A sole proprietorship exists if a natural person carries out a commercial activity with the aim of making a profit.
Next to the limited liability company, the sole proprietorship is the most frequently chosen legal form in Switzerland.
The sole proprietorship is most suitable for new entrepreneurs who wish to set up a small business in an uncomplicated manner. The person is the sole proprietor of the business, while all other employees are considered normal employees.
If several people want to set up a joint venture, they must choose another legal form (e.g. general partnership).
Sole proprietorship Taxes
The profit of the sole proprietorship is considered income. This income from self-employment is subject to income tax.
Sole proprietorship VAT
Each sole proprietor must clarify for himself whether he is subject to VAT. Every sole proprietor must determine for himself whether he is subject to VAT and, if so, register with the Federal Tax Administration. This is the case from a turnover of CHF 100,000 per year.
Sole proprietorship liability
The risk of a sole proprietorship is borne by the owner. This person is liable without limitation with his or her business and private assets.
In the case of an HR entry, bankruptcy proceedings apply instead of seizure proceedings.
It can be converted into a company with a GmbH or AG at any time by transfer of assets or contribution in kind.
Entry in the commercial register is only compulsory from an annual turnover of CHF 100,000. Voluntary registration is possible even before this. This also makes a more professional impression on customers, clients, etc.
- Costs for incorporation are low
- Low costs for bookkeeping, simple bookkeeping (Milchbüchli accounting) is sufficient.
- No double taxation of business income or assets
- Individual owners entered in the commercial register can file for insolvency (Art. 39 SchKG) and their assets are not confiscated.
- The founder’s surname must be included in the company name.
- The company name must not contain any additions indicating a business relationship (e.g. M. Muller & Company).
- There is no financial separation between ownership and private property
Sole proprietorship insurance
Founders of a sole proprietorship are considered self-employed. Accordingly, they are not subject to the classic obligations of accident insurance, BVG, etc.
However, due to the dangers of working and private life, it is advisable to at least consider protection for the following risks: