Checklist for Starting a Business

Setting up a business is an exciting and rewarding journey, but it requires careful planning and preparation. Whether you are a seasoned entrepreneur or a first-time business owner, having a comprehensive checklist can help ensure that you cover all the necessary steps. In this article, we will guide you through the essential elements to consider when starting a business in Switzerland.

Our page on company formation in Switzerland gives an overview of the process, the legal forms and the prices.

Switzerland has long been known for its business-friendly environment, strong economy, and favourable tax system. There are numerous reasons why so many entrepreneurs choose Switzerland as the location to set up a business. Some of the benefits include:

• Political and economic stability
• Favourable tax system
• Business-friendly environment
• Strong economy and infrastructure
• Highly developed financial system
• Financial privacy
• Access to a wide range of international markets
• Fast and efficient incorporation process
• Strong global reputation
• Strong and stable currency
• Highly skilled workforce
• Intellectual property protection

A comprehensive breakdown of each of these benefits and a more in-depth exploration of the advantages of setting up a company in Switzerland can be found here.

Once you have decided what type of business you want to form, it’s time to go through the practical setup process. We have put together this checklist for starting a business, so that you don’t forget any of the important steps along the way:

1. Budget your setup costs

You need to have a clear idea of how much it will cost to set up your business. Different legal forms have their own minimum initial capital requirements (see below for more details). You will also have to consider costs such as registration fees, legal fees, office space, equipment, and initial inventory. All these costs should be estimated and included in your business plan. The amount of capital you have available to start your business may determine the type of legal form you need to choose.

2. Choose a company name

The next step is to choose a unique and memorable name for your business. The name will be legally protected once it has been entered into the legal register. Each legal form has its own naming rules and requirements. If you opt for a sole proprietorship, the name must include your surname, which makes it quite restrictive. The name of a GmbH and AG can be chosen relatively freely (subject to a few minor limitations) but must include the legal form or its abbreviation in the name (i.e., “GmbH”, “AG”, etc.).

3. Determine the initial share capital

If you choose a legal form that has minimum share capital requirement, you will have to determine the amount needed. The minimum capital requirements vary depending on the legal form. A GmbH requires a minimum initial capital of CHF 20,000 (where 100% of the amount must be deposited upfront), whereas an AG requires a minimum of CHF 100,000 (50% of which must be paid up). There is no initial capital required by law for a sole proprietorship.

4. Appoint managers/directors if required

Certain legal forms, such as an AG and GmbH, require appointing directors or managers. It is important to select individuals who possess the necessary qualifications and skills to oversee your business. These two legal forms can also have more than one owner, and in fact most often do. An auditor may have to be appointed. If the company is not required to have an audit, it may waive it by consent of all shareholders or partners (opting out).

A sole proprietorship is limited to a single owner, but a partnership may be chosen instead. If two or more natural persons with a legal form similar to that of a sole proprietor join together to jointly operate a company according to commercial rules, this is called a general partnership.

The owners can usually act as managers or directors in the case of a GmbH or AG if so chosen. However, the articles of association may stipulate that certain areas of management should be delegated to third parties.

5. Prepare the documentation required for incorporating

The next stage is to prepare all the documents needed to incorporate the company. In the case of a sole proprietorship, no official incorporation process is required. However, if annual turnover exceeds CHF 100,000, it becomes necessary to enter into the commercial register.

Documents required for incorporating a GmbH and AG are similar. In both cases, you will have to draft the articles of incorporation/association. The articles of association outline the internal regulations and governance structure of the company. They contain important information such as the company's name, purpose, share capital, number of shares, rights and obligations of shareholders/members, management structure, and other provisions relevant to the operation of the GmbH or AG.

Other documents and information which should be included are:

• Registered address of the company
• Amount deposited by each member in the case of a GmbH
• Names and personal information of the managing directors
• Any benefits in kind
• Proof of share capital deposited.

When founding a corporation in cash (AG or GmbH), a blocked account at a bank is required for the capital contributions/share capital, and a capital contribution confirmation from the bank is required in this regard.

6. Complete registration and enter the commercial register

After you have drafted the Articles of Association and prepared the necessary documents outlined above, it is time to formally submit your registration application. Once the incorporation has been approved and certified by a notary, you can proceed to register the company in the commercial register. You will be assigned a company identification number (UID) after registration, which formalises your business's legal existence, and is needed for submission of tax returns, VAT registration, social insurance, etc.

7. Register with the compensation fund and other mandatory social insurance

Depending on your business activities and the type of legal entity, you may need to register with the compensation fund and other mandatory social insurances. This includes registering for accident insurance (UVG), occupational pension funds (BVG), and the AHV compensation fund. This is mandatory for all employees working in a GmbH or AG. As such, compliance with these regulations ensures the protection of your employees and yourself as an employer.

8. Clarify VAT liability and register if needed

Companies with a turnover exceeding CHF 100,000 per year must register for and pay Value Added Tax (VAT) on their sales. Determine if your business activities are expected to exceed the annual turnover threshold for VAT liability. If required, register for VAT with the Federal Tax Administration. VAT registration allows you to charge and reclaim VAT on your goods or services. In the case that the minimum threshold is not crossed, you may still consider voluntary registration for VAT, which comes with the benefit of being able to claim back input VAT deductions.

For more information on how VAT in Switzerland works, and when voluntary registration makes sense, click here.