How do I set up a limited liability company (GmbH) in Switzerland?

What is a Swiss Limited Liability Company (GmbH)?

A limited liability company (Gesellschaft mit beschränkter Haftung/GmbH) is a capital company with limited liability and belongs to the most popular legal forms in Switzerland.

Basic Characteristics:

• Shareholders: One or more natural/legal persons
• Minimum Capital: CHF 20,000 (share capital)
• Liability: Limited to company assets
• Commercial Register Entry: Mandatory
• Swiss Representation: At least one person resident in Switzerland required

Advantages of Swiss Limited Liability Company

Financial Benefits:

• Low Initial Capital: Only CHF 20,000 required
• Limited Liability: Private assets are protected
• Capital Procurement: Easy access to external financing
• Tax Optimization: Flexible profit distribution design

Organizational Benefits:

• Single-Person Formation: Possible since January 1, 2008
• Flexible Expansion: Later partner admission without re-formation
• Conversion Possibility: Easy conversion to corporation (AG) possible
• Professional Image: Higher credibility than sole proprietorship

Disadvantages of Swiss Limited Liability Company

Financial Disadvantages:

• Double Taxation: Profit tax + distribution tax
• Higher Formation Costs: Compared to sole proprietorship
• Administrative Costs: Organs, minutes, meetings

Legal Disadvantages:

• No Anonymity: All data visible in Commercial Register
• Unemployment Benefits: Only possible after complete withdrawal
• Mandatory Organs: Shareholders' meeting and management required
• Audit Requirement: With more than 10 full-time positions

Step-by-Step Formation Guide

Step 1: Budget Formation Costs

Mandatory Costs:

• Share Capital: CHF 20,000 (minimum)
• Commercial Register Entry: CHF 600-800
• Notary Costs: CHF 500-2,000
• Consulting Fees: Up to CHF 2,000

Additional Costs:

• Issuance Tax: 1% on capital over CHF 1,000,000
• NewCo Complete Package: CHF 490 (including consulting and notary fees)
• Audit Body: CHF 1,000-5,000 per year (if required)

Total Costs:

• Minimum: CHF 21,500-23,000
• With Professional Support: CHF 21,000-22,000

Step 2: Determine Company Name

Name Requirements:

• Suffix Required: "GmbH" or "Gesellschaft mit beschränkter Haftung"
• Uniqueness: Name must not already exist
• Protection: Automatic Switzerland-wide protection after Commercial Register entry
• Check: Availability in Commercial Register index

Recommended Name Structure:

• Business designation + "GmbH"
• Example: "Muster Consulting GmbH"

Step 3: Determine Share Capital

Capital Requirements:

• Minimum Amount: CHF 20,000
• Share Units: Minimum par value CHF 100 per unit
• Payment: Full payment required at formation
• Capital Payment Account: Set up at Swiss bank

Shareholder Structure:

• Minimum Participation: One share unit per shareholder
• Reporting Obligation: For participation ≥25%, disclosure of beneficial owner
• In-kind Contributions: Possible as alternative to cash

Step 4: Determine Corporate Organs

Mandatory Organs:

Shareholders' Meeting:

• Function: Supreme organ of GmbH
• Tasks: Approval of annual accounts, appointment of management
• Frequency: At least once annually
• Competencies: Profit usage, article amendments

Management:

• Appointment: Shareholder or external person
• Tasks: Operational leadership of company
• Representation: External representation
• Liability: For actions in breach of duty

Audit Body (if required):

• Requirement: More than 10 full-time employees
• Limited Audit: When exceeding 2 of 3 thresholds:
  • Balance sheet total: CHF 20 million
  • Revenue: CHF 40 million
  • Employees: 250
• Ordinary Audit: When exceeding all thresholds
• Opting-out: Waiver possible with unanimity and <10 full-time positions

Step 5: Notarial Formation Deed

Content of Articles:

• Company Name: Complete designation with legal form
• Share Capital: Amount and division
• Business Purpose: Detailed activity description
• Company Domicile: Address in Switzerland
• Share Units: Number and value per shareholder
• Management: Organization and representation
• In-kind Contributions: If applicable

Notary Appointment:

• Attendance: All founders must be present
• Documents: ID card, capital proof
• Certification: Public certification of formation resolutions
• Costs: CHF 500-2,000 depending on canton and complexity

Step 6: Commercial Register Entry

Application Process:

• Application: By management after notary appointment
• Required Documents:
  • Notarially certified formation deed
  • Proof of capital payment
  • ID copies of all organs
• Processing Time: 5-10 working days
• UID Number: Automatic assignment after entry

After Entry:

• Legal Personality: GmbH receives legal personality
• Capital Release: Access to paid-in share capital
• Business Activity: Official commencement possible

Step 7: Register Social Insurance

AHV/IV/EO Registration:

• Registration Office: Cantonal compensation fund
• Registration Requirement: All employees and management
• Contribution Rates: 10.55% (employer and employee each 5.275%)
• Family Compensation Fund: 1.2-2.7% depending on canton

Occupational Pension (BVG):

• Registration Requirement: Annual salary over CHF 22,050
• Entry Age: 17 years for risk benefits, 25 years for savings
• Pension Fund: Choice of suitable pension institution

Accident Insurance (UVG):

• Occupational Accidents: Mandatory for all employees
• Non-occupational Accidents: For working time over 8 hours/week
• Insurance Carrier: SUVA or private accident insurers

Step 8: Value Added Tax (VAT)

Registration Requirement:

• Turnover Threshold: CHF 100,000 per year
• Voluntary Registration: Also possible with lower turnover
• Registration Office: Federal Tax Administration (FTA)

VAT Rates:

• Standard Rate: 7.7%
• Reduced Rate: 2.5% (basic necessities)
• Special Rate: 3.7% (accommodation)

Accounting Periods:

• Quarterly: Standard for annual turnover under CHF 5 million
• Monthly: For higher turnovers or upon request
• Semi-annually: Possible for annual turnover under CHF 1 million

Step 9: Set Up Accounting

Bookkeeping Obligation:

• Proper Accounting: Mandatory for all GmbH
• Chart of Accounts: According to Swiss accounting standards
• Retention: 10 years for all business documents

Annual Financial Statements:

• Balance Sheet: Presentation of asset and financial position
• Income Statement: Profit and loss statement
• Notes: Additional explanations
• Management Report: Required for larger companies

External Support:

• Trustee: Recommended for professional bookkeeping
• Accounting Software: Various solutions available
• Costs: CHF 2,000-10,000 per year depending on company size

Step 10: Additional Important Steps

Open Business Account:

• Separate Account Management: Required for GmbH
• Required Documents: Commercial Register extract, articles, ID documents
• Bank Selection: Comparison of different providers recommended

Insurance:

• Business Liability: Protection against damage claims
• Property Insurance: Protection of business equipment
• Cyber Insurance: Protection against digital risks
• Legal Protection Insurance: For legal disputes

Business Permits:

• Industry-specific: Required depending on business activity
• Examples: Trade license, catering license, financial license
• Registration Offices: Municipality, canton, or federal level

Timeline for GmbH Formation

Preparation Phase (1-2 weeks):

• Check and reserve company name
• Prepare articles
• Open capital payment account
• Arrange notary appointment

Formation Phase (1-2 weeks):

• Notarial certification
• Commercial Register entry
• Wait for UID number

Follow-up Phase (2-4 weeks):

• Register social insurance
• VAT registration (if required)
• Open business account
• Conclude insurance policies

Total Duration: 4-8 weeks

Audit and Opting-out

Audit Requirement:

• Ordinary Audit: When exceeding all three thresholds
• Limited Audit: When exceeding two thresholds
• No Audit: For smaller companies with opting-out

Opting-out Requirements:

• Fewer than 10 full-time employees
• Unanimous decision by all shareholders
• Waiver of ordinary or limited audit
• Annual confirmation required

Audit Body Tasks:

• Examination of annual accounts
• Examination of bookkeeping
• Reporting to shareholders' meeting
• Notification of over-indebtedness or capital loss

Avoiding Common Mistakes

During Formation:

• Insufficient Capital Planning: Using only minimum capital
• Faulty Articles: Incomplete or contradictory regulations
• Forgotten Registrations: Overlooking social insurance or VAT
• Wrong Organ Appointment: Unsuitable persons as management

After Formation:

• Mixing Business and Private Assets
• Neglecting Shareholders' Meeting
• Insufficient Bookkeeping
• Missed Reporting Obligations for Changes

GmbH Formation Checklist

Before Formation:

• Create business plan
• Secure financing (min. CHF 23,000)
• Check and reserve company name
• Determine shareholders and their shares
• Appoint management

Formation Process:

• Have articles created
• Open capital payment account
• Pay share capital
• Arrange and conduct notary appointment
• Apply for Commercial Register entry
• Receive UID number

After Formation:

• Register AHV/IV/EO
• Choose BVG pension fund
• Conclude UVG insurance
• Register VAT (if required)
• Open business account
• Set up accounting
• Conclude additional insurance
• Conduct first shareholders' meeting

Comparison: GmbH vs. Other Legal Forms

GmbH vs. Sole Proprietorship:

• Liability: GmbH limited, sole proprietorship unlimited
• Capital: GmbH CHF 20,000, sole proprietorship CHF 0
• Taxes: GmbH double taxation, sole proprietorship income tax
• Effort: GmbH higher, sole proprietorship minimal

GmbH vs. Corporation (AG):

• Capital: GmbH CHF 20,000, AG CHF 100,000
• Flexibility: GmbH more flexible, AG more rigidly structured
• Image: AG more prestigious, GmbH sufficient
• IPO: AG possible, GmbH not possible

Tax Considerations

Corporate Taxation:

• Profit Tax: On company profits (federal, cantonal, municipal)
• Capital Tax: On company equity
• Withholding Tax: 35% on profit distributions to shareholders

Tax Optimization Strategies:

• Salary-Dividend Mix: Optimal combination for tax efficiency
• Location Selection: Choose tax-favorable cantons
• Timing of Distributions: Strategic profit distribution timing
• Business Expenses: Proper documentation and deduction

Operational Considerations

Corporate Governance:

• Regular Shareholders' Meetings: Annual meetings mandatory
• Proper Documentation: Minutes and resolutions required
• Management Reporting: Regular updates to shareholders
• Compliance Monitoring: Ongoing legal obligation fulfillment

Growth and Expansion:

• Capital Increases: Procedures for additional funding
• New Shareholders: Process for admitting partners
• International Expansion: Branch offices and subsidiaries
• Exit Strategies: Sale, merger, or liquidation options

Conclusion

Forming a GmbH in Switzerland is a structured process requiring professional preparation. With share capital of CHF 20,000 and total costs of approximately CHF 23,000, you receive a legal form with limited liability and high flexibility.

The GmbH is particularly suitable for SMEs and family businesses that value limited liability and professional appearance.

Key Success Factors:

• Careful Planning: Adequate capitalization beyond minimum requirements
• Professional Support: Expert guidance through formation process
• Complete Compliance: Fulfill all legal requirements from start
• Proper Organization: Establish sound corporate governance structure

When to Choose GmbH:

• Limited Liability Protection: Personal asset protection priority
• Professional Credibility: Enhanced business reputation
• Growth Potential: Plans for business expansion
• Tax Efficiency: Optimize profit distribution strategies
• Operational Flexibility: Balance structure with adaptability

The Swiss GmbH offers an excellent balance between limited liability protection, reasonable formation costs, and operational flexibility, making it ideal for entrepreneurs seeking professional business structure without the higher capital requirements of a corporation.