This page has an average rating of %r out of 5 stars based on a total of %t ratings
Reading Time 8 Minutes Reading Time 8 Minutes
Created on 24.02.2022

A complete checklist for founding a sole proprietorship

Are you ready to take the first step into self-employment? Do you want to start your own company? You might be interested in founding a sole proprietorship. Find out here how you can found a sole proprietorship in Switzerland.

In the first three months of 2021 alone, some 13,166 new entries were made in the Swiss commercial register. The most popular legal form for these companies after limited liability companies was sole proprietorship, with the number of new businesses rising by 18% on the previous year.

Do you want to join the start-up boom or are you still unsure how to climb the steep mountain of administration? With a checklist and some tips to remember when founding a sole proprietorship, we help you to keep a clear overview. 

What you need to know before starting a business

Before plunging into planning your sole proprietorship, you should first be aware of the preconditions for starting a business in Switzerland and what might be on the cards.

Advantages of a sole proprietorship

Sole proprietorships not only have the advantage of a smaller administrative burden than a limited liability company or a private limited company. They also have the following advantages:

  • No start-up capital: Unlike limited liability companies and private limited companies, founding a sole proprietorship does not require any initial investment.
  • No double taxation: A sole proprietorship is not subject to double taxation because it is a natural person rather than a legal entity. This means that the net income from the sole proprietorship is taxed together with all your other income.
  • Greater freedom: Company members can themselves take on the role of all possible bodies in a company.

Disadvantages of a sole proprietorship

The legal form of the sole proprietorship also has its disadvantages. The greatest disadvantages include:

  • Unlimited personal liability: If you generate debts in your sole proprietorship, you are liable for these both with your business assets and your private assets.
  • No unemployment benefits: As a sole proprietor, you cannot be insured under unemployment insurance (ALV) and cannot claim unemployment benefits if at any point you can no longer continue your activities.
  • No anonymity: You must enter your sole proprietorship in the commercial register under your own name so your details as a sole proprietor are visible to anyone.
  • More difficult to access credit: As a partnership, a sole proprietorship is less trusted by banks than a capital company and therefore has greater difficulty obtaining credit.
  • More difficult to transfer ownership shares: Unlike capital companies such as limited liability companies and private limited companies, it is not as easy to transfer ownerships shares in partnerships.

Fundamentals

Before deciding to found a sole proprietorship, it is generally important to consider the following:

  • Exclusive ownership: You must be the only member of the company to be allowed to found a sole proprietorship.
  • Work permit and residence permit: You do not need Swiss citizenship to found a sole proprietorship but you must be able to show a work permit and a residence permit.
  • Commercial register entry: You must make an entry only when your annual income is CHF 100,000. However, you can also enter your company beforehand, as this has advantages: You can be found in the Business Name Index (The link will open in a new window zefix.ch) and customers and suppliers feel secure by seeing an excerpt.
  • Accounting obligations: You are obliged to keep accounts from an annual turnover of CHF 500,000. Below this margin, it is sufficient to show income, outgoings and your assets. 

Three phases of starting a business – checklist

Have you weighed up the pros and cons and decided that a sole proprietorship is the right legal form for your future company? Then read through our checklist to set you on the road to success. Basically, founding a sole proprietorship has three phases: the preparation phase, starting the business itself and the phase after starting the business.

  • The preparation phase for starting a business is the most time-intensive. But you will save on complications when you start your business if you have all your documents together and have already clarified details such as insurance, authorizations and financing.

    Generally, you should be able to tick off these points on the checklist:

    • Make a business plan: Before you can start your actual preparations, you have to know what your company’s concept will be.
    • Clarify legal issues: What contracts will you need during your activities? Find answers to this question promptly and prepare them before you start your activities.
    • Get authorizations: Before you start, you should know which authorizations your work requires and get them. More information on relevant authorizations can be found at The link will open in a new window bewilligungen.admin.ch.
    • Declare self-employment: As a sole proprietorship, your company is not a legal entity and does not have its own legal entity; you as the owner and natural person must be the legal entity. You should therefore declare to your compensation office as soon as possible whether your activity fulfils the preconditions of self-employment under AHV insurance law.
    • Clarify insurance issues: Get offers for occupational insurances from entities like SUVA or private insurance companies. What you have to insure depends on whether you have employees or not.
    • Generally, these types of insurance are recommended for you as the owner:
    • Obligatory: old-age and surviving dependants insurance, disability insurance, loss of earnings compensation and child allowances
    • Optional: pension fund
    • Optional: daily allowance insurance
    • Optional: accident insurance

    Please note that although only old-age and surviving dependants insurance, disability insurance, loss of earnings compensation and child allowances are obligatory, the optional insurance types are recommended depending on your situation.

    If you employ staff, you must register them with the insurance entities and handle their insurance. The following types of insurance:

    • Obligatory: old-age and surviving dependants insurance, disability insurance, loss of earnings compensation and child allowances
    • Obligatory: occupational accident insurance
    • Partially obligatory: pension fund from an annual salary of
    • CHF 21,510 (as of 2022)
    • Optional: daily allowance insurance
    • Get tax advice: A new company also changes your tax situation. Get advice on how your taxation and progression levels are likely to change.
    • Secure financing: A sole proprietorship does not need start-up capital but, depending on the activity, you may need to make investments and arrange funding. As soon as your financing is planned and secured, you can open a business account with your bank. More information on opening a business account can be found at ‘Business account in CHF: The basis for payment transactions’.
    • Organize premises: If you need premises for your activity, you must of course find and finance these. Don’t forget that you usually have to pay for several months as a rental deposit.
    • Choose your company name: Creative preparation is just as important. Remember though that your last name must be included in the company name of a sole proprietorship.
    • Buy domain names: You need a website and a domain for your digital presence. Check that the domain name you want is available and buy it.
    • Create your company’s visual appearance: Create a logo and a brand identity to support your brand both online and offline. According to the Swiss Code of Obligations, you must state the company listed in the commercial register, or the name given there, on official documents like correspondence, invoices and order forms. Of course, you can add extras like short names, logos, business descriptions, signs and similar details.
    • Protect your logo: Perhaps you’d like to protect your logo. If so, you must register it with the Institute of Intellectual Property.
    • Check your obligation to be entered in the commercial register: From an annual income of CHF 100,000, you are obliged as an ‘activity of a commercial nature’ to register your sole proprietorship in the commercial register. Consider whether it makes sense for you to register your company even below this annual income.
  • After a more intensive preparatory phase, the actual founding of a sole proprietorship is completed in just a few steps. In sole proprietorships, you don’t have to specify capital, payment under subscription or structural organization or appoint governing bodies. Instead, you must consider the following points:

    • Start your business activity: The sole proprietorship is founded as soon as you start your activity.
    • Prepare commercial register registration: If you have decided to register in the commercial register or you are legally required to do so, prepare the information and documents (company name, political municipality of the head office, address, scope of activity, your personal details as owner, copy of owner’s passport or ID document).

    Registration requires your officially certified signature and must be submitted to the relevant cantonal Commercial Registry by post or in person.

    • Get your signature officially certified: Since you need an officially certified signature for registration with the Commercial Registry, you must have this certified by a notary, municipal official or at the counter of the Commercial Registry Office before you submit your registration. This service costs between CHF 10 and CHF 30.
    • Register with the Commercial Registry: Send your prepared documents for registration or deliver them in person. And order an extract from the commercial register. The entry fee for sole proprietorships is CHF 160 (as of 2022).
    • Organize accounting and financial reporting: Consider how you want to organize your accounting and financial reporting. You are only obliged to keep official accounts from a sales revenue of CHF 500,000. Below this threshold, you need only show your income, expenses and assets.
    • Register with the compensation office: Register with your cantonal compensation office.
  • Even after the actual founding of your sole proprietorship, there are a few points to consider:

    • Check your VAT obligation: Are you liable for VAT? Find out! Basically, you are liable for VAT from an annual turnover of CHF 100,000 from taxable services in Switzerland. If you meet this criterion, you must register with the Federal Tax Administration within 30 days.
    • Confirm insurance: Confirm your personal and any necessary property insurance.
    • Open a business account: You should open a business account that is separate from your private account at the latest when you start your activities.
    • Appoint a fiduciary: Perhaps you don’t want to do all the administrative work yourself. It is advisable to choose a fiduciary to support you right from the start.

Starting your sole proprietorship

Sole proprietorships are a good and simple solution for becoming self-employed. With a good awareness of what a sole proprietorship requires – and our checklist – you can make a stress-free start on setting up a company.

Keep in mind your general obligations such as taxes, insurance, customers, suppliers and employees, or let experts give you a helping hand.

Best of luck with starting your sole proprietorship.

This page has an average rating of %r out of 5 stars based on a total of %t ratings
You can rate this page from one to five stars. Five stars is the best rating.
Thank you for your rating
Rate this article

This might interest you too