What is a sole proprietorship in Switzerland
A sole proprietorship (Einzelunternehmen / entreprise individuelle) is the simplest and most common legal form for starting a business in Switzerland. It requires no minimum capital, does not create a separate legal entity, and can be established quickly and at low cost.
In Switzerland, approximately 60% of companies registered in the commercial register are sole proprietorships. This form is particularly suited to freelancers, craftspeople, consultants, professionals and traders who operate alone or with a limited number of employees.
The owner of a sole proprietorship acts in their own name and is personally and unlimitedly liable with all their personal assets for the business's obligations — a fundamental aspect to consider when choosing a legal form.
Advantages and disadvantages
Before proceeding with formation, it is important to carefully weigh the pros and cons of a sole proprietorship compared to other company forms such as a GmbH or AG.
Advantages
- No minimum capital required — you can start with zero francs
- Simple and fast formation: no notarial deed needed
- Low management costs: no audit obligation, simplified accounting below CHF 500,000
- Full decision-making freedom: no partners, no board of directors
- Profits taxed only once as personal income (no double taxation)
- Commercial register entry optional below CHF 100,000 turnover
Disadvantages
- Unlimited personal liability with all private assets
- Difficulty raising capital from external investors
- AHV/IV contributions calculated on entire net income (rate up to 10%)
- Inability to take on partners or transfer business shares
- Less professional perception compared to a GmbH or AG for some clients
Requirements to start
To establish a sole proprietorship in Switzerland, the following fundamental requirements must be met:
Capacity to conduct a gainful activity
You must be at least 18 years old and have legal capacity. Swiss citizens and holders of a B, C or L permit with authorisation for self-employment can establish a sole proprietorship.
Appropriate residence permit (for foreigners)
EU/EFTA citizens with a B permit can pursue self-employment. Non-EU citizens require a specific permit for self-employment, which is more difficult to obtain.
Business name
The business name must include the owner's surname (e.g. 'Rossi Consulting' or 'Marco Rossi, architect'). A fantasy addition may be included, but the surname must appear.
Business address
A Swiss address is needed as the business domicile. This can be your home address, a rented office or a coworking space — as long as it is a valid and accessible address.
Lawful and defined activity
The activity must be lawful and clearly defined. Some professions require specific authorisations (e.g. catering, financial advisory, transport) that must be obtained before starting.
Step-by-step procedure
Here is the complete process for opening a sole proprietorship in Switzerland, from the start of the activity to full operation:
Define the activity and business name
Precisely choose your sector of activity and formulate the business name. Check on Zefix (zefix.ch) that the name is not already registered by another company in the same canton.
Open a business bank account
Open a current account dedicated to the business at a Swiss bank. This is not legally required but strongly recommended to separate personal and business finances and simplify accounting.
Register with the Commercial Register
Registration is mandatory if annual turnover exceeds CHF 100,000. Below this threshold it is optional but recommended: it increases credibility and protects the business name. The procedure takes place at the cantonal Commercial Register Office (cost: CHF 120–400).
Register with the AHV/IV compensation fund
Within 90 days of starting the activity, you must register with an AHV compensation fund. Submit the form with the commercial register confirmation (or declaration of start of activity). The fund determines your self-employed status.
Check the VAT obligation
If you expect annual turnover exceeding CHF 100,000, you must register with the Federal Tax Administration (FTA) as a VAT taxpayer. You can choose between the effective method and the flat-rate method.
Take out the necessary insurance
Health insurance (KVG) is mandatory for everyone. As a self-employed person, you can voluntarily join the UVG (accident insurance). Consider professional liability insurance and legal protection insurance.
Set up accounting
Set up an appropriate accounting system: below CHF 500,000 turnover you can keep simplified accounting (income/expenses). Above this threshold, double-entry bookkeeping is mandatory. Software like AccountEX simplifies both regimes.
Obtain specific authorisations (if needed)
Check with the canton and municipality whether your activity requires special authorisations: catering licence, financial activity authorisation, transport licences, building permits for craft activities, etc.
Comparison: Sole proprietorship vs GmbH vs AG
Not sure whether a sole proprietorship is the right form for you? Here is a summary comparison with the two most common alternatives in Switzerland:
| Feature | Sole proprietorship | GmbH (Sagl) | AG (SA) |
|---|---|---|---|
| Minimum capital | None (CHF 0) | CHF 20,000 | CHF 100,000 (min. 50% paid in) |
| Liability | Unlimited (personal assets) | Limited to share capital | Limited to share capital |
| Formation costs | CHF 120–400 (CR registration) | CHF 2,000–3,000 (notary + CR) | CHF 3,000–5,000 (notary + CR) |
| Taxation | Personal income (once) | Corporate tax + dividends | Corporate tax + dividends |
| Accounting | Simplified below CHF 500,000 | Double-entry mandatory | Double-entry mandatory |
| Audit | Not required | Limited audit (with opt-out) | Limited or ordinary audit |
| CR registration | Optional below CHF 100,000 | Mandatory (constitutive) | Mandatory (constitutive) |
| Ideal for | Freelancers, consultants, craftspeople | SMEs with 1–5 partners | Companies with investors or listing |
The choice of legal form has significant tax, asset and operational implications. If in doubt, consult a trustee or legal adviser before deciding.
Accounting regime
Accounting obligations depend on the size of the business. Sole proprietorships with annual turnover below CHF 500,000 may keep simplified accounting based on income and expenses (art. 957 para. 2 CO).
If turnover exceeds CHF 500,000, double-entry bookkeeping with a balance sheet and income statement compliant with the Code of Obligations becomes mandatory. This involves keeping a journal, a general ledger and preparing annual financial statements.
Regardless of the regime, it is essential to retain all supporting documents (invoices issued and received, bank statements, contracts) for at least 10 years, as required by art. 958f CO.
Thresholds and obligations
- Turnover < CHF 100,000: CR registration optional, simplified accounting
- Turnover CHF 100,000–500,000: CR registration mandatory, simplified accounting, VAT obligation
- Turnover > CHF 500,000: double-entry bookkeeping mandatory, VAT and all legal obligations
Tax obligations
As the owner of a sole proprietorship, business income is declared in your personal tax return. Here are the main obligations:
Income tax
Net business profit flows into your total income and is taxed at ordinary progressive rates — federal, cantonal and municipal. There is no double taxation as with GmbH/AG.
AHV/IV/EO contributions
As a self-employed person, you pay AHV/IV/EO contributions calculated on the net business income. The rate is 10.6% (2026) for income above CHF 60,500, with a reduced declining rate for lower income.
VAT (if applicable)
If turnover exceeds CHF 100,000/year you must register for VAT. Current rates (2026) are: 8.1% (standard), 2.6% (accommodation) and 3.8% (essential goods). Returns are quarterly or semi-annual.
Wealth tax
Business assets (equipment, inventory, receivables) form part of your personal wealth and are subject to cantonal and municipal wealth tax.
Canton-specific taxes
Some cantons levy additional taxes on sole proprietorships: business tax, fiscal equalisation contributions or professional taxes. Check with your municipality.
Startup checklist
Use this checklist to make sure you don't miss any essential step:
- Define the activity, sector and business name
- Check on Zefix that the business name is available
- Open a dedicated business bank account
- Register with the Commercial Register (mandatory above CHF 100,000)
- Register with an AHV/IV compensation fund (within 90 days)
- Register for VAT with the FTA (mandatory above CHF 100,000)
- Take out KVG health insurance and consider voluntary UVG
- Consider professional liability insurance
- Set up accounting (simplified or double-entry)
- Obtain any cantonal/municipal specific authorisations
Practical tips
- Start with a sole proprietorship and convert to a GmbH only when unlimited liability becomes a real risk — conversion is possible at any time
- Even below the CHF 100,000 threshold, commercial register entry is recommended: it protects the business name and increases credibility with clients and suppliers
- Pay AHV/IV advances regularly to avoid heavy year-end adjustments — the compensation fund can adjust advances on request
- Always separate personal and business finances: a dedicated account simplifies accounting and reduces the risk of errors in your tax return
- Carefully evaluate the most advantageous VAT method: flat-rate simplifies work, but the effective method may be more beneficial if you have many deductible costs
- Make use of pillar 3a: as a self-employed person without a pension fund you can deduct up to CHF 36,288 (2026), a significant tax advantage
- Use accounting software like AccountEX from the start: the AI automatically processes invoices and expenses, generating balanced entries ready for your approval
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