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How to incorporate a startup in Switzerland? Things you need to know.

June 6, 2022
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Can I incorporate a startup in Switzerland myself? 

Yes you can. There are a few simple steps you can follow to do this. 

Step 1 - Decide which entity you want to incorporate in Switzerland?

The four types of legal forms most frequently used for setting up a business in Switzerland. They include:

Sole proprietorship: 

  • 1 person company
  • Does not require any money or capital to incorporate. 
  • It does not require registration in the commercial register if you plan on making less than CHF 100'000 of revenue per year.
  • You must however register with the OASI (AVS/AHV) to obtain your self-employed status. 
  • No notary needed

General partnership: 

  • 2 or more person company 
  • Does not require any money or capital to incorporate. 
  • Must be registered in the commercial register.
  • No notary needed

Limited liability company (GmBH): 

  • 2 or more person company 
  • Does require CHF 20,000 of capital investment to incorporate
  • Must be registered in the commercial register.
  • Notary needed to make it official

Corporation (AG): 

  • 2 or more person company 
  • Does require CHF 100,000 of capital investment to incorporate however 50,000 can be in kind meaning you don’t actually have to have money in the company. 
  • Must be registered in the commercial register.
  • Notary needed to make it official
  • Taxed on the profits and dividends of the shareholders. 

Many startups typically choose to incorporate an AG. The reason being is that it allows them to take on investment and create a favorable share structure for investors. 

If you incorporate a GmBH as a startup and you plan to take on investment, you will need to convert your GmBH into an AG. This is a costly exercise as it requires legal work and an investment from original founders to true up their initial capital. 

Step 2  - Decide on equity split with your founders

Decide on how you want to split equity among your founders when incorporating a Swiss startup. Keep in mind that this equity split will also require you to put in the equivalent amount of capital. For example, if there are 2 founders and you want to split the equity evenly each owning 50% of the startup. You will need to put in 50% of the minimum capital requirement. 

Meaning if the founders wish to incorporate an AG which requires a minimum of CHF 50,000 in cash. The founders will need to each deposit CHF 25,000 in cash into the company which is the equivalent of their ownership stake. 

Step 3  - Open a capital account with a bank

For GmBH and AG incorporation, you will need to work with a bank and open what is known as a “Capital Account”. This account allows you the opportunity to deposit the minimum capital requirement needed to incorporate a GmBH (CHF 20,000) and AG (CHF 100,000 (50K in cash, 50K in kind). 

Once you open this account and deposit the funds, the bank will issue you a certificate which you can then use to incorporate the company with the commercial register. 

Step 4 - Find a good lawyer

Preparing the documents for the commercial register and also finding a notary can be cumbersome. The best option is to find a good lawyer who can help incorporate at an affordable cost. We recommend using Lexr especially if you are in the tech sector. The lawyers will help prepare the necessary paperwork you need to file to the authorities in Switzerland. 

Also, as a startup, you will need a great lawyer moving forward when you choose to fundraise or activate an employee stock option plan. Just be sure to pick the right one early on. 

Step 5 - Signing with the Notary

When the documents have been prepared, a notary will need to validate your identity and signature. The founders will need to sign the documents and the signatures do need to be wet signatures meaning no Docusigns. 

The notary can validate this via a zoom call. They will simply request copies of your passports or identify documents. The founders will join the zoom call and show their passports and their faces via camera to allow the notary to notarize the signatures. 

This can also be done in person if you prefer. 

Step 6 - Wait and check the commercial registry

Your company will eventually be listed in the commercial registry confirming its incorporation. You can check this at the government central business name index - https://www.zefix.ch/en/search/shab/welcome

Do I need to do anything after incorporating my startup in Switzerland? 

Yes you will need to take out the necessary insurances and register your company and employees with the local cantonal fund. 

What insurances do I need to take out? 

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

If your employees work more than 8 hours per week, you will have to take out accident insurance known as UVG/LAA for occupational and non-occupational accidents.You can do this through the various insurance providers like Axa, Zurich Insurance, Helsana and others. A great digital solution is Helvengo

As a self-employed person you do not have to take out accident insurance. You are only legally obliged to insure yourself against the consequences of an accident in your private, compulsory healthcare insurance. This covers benefits at the level of medical expenses.

Other insurances that are recommended for your company include:

  • Liability insurance
  • Daily allowance insurance in case of illness
  • Property insurance (fire, theft, water damage, glass breakage)
  • Legal insurance

Do I need to 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).

In addition, if you have employees less than 18 years of age, you do not need to take out a 2nd pillar pension fund (BVG/LPP) for them. 

Do I need to 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).

In addition, if you have employees less than 18 years of age, you do not need to take out a 2nd pillar pension fund (BVG/LPP) for them. 

The company has to pay at least 50% of the employee's pension and can choose to pay more even up to 100% should they wish. 

Do I need to register my startup and employees with a Swiss Kanton? 

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

If you have multiple branches in different kantons, you will need to register them with a specific fund in the Kanton. For example, you could have a branch in Zurich and a branch in Vaud, you will then need to register your company and employees with a fund in each kanton for example SVA Zürich and Caisse cantonale vaudoise de Compensation AVS

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

This compensation fund covers you for the below insurances and allowances. 

  • Disability Insurance;
  • Earnings Loss Allowance;
  • Unemployment Insurance.

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

You will receive a family compensation contribution which the company must pay to cover family allowances. In the Caisse cantonale vaudoise de Compensation AVS for example, this rate is typically 2.65% and is taken from the salary paid to your employees. To be clear, this is a charge only for the company meaning this will not be deducted from the employee’s payslip. 

In addition, there could be deductions which the Kanton will require from the employee depending on the kanton. In Vaud again, employees and employers are required to pay 0.06% of the gross salary to cover what’s known as the Cantonal supplementary benefits for families (PC Familles). In Zurich for example, there is no such charge for the employee. 

In addition, the kanton 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 something I should know about registering them with the Swiss kantons?

Non Swiss employees will have been assigned a permit. These range from the below. 

Should your employees not have a C permit, you will need to register them with the withholding tax office. This is a separate tax office from within the Kantonal government. For example, in Zurich, you will need to register your employees with Quellensteuer | Kanton Zürich

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

The office will provide you with a withholding tax number which is used to identify your company and your employees when you submit your employees withholding tax amounts each month. Because businesses are the ones submitting withholding tax amounts, the withholding tax office lets you deduct a specific percentage when you submit. The withholding tax office will provide you with this percentage upon registering your employees. 

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

Is there a service I can use to incorporate a startup in Switzerland? 

There are plenty of services you can use when incorporating a Swiss company. Services like NewCo and Startups.ch can help you incorporate quickly and manage all the administrative details. 

Bassil Eid
Earny CEO

CEO of Earny and long time CFO working with Startups.