with the company’s assets and their private assets. The limited partner is the only exception: in this case, liability is limited to the liability amount entered in the commercial register.

The alternative: you found a corporation and are employedby your own company. 

• In the case of corporations, the focus is on the capital paid in. Among corporations across Switzerland, joint-stock companies (AG) and limited liability companies (GmbH) are the most popular company forms. As a legal entity, the corporation is given its legal capacity upon entry in the commercial register. For liabilities, the AG and GmbH are liable with the company’s assets.
• Founders can employ themselves as managing director of their own AG or GmbH, for example. As an employee of their own company, they are automatically insured in the event of unemployment or an accident. Occupational benefits insurance (BVG) must also be ensured.

The legal form of the company determines your position under social insurance law.

Register with the compensation fund

Have you chosen to establish a sole proprietorship or partnership? You have taken the first step! Under social insurance law, you have thus chosen the path of self-employment. This is because in Switzerland you are considered to be self-employed once the compensation fund of your place of work has reviewed your application and approved your self-employment. Various criteria apply depending on the industry. An entry in the commercial register is not enough for approval of self-employment.

To review an application, the compensation fund requires documentation of your self-employment, which is why the application is made retroactively. Include documents with your application that prove you are self-employed. These may comprise, for example, offers and invoices, advertising materials, or a description of your activity.

From the perspective of the compensation fund, self-employment has the following four features:

• Presence under own name
• Work for own account
• Activity in and independent position
• Work at own economic risk

For the self-employed, the duty to pay contributions starts in the first January following the founder’s 17th birthday. If there is gainful activity, contributions must be paid. If you work beyond retirement age, then you remain subject to contributions.

Anticipate your social insurance contributions

The next step: social insurance. We recommend calculating the costs as normal expenses in your budget. The self-employed pay contributions for Federal Old Age and Survivors’ Insurance (AHV), disability insurance (IV), and Loss of Earnings benefits (EO) entirely themselves. On top of this are a percentage of the family allowance amount and administrative costs.

• Understand the statement: your contributions for social insurance are calculated based on the amount of earned income. You will receive a provisional invoice for the past quarter on a quarterly basis from your cantonal compensation fund. The invoice amount will be based on the information you provide or on the numbers from the previous year. The compensation fund can only issue a definitive contribution statement once the cantonal tax office has reported your income from self-employment. Report any material changes to your income of 25% or more to your compensation fund in the following year at the latest to avoid back payments with default interest.
• Check your AHV account statement: the compensation fund recommends self-employed persons check their AHV account statement every five years. Do the amounts entered correspond to your the income subject to contributions that is indicated in your tax declaration? The AHV account statement only shows the years with a definitive contribution statement. You can order your AHV account statement free of charge from you cantonal compensation office.
• Avoid pension and contribution gaps: only women who have paid AHV contributions for 43 years and men who have paid for 44 years will receive a full AHV pension. The maximum pension amount of CHF 2,370 is only paid to those who earned an average annual income of CHF 85,320 for the entire contribution period. Daily sickness and accident benefits are voluntary. Contribution gaps may occur as the result of extended illnesses or accidents. We recommend closing these gaps in good time to prevent any effects on your AHV pension. Missing contributions can be paid up to five years later. To do so, contact your compensation fund.

What other types of insurance do you need?

Once you register with the compensation fund, you have already dealt with another important matter of the founding phase – insurance. In addition to social insurances for entrepreneurs and any employees of the company, there is a second type of insurance: business insurance. Here, there are various offers available for companies.

What we highly recommend is voluntary accident insurance. How great is the risk of an accident during your work? Mandatory health insurance only covers the treatment costs in the event of an accident. As a rule, accident insurance covers medical care, reimbursement of costs, and monetary benefits (daily benefits, disability pension, compensation for bodily injury, helplessness allowance, survivors’ pensions).

Plan your occupational benefits and your private pension

An important step for founders is planning occupational benefits (BVG). BVG is voluntary for the self-employed. Thanks to a large number of professional and industry associations, you can insure yourself at an occupational benefits institution that is right for you. As an alternative, you can also join an industry-specific pension fund or the National Substitute Pension Plan BVG.

What else should you take into account when becoming self-employed?

1. Protect your intellectual property: Clever ideas can be stolen quickly. Decide at an early stage whether and how you want to protect your innovations and creations, such as inventions, logos, or product and packaging designs. You can find further information on how to protect innovations and creations by means of patents, trademarks, and design protection on the SME Portal of the Swiss Confederation. It also provides valuable information on copyrights and industrial property rights.
2. Are you subject to value-added tax? If you generate annual revenues with your company of at least CHF 100,000 for services rendered in Switzerland, then you are subject to value-added tax. Register in writing with the Federal Tax Administration in Bern within 30 days.
3. Do you have to be entered in the commercial register? If you, as the owner of a sole proprietorship managed as a commercial enterprise, earn annual revenues of at least CHF 100,000 , then you must be entered in the commercial register. The cantonal commercial registry office at the place of your registered office is responsible for this.
4. Create a clear marketing concept: how will you market your product or service? A carefully considered marketing concept puts the focus on your customers and their needs. Whether digital marketing measures or traditional advertising – there are many options for your company to reach customers in a targeted way.
5. Accept support: marketing isn’t your area of expertise? Don’t hesitate to look for help and outsource tasks. This allows you to focus on your core competencies. This isn’t just true for marketing, but rather also for the entire viable operations of a start-up. A quality network can also help you to develop and expand cooperations and your customer base.
6. Take the pressure off your family: during maternity leave, self-employed women are insured against income shortfalls. The statutory maternity leave is 14 weeks. Parents can also receive family allowances. For this reason, self-employed persons also pay an obligatory amount into the family compensation fund. Report changes such as the birth of your child immediately to your compensation fund. You can also report the start, termination, or conclusion of your children's education to the compensation fund. The last income subject to AHV contributions prior to the birth of your child is used as the basis to calculate maternity pay.
7. Reduce your health insurance premiums: anyone in Switzerland who lives under modest economic circumstances can receive support by means of a financial contribution to the mandatory health insurance premiums. Are you entitled to lower premiums? That depends on your tax status. If you are entitled then the compensation fund will send you the application form in the spring for the following year.
8. Plan your retirement: have you already had thoughts about when you want to retire? The earlier you start planning your retirement, the more relaxed you can be as you reach the retirement date. To review your situation, you must consider which financial and insurance effects your individual retirement will have on your entire life. You can freely choose the start of your pension. You can draw on your pension one or two years early. Or postpone it by up to five years. 
9. What will happen to your company when you retire? Succession planning can be especially complex if your company is the main component of your retirement provision. Deal with this issue approximately five years before you would like to retire so that you have enough time to put your business in good hands, or even dissolve it if necessary.