The ultimate checklist for self-employed people in Switzerland

What does “self-employed” actually mean?

In Switzerland, you qualify as self-employed once the compensation office of the canton your business is registered in has reviewed your application and approved your self-employment. For social insurance purposes, self-employed people must meet four criteria:

• Trading under your own name
• Working for your own account
• Working independently
• Working at your own economic risk

As regards legal forms, sole proprietors and partners in a partnership are considered to be self-employed.

Get all the formalities in place to go it alone

5. Choose the legal form

Sole proprietors and partners in a partnership are considered to be self-employed:

• A sole proprietorship is a company owned by a single individual. The founder must be recognized as self-employed by the relevant compensation office.
• A partnership (limited partnership or general partnership) is a commercial association of at least two people, who are referred to as the partners. They run a business under a joint company name.

Alternatively, you can form a corporation and be employed by it.

• In the case of corporations, the focus is on the capital paid in. The company limited by shares (AG) and limited liability company (GmbH) are popular throughout Switzerland. AGs and GmbHs are legal entities that acquire their legal personality once entered in the commercial register. They are liable to the extent of their company assets.
• Founders can employ themselves as managing director of their own AG or GmbH, for example

The legal form of the company determines your social insurance status.

6. Register with the compensation office

In Switzerland, you qualify as self-employed once the compensation office of the canton you work in has reviewed your application and approved your self-employment. Various criteria apply, depending on the industry.

• To review your application, the compensation office needs proof of self-employment
• Your registration will be backdated
• Include documents with your application that prove you’re self-employed, such as quotes, invoices, advertising materials or a description of your business

Self-employed people are required to pay contributions:

• The requirement starts in the January following your 17th birthday
• Anyone in gainful employment must pay contributions
• The requirement continues to apply if you work beyond statutory retirement age

7. Budget for social insurance contributions

The next step – social insurance:

• Factor the costs into your budget as normal expenses
• Self-employed people pay all of their own contributions for federal old-age and survivors’ insurance (OASI), disability insurance, loss of earnings compensation
• On top of this are a percentage contribution for family allowance and administrative costs.

Your social insurance contributions are calculated on the basis of your earned income:

• Your cantonal compensation office sends you a provisional bill every quarter for the previous quarter. The amount due is based on the information you provide or on the numbers from the previous year
• As soon as the cantonal tax office has reported your income from self-employment, the compensation office can calculate the final bill
• Report any material changes to your income (25% or more) to your compensation office in the following year at the latest to avoid back payments with default interest

Try to avoid pension and contribution gaps:

• Only women who have paid OASI contributions for 43 years and men who have paid for 44 years will receive a full old-age pension.
• Daily sickness and accident benefits insurance is voluntary. Contribution gaps may occur as the result of extended illnesses or accidents. We recommend closing these gaps in good time to avoid any impact on your old-age pension.
• This can be done up to five years in arrears. Contact your compensation office for more information.

8. Take out the right insurance

Insurance is another key consideration in the start-up phase. Besides the various types of social insurance for the company owners and any employees, you’ll also need business insurance. Companies can choose from a range of options here.

• Which types of insurance are mandatory? Which are voluntary? Our website for self-employed people provides an overview of the various insurance solutions we offer for people starting their own company.
• The AXA SME insurance check allows you to work out what insurance you need with just a few clicks.

Are you adequately insured if you have an accident?

• We recommend voluntary accident insurance. Mandatory health insurance only covers actual 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, impairment compensation, helplessness allowance, survivors’ pensions).

9. Organize occupational and private pensions

Pension planning is a vital step for company founders:

• Occupational benefits are voluntary for the self-employed. Thanks to a large number of professional and industry associations, it shouldn’t be hard to find an occupational pension that suits your needs. As an alternative, you can also join an industry-specific pension fund or the Substitute Occupational Benefits Institution Foundation LOB.
• A private pension (Pillar 3a) offers long-term security as well as attractive tax benefits. Our blog “Securely self-employed: optimizing your pension with Pillar 3a” looks at making the best possible provision for your retirement.

10. Plan your retirement

Have you already started thinking about when you want to retire? Whether you opt for early retirement, partial retirement, ordinary retirement, or deferred retirement,

• The earlier you start planning, the more relaxed you can be about it
• You need to weigh up how your plans for retirement will affect your financial and insurance situation throughout your working life

You’re free to choose when you start drawing your pension:

• You can bring it forward by one or two years
• You can postpone it by up to five years.

What will happen to your company when you retire?

• We recommend that you address this issue about five years before you intend to retire so that you have enough time to put your business in good hands, or dissolve it if necessary

Do you employ staff?

16. Become an employer

Employing staff comes with certain obligations attached. In Switzerland, for example, the law requires that all employees be insured against disability, death, and poverty in old age. Employers must pay social insurance contributions:

• These are handled through your compensation office.
• They include employer and employee contributions for OASI, disability, loss of earnings compensation, and unemployment insurance as well as employer contributions for family allowance

Employers must also insure their staff against occupational accidents and sickness. Overview of mandatory accident insurance and other reporting requirements:

• Compensation office:
  • Employees who already have an OASI number can be listed on your salary declaration at the end of the year
  • You must notify the compensation office within one month of cross-border commuters who don’t have an OASI number and employees moving to Switzerland from abroad
  • Employees whose contracts have been terminated need only be reported to the compensation office if they claim a family allowance
• Mandatory accident insurance:
  • Occupational accident insurance is sufficient for employees who work fewer than eight hours a week
  • Employees who work more than eight hours a week must also be insured against non-occupational accidents
  • If your company isn’t insured by law with the Swiss National Accident Insurance Fund (Suva), you can get this insurance from a private insurer, a health insurer or a public accident insurance fund.
• Daily sickness benefits insurance: this makes sense in view of the legal obligation to continue paying salary.
• Pension fund:
  • Occupational benefits insurance is mandatory for employees whose gross income is more than CHF 21,330 a year or CHF 1,777.50 a month.
  • Do you employ at least one person for whom occupational benefits insurance is mandatory? If you do, you should affiliate as an employer to an occupational benefits institution registered under the Occupational Pensions Act.
• Family allowance:
  • Your employees are entitled to a family allowance for children under 16.
  • The same applies to children aged 16-25 in full-time education.
  • Certain conditions apply. Send the application form to the compensation office. If the conditions are met, the compensation office will send you a confirmation.
  • The family allowance will be set against your social insurance contributions.