Setting up a business in Switzerland

Setting up a business in Switzerland is a simple process : it only takes a few days to complete the necessary administrative steps. To carry out your project, it is important to know some Swiss laws concerning the creation of a company.

Who has the right to create a company in Switzerland?

The Swiss economy attaches great importance to the principles of economic freedom. This freedom, which has many positive effects on the growth of companies, also means that everyone (including foreign citizens) has the right to carry out a craft, industrial or commercial activity, to found, manage or participate in a company.

For foreign nationals, the authorization to create a company varies according to the place of origin of the founder:

• Nationals of EU/EFTA member states can freely exercise a self-employed activity in Switzerland. To do so, they only have to be in possession of a residence permit (B permit) valid for 5 years. It is also necessary to be able to prove the existence of their planned gainful activity by presenting an UID number, an entry in the professional register and with a social insurance company as an independent entrepreneur, a business plan, accounting figures, or an entry in the commercial register. Further information on the required documents can be obtained from the cantonal immigration and employment market authorities.
• Third-country nationals (neither EU nor EFTA) must meet the requirements for the Swiss labor market.

It is also important to note that foreign nationals must obtain authorization before they can acquire property in Switzerland according to the Federal Law on the Acquisition of Real Estate by Persons Abroad. More information on the laws relating to the construction of a business on Swiss territory is available in our article Building in Switzerland: land use planning and environmental protection.

What legal form to choose for a company?

Anyone wishing to start a business in Switzerland must choose a specific legal form. It is essential not to neglect this step because not all legal forms suit every type of business. To guide your choice, it is necessary to define your type of activity, the expected duration, the legal and fiscal framework conditions as well as the strategic objectives of the management (head office, production or operating sites, sales office, financial or service company). You can find the different existing legal forms in our article Choose a legal form for your company in Switzerland. 

Company’s accounting

Before setting up a company, it is important to know the requirements and laws concerning the company’s accounting. The obligation to keep accounts and to present accounts by the rules established in the Code of Obligations applies to the following companies:

• Legal entities (corporations, limited liability companies, limited partnerships with shares, cooperatives, associations, and foundations).
• Sole proprietorships and partnerships (general and limited partnerships) with a turnover of more than CHF 500,000 in the last financial year. If the turnover of sole proprietorships or partnerships does not exceed this amount, it is still necessary to keep at least simplified accounts, which include only income, expenses, and assets.

Accordingly, anyone who registers his business name (i.e. the name by which he is known in the business) in the Commercial Register is obliged to keep the books of account required by the nature and scope of his business following the Ordinance on the Keeping and Retention of Books of Account. The books of account must reflect the company’s financial situation, the state of the debts and receivables related to the operation, as well as the annual exercises’ results. Under Swiss law, profit and loss statement and the annual balance sheet must be drawn up by the principles generally accepted in the trade: they must be complete, clear, and easy to consult. This makes it possible to present the financial statements following internationally accepted guidelines (e.g. US-GAAP, IFRS, Swiss GAAP FER).

There are some specificities related to the different types of companies. For legal entities, there are detailed minimum requirements on how to structure the annual accounts to improve transparency. These must include at least a balance sheet and an income statement, with comparisons with the previous year and explanatory notes. For companies, especially those listed on the stock exchange, the annual interim accounts must be consolidated in group accounts when two of the following conditions are met in two successive financial years:

• A balance sheet total of CHF 20 million;
• A turnover of CHF 40 million;
• Annual average of 250 full-time employees.

Please note that all accounting documents and reports related to the company’s accounting must be kept for at least ten years.

In Switzerland, some persons and companies are authorized by the state to verify the annual accounts’ accuracy, such as fiduciary agents, trust companies, or auditing companies. However, the audit depends on the size and economic importance of the company. Indeed, the ordinary audit is maintained for companies that are required to prepare consolidated accounts, are listed on the stock exchange, or meet two of the three conditions mentioned above. If these conditions are not met, the annual accounts’ audit is limited (management’s interview, appropriate details’ verification, and analytical audit). It is possible to waive the audit if all company’s partners agree and if the company does not have more than ten full-time jobs on average per year.

Creating a company

Once the business planning is completed, it is possible to move on to the actual creation of your company. There are many structures in place to help and guide you in this process: first of all, the cantons’ economic promotion services, such as the Greater Geneva Bern area, but also advice from banks, consulting firms, fiduciaries, and specialized lawyers.

The process of creating a company is also simplified thanks to the online counter “EasyGov” proposed by the State Secretariat for Economic Affairs (SECO). This service considerably reduces the administrative burden related to a company’s creation and increases the companies’ productivity. It allows sole proprietorships, limited liability companies, stock corporations, general partnerships, and limited partnerships to register with cantonal compensation offices, VAT authorities, and accident insurance companies directly online. Sole proprietorships, general and limited partnerships can also be entered in the commercial register so that the entire process of setting up these types of companies can be done via “EasyGov”.

Registering a company in the commercial register

Any craft, industrial or commercial activity requires an entry in the commercial register. The commercial register lists all commercial companies operating in Switzerland and presents the responsibility and representation relationships of a company. Anyone can therefore consult the Central Business Name Index of the Federal Office of the Commercial Register to check the availability of the name chosen for the company. All entries and deletions in the commercial register are published in the Swiss Official Gazette of Commerce.

Once registered in the commercial register, the company benefits from the protection of business names. The business name, i.e., the name under which the commercial enterprise will be operated, can be chosen freely within the legal requirements’ framework. There are also constraints in the business name that depend on the legal form of your company:

• In the case of limited companies (Ltd) and limited liability companies (LLC), it must contain the legal form;
• In the case of a partnership, it must, if all the partners are not named, contain at least the surname of one partner with an addition indicating the existence of the partnership;
• In the case of a sole proprietorship, it must be based on the creator’s family name and may not contain any additions presuming the existence of the company.

Foundation costs

Foundation costs depend on several factors, such as the method of foundation, the cost of which varies depending on whether it is done in the traditional way or on SECO’s electronic platform. The fixed costs amount to about CHF 5000 to 8000 for a traditional foundation, and about CHF 2000 for an electronic foundation. It should be noted that a corporation’s foundation is generally more complicated, which in most cases implies a higher cost than that of a partnership. In Switzerland, there are also regulations on the CO2  emissions of a company: each company must obtain a certificate that entitles it to emit a certain amount of CO2. Depending on the quantity produced, the cost of the foundation can vary.

In a nutshell: Switzerland does everything possible to encourage and facilitate the creation of new businesses. The government provides several authorities to assist you in this process, such as the GGBa, to facilitate the various administrative steps required to create a company.

Greater Geneva Bern area (GGBa) is the investment promotion agency for Western Switzerland. If you would like to know more about the administrative steps to take in order to create your company or about other subjects that could help you set up your business, contact us.

Our “Why Switzerland” articles are likely to answer your questions.