Choosing The Right Legal Structure For Your Business In Switzerland

Published on September 29, 2025 and written by Cyril Jarnias

Starting a business in Switzerland is an exciting adventure, but one that requires making crucial choices from the very beginning. Among these fundamental decisions, selecting the legal structure of your company holds a predominant place. This choice will not only influence how your business is perceived by partners and clients but also your legal, tax, and administrative obligations. In this article, we will explore the different options available to you and guide you through this critical decision for the future of your entrepreneurial project in Switzerland.

Switzerland, known for its economic and political stability, offers a favorable environment for business creation. With a constantly increasing business creation rate—over 44,000 new companies registered in 2024 according to the latest statistics—it’s clear that Swiss entrepreneurship is booming. However, navigating the complexities of different legal structures can be challenging for newcomers.

Whether you’re a solo entrepreneur dreaming of launching your own business or an ambitious team ready to conquer the Swiss market, understanding the nuances between a sole proprietorship, a limited liability company (LLC), or a corporation (AG) is crucial. Each legal form has its advantages and disadvantages, and the optimal choice will depend on your short- and long-term goals, your financial situation, and the nature of your activity.

In the following sections, we will break down the main legal structures available in Switzerland, analyze their characteristics, and help you determine which one best suits your needs. Get ready to dive into the fascinating world of Swiss entrepreneurship and lay the solid foundations for your future business!

The Stars of Swiss Entrepreneurship: Overview of Popular Legal Structures

In Switzerland, entrepreneurs can choose from several legal forms to structure their activity. Each of these options has unique characteristics that may prove more or less advantageous depending on the nature of your project and your ambitions. Let’s take a closer look at the three most popular structures among Swiss entrepreneurs.

Sole Proprietorship: The Choice of Simplicity

The sole proprietorship, also known as an individual enterprise, is the simplest and most accessible legal form for starting a business in Switzerland. It represents about 60% of companies created each year, demonstrating its popularity among beginner entrepreneurs and freelancers.

• No minimum capital required to start
• Minimal creation formalities
• Simplified management and great operational flexibility
• No obligation to register with the commercial register if annual turnover is less than 100,000 CHF

However, this structure also has notable disadvantages, including the entrepreneur’s unlimited liability on personal assets in case of debts or bankruptcy. Additionally, credibility with business partners and financial institutions may be lower compared to other legal forms.

LLC: The Middle Ground Between Protection and Flexibility

The Limited Liability Company (LLC) has become the preferred choice for over 30% of new businesses in Switzerland. It offers an interesting balance between personal asset protection and management flexibility.

• Limited liability of partners to the amount of their contributions
• Accessible minimum share capital of 20,000 CHF
• Structure suitable for SMEs and projects with growth potential
• Increased credibility with partners and clients

Nevertheless, creating an LLC involves more complex formalities, including appearing before a notary and mandatory registration with the commercial register. Creation costs are also higher than for a sole proprietorship.

Corporation (AG): The Choice for the Ambitious

The Corporation (AG) is the preferred legal form for large companies and projects requiring significant investments. It represents about 10% of new companies created each year in Switzerland.

• Strong brand image and maximum credibility
• Possibility to raise significant funds through stock issuance
• Structure suitable for international-scale projects
• Clear separation between management and company ownership

However, the AG requires a minimum share capital of 100,000 CHF, of which 50,000 CHF must be paid up immediately. Creation and management formalities are also more burdensome, with increased obligations in terms of governance and transparency.

Sole Proprietorship or Company: The Swiss Entrepreneur’s Dilemma

One of the most frequent questions future entrepreneurs in Switzerland ask themselves is whether it’s better to opt for a sole proprietorship or create a company (LLC or AG). This crucial decision depends on many factors and deserves thorough analysis.

Advantages of Sole Proprietorship

The sole proprietorship remains the preferred choice of many entrepreneurs in Switzerland, particularly for those starting an independent activity or small business. According to statistics from the Federal Statistical Office, over 300,000 sole proprietorships are active in Switzerland, testifying to the popularity of this legal form.

• Speed and simplicity of creation: no need to appear before a notary
• Minimal startup costs: no minimum capital required
• Total flexibility in management and decision-making
• Simplified taxation: business income is taxed with the entrepreneur’s personal income

However, the sole proprietorship also has major disadvantages, including the entrepreneur’s unlimited liability on personal assets and sometimes limited credibility with business and financial partners.

Benefits of Creating a Company

Opting to create a company, whether an LLC or AG, offers many advantages, especially for ambitious projects or those requiring significant investments. In 2024, over 70% of new businesses created in Switzerland chose the company structure, illustrating a growing trend toward these more structured legal forms.

• Protection of personal assets: liability is limited to share capital
• Increased credibility with clients, suppliers, and financial institutions
• Possibility to associate multiple people with the project
• Potential tax optimization, especially for reinvested profits
• Ease in raising funds and attracting investors

Nevertheless, creating and managing a company involves more complex administrative formalities and higher costs, both at creation and for ongoing operations.

Selection Criteria Between Sole Proprietorship and Company

To make the right choice between sole proprietorship and company, several criteria must be considered:

1. Nature and scale of activity: A small-scale or consulting activity may suit a sole proprietorship, while an ambitious project or one requiring significant investments will be better served by a company.

2. Financial risks: If your activity involves significant financial risks, the protection offered by a company may be crucial.

3. Growth prospects: A company offers more flexibility to welcome new partners or investors, thus facilitating future growth.

4. Image and credibility: Certain sectors or clients may prefer dealing with companies rather than sole proprietorships.

5. Taxation: The tax structure of your activity can vary considerably between a sole proprietorship and a company. A thorough analysis with an accounting expert is recommended.

Optimizing Your Choice: Strategies for Selecting the Ideal Legal Structure

Choosing the optimal legal structure for your business in Switzerland requires deep reflection and meticulous analysis of your personal and professional situation. Here are some strategies to help you make the best possible decision.

Assess Your Needs and Long-Term Goals

Before diving into choosing a legal structure, it’s crucial to clearly define your short-, medium-, and long-term goals. Ask yourself the following questions:

• What is the scale of your initial project and how do you envision its evolution?
• Do you plan to hire staff in the near future?
• Do you want to associate other people with your project?
• Do you envision international expansion in the medium term?

A study conducted by the University of St. Gallen revealed that 65% of entrepreneurs who changed legal forms within the first five years of operation did so because their initial structure no longer matched their growth needs. Anticipating your future needs can therefore save you costly and time-consuming procedures later.

Analyze Tax Implications

Taxation is a key element in choosing the legal structure. In Switzerland, the tax regime varies considerably between a sole proprietorship and a company.

• Profits are taxed at the entrepreneur’s personal tax rate
• Social security contributions (OASI/DI/APG) are calculated on net profit

• The company is taxed on its profits (corporate tax rate)
• Dividends paid to shareholders are subject to income tax (with partial taxation)

According to a PwC Switzerland study, the total tax burden (taxes + social charges) can vary from 10 to 25% between a sole proprietorship and a company, depending on profit level and canton of establishment. It is therefore crucial to conduct detailed tax simulations before making your choice.

Consider Liability and Asset Protection Aspects

Protecting your personal assets is a crucial aspect to consider. If your activity involves significant financial risks, opting for a structure that limits your liability (LLC or AG) may be wise.

Statistics from the Federal Statistical Office show that the bankruptcy rate of sole proprietorships is 1.5 times higher than that of companies. This difference is partly explained by the unlimited liability of sole proprietors, which may push them to declare bankruptcy more quickly in case of financial difficulties.

Evaluate Creation and Management Costs

Costs associated with creating and managing your business vary considerably depending on the chosen legal structure. Here’s an overview of average costs to expect:

• Sole proprietorship: 0 to 1,000 CHF for registration with the commercial register (if necessary)
• LLC: between 4,000 and 6,000 CHF for creation (including notary and RC registration fees)
• AG: between 8,000 and 12,000 CHF for creation

In addition to these initial costs are annual management fees, which are generally higher for companies due to greater accounting and administrative obligations.

Consult Experts

Given the complexity and long-term implications of choosing a legal structure, it is strongly recommended to consult experts before making your decision. A lawyer specialized in corporate law, an accounting expert, or a business creation advisor can help you:

• Analyze your personal and professional situation in detail
• Conduct precise tax simulations
• Evaluate risks specific to your sector of activity
• Anticipate your company’s future needs

A survey conducted among Swiss entrepreneurs revealed that 78% of those who consulted an expert before choosing their legal structure declared themselves satisfied with their choice after 5 years of operation, compared to only 45% for those who made their decision alone.

Conclusion: Making the Right Choice for a Flourishing Entrepreneurial Future in Switzerland

Choosing the appropriate legal structure for your business in Switzerland is a crucial decision that will have significant repercussions on the development and success of your entrepreneurial project. Whether you opt for the simplicity of a sole proprietorship, the flexibility of an LLC, or the scope of an AG, each option has its advantages and disadvantages that should be carefully weighed.

Let’s recall that according to statistics from the Federal Statistical Office, companies that chose a legal structure suited to their activity and objectives have a 30% higher chance of surviving beyond their first five years of existence. This figure underscores the crucial importance of this initial decision.

To make the right choice, it is essential to:

• Clearly define your short-, medium-, and long-term goals
• Accurately assess financial risks related to your activity
• Analyze in detail the tax implications of each option
• Consider the image and credibility you wish to project to partners and clients
• Anticipate your future needs in terms of financing and growth

Remember that choosing the legal structure is just one step in your entrepreneurial journey. The success of your business will also depend on many other factors such as the quality of your offer, your commercial strategy, your financial management, and your ability to adapt to market developments.

Switzerland offers a favorable environment for entrepreneurship, with a stable legal framework, attractive taxation, and a dynamic innovation ecosystem. By choosing the legal structure best suited to your project, you give yourself every chance to fully benefit from these advantages and build a prosperous and sustainable business.