Overview of the most common legal forms in Switzerland
When deciding to establish a company in Switzerland, one of the initial key decisions is choosing the legal form under which the business will operate. This choice will influence the company’s structure, legal liability, registration requirements, and taxation. In this article, we will delve into three prevalent legal forms: the limited company, the limited liability company, and the sole proprietorship.
Limited Company (Ltd.)
The limited company, or Ltd., is best suited for businesses intending to operate on a grand scale. Its defining characteristic is the distinction between the share capital and shareholder liability. If you are aiming for a significant scale and want to integrate shareholders without revealing their identities, Ltd. might be your go-to. A minimum share capital of CHF 100’000 is required, with shareholders' personal liability limited to the company's assets value.
Limited Liability Company (LLC)
For businesses that prefer flexibility, especially small to medium-sized ones, the limited liability company (LLC) emerges as a fitting choice. Entrepreneurs favour this legal form because it restricts the partners' liability solely to their capital share, protecting their personal assets from business debts. One of the standout benefits of LLCs over Ltds is the lowered capital requirement, setting the minimum share capital at CHF 20’000. This allows entrepreneurs to pool partners while still ensuring a ceiling on their personal risks.
Sole proprietorship
For independent professionals or individuals desiring to manage their business endeavours without any external interference, the sole proprietorship is the most straightforward legal form. However, a notable downside is the lack of distinction between the entrepreneur's personal assets and the business assets, making the entrepreneur personally accountable for business debts. The silver lining, though, is the hassle-free registration process with the Registry of Commerce and the absence of any minimum share capital requirement.
Conclusions
Selecting the appropriate legal form for your company is a vital decision. Evaluate your future plans and aspirations for the company you want to create and opt for a legal form that aligns best with its structure and responsibilities.
