A sole proprietorship is the least binding but most common form of enterprise. One characteristic of this legal form is that it can be founded and discontinued informally. A sole proprietorship is a particularly suitable legal form for microenterprises and sideline businesses, but can also employ staff and subsequently be changed to another legal form.

This legal form is advisable for anyone wanting to go into business for themselves and run a company with limited financial risks. While optional, registration on the commercial register is advisable as it sends a strong signal to suppliers and customers. The founders should also clarify recognition of their self-employed status at an early stage with the compensation office to avoid conflicts with social security law. 

• Character: commercial activity by an individual
• Commercial register: registration possible, mandatory from revenue of CHF 100,000
• Minimum capital: no capital requirements
• Contract: no contract required
• Liability: with all private and company assets
• Company name: must contain at least the last name of the owner

With partnerships, it is common that all or some of the partners bear joint liability for company debts with their private assets. This legal form is generally suitable for small companies with manageable financial risks. Partnerships can be a suitable legal form for a company with manageable liability risks set up within the family, while a legal entity is the advisable legal form for all other startups.  A simple partnership is always created when several people start an informal profit-making activity. One example is implementing an event or a project. 

Simple partnership

A simple partnership (as the simplest form of partnership) can be suitable when operating a shared office which is not visible externally. For independent companies of a more permanent nature, a simple partnership is not suitable.

• Character: association of several people, for the most part temporary
• Commercial register: registration not possible
• Minimum capital: no capital requirements
• Contract: agreement in writing recommended
• Liability: with all private and company assets
• Company name: only visible externally as an interest group

With a general partnership, two or more natural persons join forces to operate a company together in accordance with commercial rules.

• Character: combination of several natural persons
• Commercial register: registration mandatory and authentication of signatures may be required
• Minimum capital: no capital requirements
• Contract: agreement in writing recommended
• Liability: with all private and company assets
• Company name: must contain a last name accompanied by “and partner”, “& Co.”, “and son” or all last names

As a rule, legal entities are suitable for all companies, and especially for those with growth plans, an increased risk of losses and a group of founders who are independent of one another. The main difference with regard to partnerships lies in the limited liability of the partners to the legally and contractually stipulated capital contribution. The shareholders are therefore only liable up to the amount of their shares, but in general not with their private assets. Founding this form of company involves greater obligations than for partnerships. Examples of this are notarial certification of the certificate of incorporation and the articles. Furthermore, limited liability companies and private limited companies are subject to audit requirements if they employ more than ten staff.

Limited liability company (GmbH)

• Character: commercial activity of an individual or combination of several natural persons or legal entities
• Commercial register: registration required
• Minimum capital: share capital of CHF 20,000 in cash or contributions in kind
• Certification: by notary
• Transferability: capital contributions can be transferred in writing
• Liability: with all company assets
• Audit: can be waived for companies with up to ten full-time equivalents

Private limited company (Ltd)

• Character: commercial activity of an individual or combination of several natural persons or legal entities
• Commercial register: registration required
• Minimum capital: CHF 100,000 in cash, of which at least CHF 50,000 at founding
• Certification: by notary
• Transferability: free or limited by articles, depending on class of shares
• Liability: with all company assets
• Audit: can be waived for companies up to ten full-time equivalents