How to create a startup in Switzerland? Things you need to know 📝

Can I create a startup in Switzerland myself? 🏢

Yes, you can! Creating a startup in Switzerland is a simple process that can be carried out independently. Here are the key steps to follow:

Step 1 - Choose the type of entity to incorporate 📝

In Switzerland, there are four legal forms commonly used for incorporating companies:

Sole proprietorship :

• Suitable for one-man businesses.
• No capital requirement for incorporation.
• No obligation to register in the Commercial Register if annual sales under CHF 100,000.
• Registration with OASI (AVS/AHV) is required to obtain self-employed status.
• No notarial intervention required.

General partnership :

• Suitable for companies with two or more partners.
• No capital requirement for incorporation.
• Entry in the commercial register is compulsory.
• No notarial intervention required.

Limited liability company (GmbH) :

• Suitable for companies with two or more partners.
• Requires a minimum capital investment of CHF 20,000 for incorporation.
• Entry in the commercial register is compulsory.
• A notary's intervention is required for official recognition.

Société anonyme (SA) :

• Suitable for companies with two or more partners.
• Requires a minimum capital investment of CHF 100,000 (50% of which may be in kind) for incorporation.
• Entry in the commercial register is compulsory.
• A notary's intervention is required for official recognition.
• Shareholders' profits and dividends are subject to taxation.

Many startups choose to incorporate as a public limited company, as this enables them to attract investment and create investor-friendly share structures. However, if you initially choose to incorporate as a GmbH and plan to seek investment at a later date, you will need to convert your GmbH into an AG, which can be a complex and costly process.

Step 2 - Determine the distribution of capital with the founders 💼

When incorporating your Swiss startup, decide on the distribution of capital among the founders. Bear in mind that capital distribution also requires a corresponding capital contribution. For example, if there are two founders and they agree to split the capital equally (50% each), each founder must contribute 50% of the minimum required capital.

Step 3 - Open a capital account with a bank 💰

To incorporate a GmbH or AG, you'll need to open a "capital account" with a bank. This account enables you to deposit the minimum capital required for a GmbH (CHF 20,000) or a SA (CHF 100,000, 50% of which can be in kind). Once you have deposited the funds, the bank will issue a certificate which you can use to incorporate the company with the Commercial Register.

Step 4 - Get help from a reliable lawyer 🤝

Preparing the necessary documents for the commercial register and finding a notary can be a complex process. It is advisable to use a reliable lawyer, such as Lexr, to help you complete the incorporation at an affordable cost. They will help you prepare the required documents and file them with the Swiss authorities. In addition, having a competent lawyer from the outset can be beneficial for future fundraising or employee stock option plans.

Step 5 - Sign with a notary and validate documents 🖋️

Once the documents have been prepared, a notary will validate the identity and signatures of the founders. The founders must sign the documents with handwritten signatures (no digital signatures). This can be done during a Zoom call, where the notary will verify the founders' passports and identities. Alternatively, face-to-face meetings can be arranged if preferred.

Step 6 - Wait for confirmation from the commercial register ⏳

Your company will be listed in the Commercial Register, confirming its incorporation. You can consult the register on the government's central business name index. This confirmation completes the process of incorporating your startup in Switzerland.

Post-incorporation stages

Once you've created your startup, you have other obligations to fulfill:

• Obtain the necessary insurance 🛡️
• Register with the local cantonal fund 💼

What insurance do I need? 🛡️

If you have an AG or GmbH and your employees work less than 8 hours a week, you will only need to subscribe to the Federal Law on Occupational Accidents (UVG/LAA).

If your employees work more than 8 hours a week, you'll need to take out accident insurance called UVG/LAA for occupational and non-occupational accidents. You can do this with various insurers such as Axa, Zurich Insurance, Helsana and others. An excellent digital solution is Helvengo.

As a self-employed person, you are not obliged to take out accident insurance. You are only legally obliged to insure yourself against the consequences of an accident under your compulsory private health insurance. This covers medical expenses.

Other types of insurance are recommended for your business:

• Liability insurance
• Daily sickness benefit insurance
• Property insurance (fire, theft, water damage, glass breakage)
• Legal insurance

Should I take out a pension for my Swiss startup?

If salaries exceed the annual amount of CHF 21,150, you will be obliged to register your employees with a 2nd pillar pension fund (BVG/LPP).

What's more, if you have employees under the age of 18, you don't need to take out a 2nd pillar pension fund (BVG/LPP) for them.

The company must pay at least 50% of the employee's pension and can choose to pay more, even up to 100% if it wishes.

Do I have to register my startup and employees with a Swiss canton?

You will be asked to choose and register as an employer with a compensation fund (AHV/AVS) in the canton. For example, if your company is based in Zurich, you will need to register your company and your employees with SVA Zurich.

If you have several branches in different cantons, you will need to register them with a specific fund in each canton. For example, if you have a branch in Zurich and a branch in Vaud, you will need to register your company and your employees with a fund in each canton, such as the SVA Zürich and the Caisse cantonale vaudoise de compensation AVS.

Please note that some cantons have more than one compensation fund. For example, in Geneva, you can choose to register with either the Office cantonal des assurances sociales de Genève or the Fédération des Entreprises Romandes, both located in the canton of Geneva.

This compensation fund covers you for the following insurances and benefits:

• Disability insurance ;
• Allowance for loss of earnings ;
• Unemployment insurance.

When you register with the canton, it will provide you with a list of the social charges you need to include in your payroll. Some of these charges affect only the company, but others may also affect the employee.

You will receive a family allowance contribution which the company must pay to cover family allowances. At the Caisse cantonale vaudoise de compensation AVS, for example, this rate is generally 2.65% and is deducted from the salary paid to your employees. To be clear, this is a charge only for the company, which means that it will not be deducted from the employee's pay slip.

In addition, there may be deductions that the canton will require the employee to make, depending on the canton. In Vaud, for example, employees and employers must pay 0.06% of gross salary to cover what are known as cantonal supplementary benefits for families (PC Familles). In Zurich, for example, there is no such charge for employees.

In addition, the canton will also provide you with an AHV administration fee. This is the fee they charge you for processing your taxes.

Some of my employees are not Swiss. Is there anything I should know about registering them with the Swiss cantons?

Non-Swiss employees will be issued with a permit. These permits are as follows:

• EU/EFTA B permit (resident foreign nationals)
• EU/EFTA C permit (established foreign nationals)
• Ci EU/EFTA permit (resident foreign nationals with gainful employment)
• EU/EFTA G permit (cross-border workers)
• EU/EFTA L permit (short-term residents)

If your employees do not have a C permit, you will need to register them with the tax withholding office. This is a separate tax department within the cantonal government. For example, in Zurich, you'll need to register your employees with Quellensteuer | canton Zürich.

Please note that you must register your employees in the canton where they reside, not in the canton where the company is based. For example, if your company is based in Zurich but your employees reside in Zug, you will need to register with the tax withholding office with Quellensteuer - canton Zug.

The office will provide you with a tax withholding number that is used to identify your company and your employees when you submit your employees' tax withholding amounts each month. Since companies submit tax withholding amounts, the tax withholding office allows you to deduct a specific percentage when submitting. The withholding tax office will provide you with this percentage when you register your employees.

For example, they may tell you that you can deduct 2% of the withholding tax you submit. This means that if you submit CHF 1,000 in withholding tax from your employees, you only have to pay CHF 980, and you can keep CHF 20 for yourself.

Incorporation services in Switzerland 🤝

Several services can help you set up a Swiss company, such as NewCo and Startups.ch. These services can speed up the process and efficiently manage the administrative details.

With the help of these resources and by following the steps outlined above, you can successfully create your startup in Switzerland and embark on your entrepreneurial journey.

How Earny can help you 🤝

At Earny, we specialize in payroll management services. We understand the intricacies of Swiss payroll regulations and can help you manage your payroll tasks efficiently. Our advanced software simplifies payroll processes, ensuring accurate and transparent payroll solutions for your startup. Let us take care of your payroll, allowing you to focus on growing your business. Contact Earny today to simplify your payroll management.