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Being your own boss and employing others – Is it necessary to have contracts and social insurance?

After starting a business many entrepreneurs require additional help from third parties (some based on contracts).

For example, an owner of a trucking company may regularly require drivers. Moreover, depending on circumstances one may also require the help of a bookkeeper, accountant and/or fiduciary. Often there simply is not enough time for one person to do all of the required work. The question you have to ask yourself is how the relationship between you and your employees will function. This will dictate whether an employment or project contract is appropriate.

If your business appears to require a certain employee for the foreseeable future, it makes sense to formalize this employment with a contract. This however is not pressingly necessary as it is not required by law. If someone is regularly employed at your firm for a longer duration of time, this activity itself qualifies as a employment contract and obliges you to cover the social insurance (AHV/IV/EO; if applicable, pension fund) duties of the employee.

With independent contractors, sometimes referred to as freelancers, it is unclear whether a contract of employment exists or not. These kinds of employment conditions are to be avoided. Should at some later point an independent employee turn out to be dependent one, so an actual employee of the business, massive costs may arise.

A fiduciary, who fills out the tax forms and creates the annual financial statements, would be an example of a self-employed person in most cases.

In contrast, the drivers of a transport business could be seen as dependent employees whose employment could bring with it certain aforementioned contractual obligations (even without a written contract).

Starting your business or changing the type of business entity that your company already has can be easy. STARTUPS.CH offers you professional consulting throughout the entirety of the process and thereafter. You can register for a consultation here or request free informational material.

On STARTUPS TV you can watch interesting reports on the topic of successful business starts, with plenty of information, tips and tricks to help you do the same.

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