Complete Guide to Setting Up a Sole Proprietorship in Switzerland

Switzerland has become a hub for global firms to establish business entities. The jurisdiction in the country is easy on taxeslow taxing and is quite also enjoys a very favorable economicallylegislature economicallyin the economic sense. Additionally, Switzerland offers political stability and economic safety. 

Switzerland’s cantons have a long history of opening tax incentives to attract foreign companies. The country holds the top rank in the 2022 Global Innovation Index, and several cantons offer startup support packages to new businesses. 

Movement and shipping across the country are smooth, thanks to its robust infrastructure. Switzerland ranks 35th on the list of countries’ Ease of Doing Business capacity. According to the UNCTAD World Investment Report 2021, the FDI inflow for Switzerland stands at  47 billion dollars for 2020.

Companies can establish their presence in the European market by establishing a business in the country. The country is a close neighbor to the EU and its third biggest economic partner after the US and China. Setting up a sole proprietorship in Switzerland can be beneficial to expand business globally.

Read up on ways to register a sole proprietorship in Switzerland, along with relevant considerations. 

Who can be a Sole Proprietor in Switzerland? 

A sole proprietorship is a single-owner company. It refers to the typical structure individuals choose as the best mode that might work for them. It is the most simple form of business in the country, allowing owners to hire personnel. 

Anyone can set up a sole proprietorship in Switzerland, irrespective of nationality. Foreign citizens in Switzerland can also opt to establish a sole proprietorship. 

The most popular occupations registered as sole proprietors in Switzerland are small business owners, freelancers, and individual entrepreneurs with a specific structure. 

Benefits of Sole Proprietorship in Switzerland

Setting up a sole proprietorship in Switzerland offers several benefits to the sole proprietor, which are as follows:

• Individual owners of sole proprietorships get unlimited liability.
• Sole proprietorships aren’t subject to the double taxation system. 
• Unlike in any limited liability company or a private limited company, founding sole proprietorships in the country does not have a fixed initial investment.
• The individual enjoys the total profits due to zero legal separation of a proprietor from the business.

Documents Required for Registering Your Business in Switzerland

The documents you need to register a sole proprietorship in Switzerland are listed below-

• For foreign individuals – passports, proof of address and bank statement
• Swiss resident directo’s passport and address proof
• Power of Attorney (PoA)
• Bank certificate that capital is submitted
• Permits

It takes two to six weeks to establish a sole proprietorship in Switzerland. Processing times depend on the canton that you choose as a domicile for the company. 

Other Criteria for Registering a Sole Proprietorship in Switzerland

To establish a sole proprietorship in Switzerland, you must consider the following aspects. While the initial phases for preparations are intensive, the final founding part of the sole proprietorship is easy to wrap up. 

• No specifics around the capital, subscription payment, or even structure-related organizations apply to such a business.
• The proprietorship gets founded right as you begin the business activity.
• Make sure you prepare the commercial registry-related registration. The documents you need in this regard are-

• Company name
• Political municipality of head office
• The address and the scope of the activity
• Personal details 
• Copy of passport or other ID documents
• Certified signature to be submitted to the cantonal Commercial Registry in person or post.
• Register with the Commercial Registry

• When the revenue from sales is at least CHF 500,000, you need to organize accounting and financial reports.
• Register with the cantonal compensation office

Post-registration compliances 

• Registration means that you are entered into the Swiss Business and Enterprise Register or BER and assigned the Unique Enterprise ID Number.
• The price for registering on a commercial register is CHF 120 for sole proprietors.
• You must register for tax and social security, and take the relevant business insurance.
• The overall administrative costs for registering and starting a sole proprietorship is CHF 700, including all possible costs.

Taxation

• Sole traders don’t need to pay corporate taxes. The company owners pay income tax on their individual profits. 
• Businesses having turnover higher than CHF 100,000 must register for VAT. As per the 2021 general rate for VAT in Switzerland, the applicable figure is 7.7%.

How to Register a Sole Proprietorship Firm in Switzerland?

Here’s how to register a sole proprietorship in Switzerland :

Select business name

• All sole proprietorships in Switzerland need to register a company name. 
• Remember that this must be unique, and you can ensure so by checking up on the Central Business Name Index. 
• Sole business names must comprise the founder’s last name.

Open a local bank account

• Open a Swiss bank account. 
• The bank fees are around CHF 200 for sole proprietorships.

Draft Article of Association

• Furnish the notary public with all articles of association for the company. 
• Accomplish application forms for registration and ensure that the documents stand authenticated.  

Stamp declaration form

• You must sign the Stamp Declaration Form and Lex Friedrich Declaration form to submit to the Register of Commerce.  

Pay stamp tax

• Pay the stamp tax via a post office or a bank and check the Swiss Official Gazette of Commerce, wherein the Register of Commerce publicizes all official registrations. 
• On the registration day, the company you establish becomes a legal entity.

Register for VAT

• Companies established as sole proprietorships have to register for VAT if the turnover is more than CHF 100,000.

Foreign owners need to have a work permit (G permit) to set up a sole proprietorship in Switzerland. For this, they must submit a filing that mentions the business plan and the infrastructure used for the business. Once they get a permit, non-Swiss residents must register with the Swiss canton revenue administration. 

Conclusion

As mentioned earlier, sole proprietorships in Switzerland have a few specific requirements. As you operate and hire in Switzerland, payroll management could be challenging. In this regard, Multiplier is perfect for sole proprietors. 

Multiplier is a global employment solution for companies planning to expand their business. It offers reliable EOR solutions to ease your management process of international employees. You can easily utilize our payroll services and manage freelancer payments with just one click.