Many future events depend on the choice of the legal form of my company. Precisely for this reason, you should make a prior assessment of the various advantages and disadvantages of each legal form. For all cases, however: A legal form that is "perfect" in all respects does not exist. Nevertheless, the legal form can also be changed subsequently. Without question, such a modification has a cost, a considerable administrative burden and possibly associated tax consequences.
The next section will deal with important questions related to the choice a legal form.
1. We believe that the Liability plays the most important role.
Here it is necessary to distinguish whether claims against the company should only be covered by the assets of the company or am I prepared to provide joint liability with my private assets.
If I am willing to accept business risks with my private assets, a proprietorship, as well as a general partnership comes into question as available legal forms. Those who want to limit the liability solely to the assets of the company prefer to choose a public company or a limited liability company as the legal form.
Generally, we advise that the higher the appointed financial resources and the company risks, the more likely a public company or a limited liability company is the suitable type of legal form. These two types of legal forms provide exclusively to the liability being limited to the companies capital and the entrepreneurs private assets remain protected.
2. How high should my own capital be, respectively, how much equity can I provide and do the start up costs play a role for me?
E.g. CHF 20,000.00 is necessary as start up capital for a limited liability company, CHF 100,000.00 for a public company, whereby 20% must be payment under subscription (deposited). There are no provisions regarding minimum capital for a sole proprietorship and a general partnership.
In addition, the costs for the actual registration in the commercial register and, depending on the legal form, the required notarisation may cost several hundred to several thousand francs. In this point, it is important that you be competently advised if anything is unclear.
3. Depending on the legal form, there are strict guidelines regarding bookkeeping and accounting Will, respectively, can I meet these requirements?
Corporations (AG and GmbH) are required to keep proper accounting records while general partnerships and sole proprietorships when there is more than CHF 500,000 revenue per year. If this revenue is not reached, reduced requirements apply.
4. Am I aware of the social security contributions I must make, for whom and to whom?
Depending on the legal form, contributions may be mandatory, voluntary or may not even exist at all.
As long as I am employed, I do not have to worry about social security contributions because my employer takes care of these. However, when I play with the idea of being self-employed, I am responsible for the proper execution. If I hire further employees in my company, I am - as my previous employer was - responsible for the correct registration, declaration and payment of all legal social security contributions for my employees.
Therefore, I should think about the Swiss social security system and at least understand the basic processes. To that extent, the terms "Pillar 1", "Pillar 2," "Pillar 3", "ALV" (unemployment benefits), etc. should not be equated with "technical jargon".
In addition, some insurances / benefits, as already mentioned, are mandatory, others are voluntary or - depending on the legal form - not provided for. The best example is unemployment benefits (ALV = Arbeitslosenversicherung = unemployment). As the name suggests, the unemployment benefits should protect against the financial risk of unemployment. The employed owner of a public company / limited liability company is obligated to make contributions, whereas the owner of a proprietorship cannot even pay contributions on a voluntary basis.
5. Have I thought about tax consequences?
The different legal forms have different advantages and disadvantages. The following tabular overview (in PDF format) shows which legal form is taxed with what.
6. How will my company continue to exist when I decide to retire?
Depending on the legal form, other regulations regarding liquidation, withdrawal of shareholders or the survival of the company come into play. In order to avoid inconveniences arising from this context, at the date of incorporation I should already be clear about the consequences associated with my withdrawal from the company. Perhaps, I would like to someday bequeath my company to my heirs. Of course, a scenario is also conceivable, in which cooperation with the existing partners is, for whatever reason, no longer possible.
In summary, it can be concluded that a legal form does not exist, which is 100% appropriate and which only generates benefits. Nevertheless, one should take enough time for the choice. At best - even if there are associated costs - appropriate professional help is expedient because, for the most part, expert tips can save you subsequent inconvenience. At first glance, the consultation of a lawyer may be considered an unnecessary investment, but one should also bear in mind that any subsequent adjustment might quickly increase the cost substantially.