Business Structure

Business Structure

1, Sole Trader (In German: Einzelfirma, In French: raison individuelle)
2, Limited company (In German: GmbH, In French: Sàrl)
3, Stock corporation (In German: AG, In French: SA)
4, Branch office - Representation

There are significant differences with regard to cost, risk, flexibility and liability. A legal advisor should help you identify the most suitable for your project.

Which Business Structure to Choose

1,Sole Trader(In German: Einzelfirma, In French:raison individuelle)
When you start a business alone and under your own name, it implies that your business is a sole Trader.

Advantages :
- no lower requirement on equity
- ease of formation
- no legal formalities
- low costs to ceate and operate
- the net profit of the company is taxed as income of the owner

Disadvantages:
- only 1 owner
- unlimited personal liability (the business = the owner)
- risk of personal bankruptcy
- the name of the company has to include name of the owner

2,Limited company (In German: GmbH, In French: Sàrl)
A limited company offers better protection (less liability) than a sole trader or a partnership.
It also implies a higher cost than a sole proprietorship. A minimum of 1 person is required to
incorporate a limited company. The company starts to exist when it is registered with the Registrar of companies (In German: Handelsregister, In French: Registre du Commerce)


Advantages :
- a minimum investment commitment of CHF 20'000.- is required
- the founders liability is limited to the difference between CHF 20'000 and the lower amount
that has already been invested by the founders.
For example: If paid-up capital is CHF 15'000 out of total capital of CHF 20'000, then the partners remaining open liability is only CHF 5'000
- the company is a legal entity on its own
- the company can relatively easily be transformed at a later stage into a limited company (SA)
- any name can be used for the company as long as it includes GmbH or Sàrl
- relatively simple legal formalities
- no audit is required by law

Disadvantages:
- transfer of ownership is cumbersome
- upper limit of capital: CHF 2'000'000
- number of partners is limited by law
- the net profit of the company is taxed independently of the income of the partners

3,Stock corporation (In German: AG, In French: SA)
A corporation offers the best protection and the easiest transfer of ownership but includes high costs and strict legal formalities. A minimum of 3 persons is required to incorporate a stock
corporation.

Advantages :
- personal liability is restricted to the capital investment or commitment
- shares can easily be transferred
- any available name can be used for the company (with or without AG or SA)
- it is easier to find investors
- the corporation is a legal entity (person) on its own

Disadvantages:
- a minimum capital of CHF 100'000. is required, 20% but at least CHF 50'000.00 is free.
- double taxation: the company is taxed on its profits and the share holder are taxed when they receive a dividend

4, Branch office - Representation:
This is the simlplest option, relatively quick and cost effective.
Instead of creating a separate business, a Swiss or foreign company, can open a branch office immediately.
The branch office must be registered in the commercial register and be represented by a person who is residing in Switzerland.