Turning your business plan into a business

Before you can open for business, you’ll have to take care of various administrative and legal tasks to officially create your company. The decisions you make in this step will lay the groundwork for how your business operates going forward.

D'un plan à une entreprise - Blanc

Legal structure

One of the first decisions you need to make is what legal structure you want for your business. Your choice will depend on many factors, including the number of business partners you have, the amount of risk and liability you are willing to take on, and how much capital you have to invest.

The different types of legal structures available in Switzerland are set forth in the Swiss Code of Obligations. In general there are two types of companies: unincorporated companies (sole proprietorships and general partnerships) and incorporated companies (limited liability companies and corporations). Unincorporated companies are inseparable from their founders; the founders are the company, and the founders’ assets are inseparable from those of the company. Incorporated companies have their own legal personality; their assets are completely separate from those of the owners.

The legal structure you decide on will determine the steps you need to take to register the company, as well as the tax and accounting procedures you will have to follow. So it’s important to get familiar with the different types of structures available so you can make the right decision. The following table compares the main features of each one:

choix-forme-juridique.pdf (864.7 kB)

Administrative steps

You will have to go through various administrative steps to create your company, such as requesting any necessary permits, selecting a name, and protecting your intellectual property.

Requesting permits

Some types of businesses are regulated in Switzerland and require a special permit or that you hold specific academic credentials. Check with the cantonal police office covering commercial activities (the Office de la police cantonale du commerce) to see if there any such requirements for your business.

Portal of authorizations and regulated professions in Switzerland at the federal, cantonal and communal levels: www.autorisations.admin.ch.

Choosing a name

There are some legal rules you have to follow when selecting a name for your company. For example, the name cannot contain any false information or be misleading as to what kind of business you perform. If you set up a sole proprietorship, your last name must be part of the company name. And if you set up an incorporated company, the name must indicate whether it is a limited liability company or a corporation.

If your business will be registered in the Swiss commercial register, you can do a search of the register to check whether another company is already using the name you want. Once you have settled on a name, the commercial registrar will have to approve it.

Database of company names already in use: www.zefix.ch.

Protecting your intellectual property

If your business is based on an original idea, you will want to make sure that nobody copies it. Switzerland has passed a series of laws to protect intellectual property such as a patent, trademark, design or copyright.

You can also take advantage of legal protection for your company name and logo, or a process or model. The Swiss Federal Institute for Intellectual Property and the World Intellectual Property Organization are a good starting point.

Business premises

When selecting a site for your company, there are two things to keep in mind. First, the size and capacity you need (like surface area, volume, height, and bearable weight), and second, specific criteria related to your business (like tax rates, labor pool, equipment suppliers, infrastructure, and transportation links).

  • If you choose to rent your business premises, you will need to sign a commercial lease. They typically run for five years with a six-month notice period for termination of the lease.
  • If you just want somewhere to work away from home, you could rent an office in a coworking space. This is a low-cost solution that will also put into contact with other local entrepreneurs.
  • If you want to purchase your business premises, you will have to go through a notary. Your company as the buyer will be responsible for paying the property transfer fees. Real-estate transactions are also subject to various other fees and taxes.
  • Another option is to purchase land and build your own premises; this would be a major undertaking that should be done with the help of professionals. You will need to become familiar with local zoning laws and apply for a building permit.

Zoning

Before embarking on the long and costly process of purchasing, building or renovating your business premises, make sure your plans comply with local zoning laws. Each municipality (commune) has a zoning plan that specifies which plots can be used for what purposes. If your plans don’t comply with the local zoning laws, you can apply to the municipality for a variance.

Formalization

The process for formalizing your company’s founding will depend on the legal structure you choose. Sole proprietorships typically just need to sign up with a social security fund. The process for setting up a limited liability company (société à responsabilité limitée) or corporation (société anonyme) is more complicated and requires a notary.

Sole proprietorships are not required to register with the local commercial register unless their full-year revenue exceeds CHF 100,000. But it is usually a good idea to register so that your business activities are on record. Business registries are in the public domain and protect the names of the companies registered with them. Since they let anyone view the full details about a company and are a reliable source of information, some organizations require that the businesses they work with be registered. Banks also require companies to be registered in order to qualify for a business loan.

If you decide to create a limited liability company or a corporation, you will need to:

  • Draft bylaws for your company and have them notarized
  • Put the legally-required capital into a capital-deposit account
  • Hold a general meeting of shareholders to officially create the company
  • Have a notary prepare your articles of incorporation
  • Register your company with the local commercial register, once you have the notarized articles of incorporation

Limited liability companies must, upon creation, issue shares worth at least their par value (minimum CHF 20,000). Corporations must be created with capital of at least CHF 100,000, of which at least 20% (minimum CHF 50,000) is actually paid in.

Set-up fees for a new business include:

  • Notary fees for the articles of incorporation: CHF 200 to CHF 2,000 in Vaud Canton (not including drafting the bylaws) along with a percentage of the total amount of capital
  • Consulting fees, which could be an hourly or flat rate
  • Fees for registering with the commercial register (around CHF 600 for a limited liability company or corporation)
  • Fees for publishing a notice in the Feuille Officielle Suisse du Commerce (between CHF 25 and CHF 200)
  • A federal stamp duty for limited liability companies and incorporations, equal to 1% of the capital above CHF 1 million

Beware of private commercial registers! These registries are not official. The law recognizes only each canton’s official commercial register. Registration with any other commercial register is optional. Be sure it’s worth the cost before accepting any of these offers.

Taxes

Corporate taxes

Sole proprietors pay taxes on income from their business and on their total assets, including any capital invested in the sole proprietorship. Limited liability companies and corporations are taxed as individual entities separate from their owners and managers.

  • If you create a limited liability company or corporation, your company will be taxed on its net income and capital.
  • The Vaud Cantonal Government (Conseil d’Etat) may grant tax exemptions to new businesses if they are of particular benefit to the Canton’s economy. The exemptions apply to some or all of the taxes on a company’s income and capital, but not to taxes on real-estate gains or the additional tax on buildings. Tax-exempt status is accorded for 10 years, including the year of the company's creation.

Value added tax (VAT)

As an entrepreneur in Switzerland, you will have to pay value added tax (VAT) to the federal government. But you can recover any VAT that you pay to other businesses, such as when you purchase supplies and services. The purpose of VAT is to tax end consumption. There are four VAT rate categories depending on the type of product or service:

  • The normal rate of 7.7%
  • A reduced rate of 3.7% for certain goods, such as food and non-alcoholic drinks not consumed in a restaurant, and books, magazines, and newspapers
  • A special rate of 3.8% for the hotel sector
  • Flat rates that are applicable, upon request, to companies with less than CHF 5,000,000 in annual revenues and that pay less than CHF 109,000 in taxes. These rates are set by the Swiss Federal Tax Administration and vary by sector. They are meant to spare smaller companies all the administrative work involved in the normal VAT system.

Even if your new company doesn’t reach CHF 100,000 of revenues during the start-up period and subsequent years, you may want to register for VAT voluntarily if you plan to spend a lot of money to build your premises and purchase capital equipment. That will let you deduct the entire amount of the VAT you pay on those expenses.

By the same token, if your company carries out some activities that are excluded from VAT (such as organizing cultural events or leasing property to taxpayers), you may want to voluntarily register those activities for VAT so that you can deduct the VAT on your business expenses.

Accounting

If you register your company with the local commercial register, then you will have to keep a set of books. That will involve preparing an inventory and balance sheet when you first start out, and then preparing an inventory, balance sheet and income statement at the end of each fiscal year.

Annual accounts

The purpose of this bookkeeping is to enhance transparency and provide information on your company’s financial position and earnings.

The income statement lists your income and expenses over a given period, while the balance sheet lists your current assets, fixed assets, liabilities, and equity at a given date. They must be prepared in accordance with the accounting rules in the Swiss Code of Obligations.

Those rules are based on the following accounting principles:

  • Materially complete
  • Clarity
  • Prudence
  • Going concern basis
  • Consistency from one accounting period to the next
  • No netting out of assets/liabilities or income/expenses (they must be listed in their entirety)

For more information, see Tools > Accounting

Audits

Limited liability companies and corporations must have their accounts audited. The type of audit (ordinary or limited) depends on the number of employees and total assets the company has.

  • When an ordinary audit is performed, the auditors deliver a full report to the Board of Directors and a summary report to shareholders at the Annual General Meeting.
  • For limited audits, only a summary report is submitted to shareholders at the Annual General Meeting.

In Switzerland, tax and accounting services are commonly provided by a fiduciaire (a job title that has no defined qualifications). The same holds true for other accounting job titles - such as comptable, expert-comptable, fiscaliste, and expert fiscal. Be sure the accountant and auditor you use are fully qualified and, preferably, members of their professional organizations.

Social security and labor law

All businesses must pay Swiss social security contributions, which consist of unemployment insurance, old-age and survivors’ insurance (assurance vieillesse et survivants, AVS), disability insurance (assurance invalidité, AI), loss-of-income insurance (assurance perte de gain, APG), and an occupational pension fund. You may also have to pay family allowances and purchase accident, health, and/or maternity insurance.

If you hire staff, you will have to become familiar with the part of Swiss law applicable to employment contracts.

Payroll taxes

  • Social security obligations: Employers are responsible for paying their employees’ AVS contributions (8.4%), AI contributions (1.4%), and APG contributions (0.45%). Sole proprietors have to pay 9.65% of their revenues (as declared on their federal tax return), less the interest on the capital they invested in the company. That 9.7% consists of 7.8% for AVS, 1.4% for AI, and 0.45% for APG.
  • Unemployment insurance: Premiums are equal to 2.2% of employees’ annual salary, along with a ‘solidarity’ contribution of 1% for the amount of salary above CHF 148,200. Sole proprietors do not have to pay for unemployment insurance.
  • Occupational pension plans: Employees whose annual salary is above CHF 21,060 must be admitted to the company’s occupational pension plan. Companies are required to contribute only on the first CHF 84,240 of an employee’s salary. Sole proprietors may voluntarily choose to contribute to an occupational pension plan. Sole proprietors who choose to enroll in such a plan will be subject to the law governing occupational pensions.
  • Family allowances:  Employers are responsible for paying contributions to a family allowance fund even if their employees do not have children young enough to be eligible for the allowances. Sole proprietors are required to contribute according to the level of their salary that is subject to social-security contributions (the salary level is capped at CHF 148,200 per year).
  • Accident insurance: Employers must provide all employees with insurance for accidents in the workplace. Employees who work at least eight hours per week must also be covered for non-work accidents. Sole proprietors are not required to have accident insurance. They can, however, take out an insurance policy to provide income in the event of illness or disability.
  • Health insurance: In Switzerland, employers are generally not required to provide staff with health insurance (i.e., to cover the cost of care provided or for loss of income owing to illness).
  • Maternity insurance: Women who are gainfully employed can take 14 weeks of maternity leave following the birth of a child. During this leave they will receive an allowance equal to 80% of their most recent salary (up to a maximum of CHF 196 per day).

Labor law

  • Employment agreement: An employment agreement, which should preferably be in writing, sets forth the obligations of both the employer and the employee. It is used for both short-term and permanent positions. A written agreement is required for an apprenticeship or when the employment terms differ from those set forth in the Swiss Code of Obligations.
  • Working hours: An employee’s working hours are specified in the employment agreement. Swiss law sets the maximum number of working hours per week at 45 or 50, depending on the profession.
  • Vacation and holidays: Swiss law sets the minimum number of vacation days at five weeks up to the age of 20 and four weeks after that age. Employees’ salaries must continue to be paid in full during the vacation. Vacation dates must be approved by the employer and include at least two consecutive weeks.
  • Terminating an employment agreement: Employees must be given notice if their employment contract is to be terminated (except in cases of immediate dismissal for good cause). The required notice period is:
    • 7 days during the trial period
    • 1 to 3 months (from the end of the month) after the trial period:
    • 1 month during the first year of employment
    • 2 months from the 2nd to 9th year of employment
    • 3 months from the 10th year onward.

Once the trial period is over, employees cannot be dismissed under the following circumstances: while carrying out military service (or four weeks before or after); in the event of total or partial inability to work (from 30 to 180 days, depending on the number of years employed); during pregnancy and for 16 weeks after giving birth; or if engaged in foreign assistance on behalf of the federal government.

Government financing

Vaud Canton offers various forms of financial assistance to companies in the manufacturing industry, manufacturing-related services and high-tech industry. This assistance, provided by the Vaud Office of Economic Promotion and Commerce (Service de la promotion économique et du commerce, or SPECo), is available to start-ups and small and medium-sized businesses in the canton that are seeking to expand.

Several kinds of financial assistance are available:

  • Investment aid: The Canton may guarantee a bank loan or pay some of the interest on a loan in order to promote large-scale, innovative, and job-creating business projects.
  • Support for innovation: Local governments in Switzerland aim to promote high-tech companies in particular through targeted initiatives. In Vaud, various cantonal entities provide business support and cooperation programs, including through specialized schools in the Canton.
  • Aid for growth and international expansion: The Vaud Office of Economic Promotion and Commerce provides financial assistance to companies participating in an industry conference or carrying out market research in search of business opportunities.
  • Aid for training: Companies that provide their employees with technical or scientific training can receive financial assistance. Training programs designed to help companies implement environmental or CSR initiatives can also qualify for financial support.

Useful documents

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Starting your own business

This hands-on guide to starting a company in Switzerland was prepared by BCV and the Vaud Chamber of Commerce and Industry (CVCI).

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Pistes de réflexion et modèle pour rédiger son plan d'affaires

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Business plan

Ce modèle à compléter vous permettra de réaliser votre business plan avec toutes les données nécessaires.

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Budget de trésorerie

Ce fichier vous permet de disposer d'un canevas pour faire votre budget de trésorerie.

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Keywords: Budget/ Trésorerie

 

Tableau comparatif RI, Sàrl, SA

Tableau comparatif Raison individuelle, Société à responsabilité limitée, Société anonyme

File size : 844.48 KB - Last update : 14 December 2018

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