How to Create a Limited Liability Company in Switzerland Step-by-Step
Do you want to start a business and turn your idea into a limited liability company? Setting up an LLC in Switzerland requires careful planning and completing all necessary formalities. Following a structured approach helps avoid legal and financial pitfalls. Choosing the right legal form is especially important, as it impacts liability and taxes in the long term.
During the company formation process, various documents must be submitted, and approvals obtained. With the right preparation, you can incorporate your business efficiently and smoothly.
Our guide provides all the essential steps for founding an LLC in Switzerland. Get started and turn your vision into reality!
Introduction to the Swiss LLC and Its Requirements
The limited liability company (german: GmbH) is a widely used legal form in Switzerland, particularly attractive for small and medium-sized enterprises (KMU). Forming a LLC is a popular choice because this legal structure combines characteristics of both a public limited company and partnerships. A key requirement for company formation is the involvement of at least one person, whether it is a natural person or a legal entity.
A Swiss LLC is a company with its own legal identity, and shareholders are only liable up to their contributed capital. This limits financial risk to the initial investment, making it a significant advantage for many entrepreneurs in Switzerland. Additionally, the minimum share capital required is CHF 20,000, providing financial security for the business. Anyone looking to form an LLC should inform themselves early about the necessary steps, as the management of the company must comply with Swiss regulations.
Is a LLC the Right Choice for Your Business?
Deciding whether a LLC is the ideal legal form for your business depends on various factors. Here are some advantages and disadvantages to consider:
✅ Advantages of a Swiss Limited Liability Company
- Low Initial Capital Requirement: To create a LLC, a minimum share capital of CHF 20,000 is required, making it appealing for many entrepreneurs in Switzerland. This requires a relatively low financial entry barrier compared to other legal forms.
- Limited Liability: Shareholders’ liability is restricted to their contributed capital, which protects their personal assets in the event of insolvency.
- Flexible Company Name: The choice of the company name is generally unrestricted as long as it includes “GmbH,” enabling unique branding opportunities.
- Simplified Formation Process: A limited liability company can already be established by just one person.
- Easy Conversion: The option to convert a GmbH into a public limited company (AG) without liquidation provides flexibility for future growth plans, facilitating a smooth transition if the business expands.
❌ Disadvantages of a LLC
- Higher Formation Costs: The initial costs for founding a limited liability company are generally higher than for a sole proprietorship.
- Public Information Disclosure: Details about shareholders, capital, and contributions are publicly accessible through the commercial register, and registration is mandatory.
- Increased Administrative Effort: Setting up a GmbH involves significant administrative tasks, including keeping records, conducting shareholder meetings, and submitting tax documents. Additionally, shareholders must register with the federal authorities for social insurance contributions, which can be a financial burden.
- Tax Considerations: Starting a limited liability company also entails fulfilling tax obligations. It is taxed differently from other business types.
After weighing the pros and cons, do you feel that a LLC might not fully meet your needs? In that case, a public limited company (AG) could be a better option for you. For more information about public limited companies, check out our blog.
Formation Costs and Timeline
Understanding the costs and timeframe for setting up a business is crucial for efficient planning. This section outlines the key expenses and the steps involved in setting up a Swiss LLC.
How Much Does It Cost to Establish Limited Liability Company?
The costs of company formation in Switzerland depend on several factors. Key expenses include:
- Notarization of the Articles of Association
- Fees for the Commercial Register
- Legal support for drafting incorporation documents
- Tax and legal consulting
Careful planning helps keep incorporation efficient and cost-effective.
Additionally, opening a business account with a Swiss bank is often required to deposit the share capital. Depending on the bank, additional fees may apply. In some cases, notarization of specific documents may also be necessary. In total, formation costs typically range between CHF 2,000 and CHF 5,000.
How Long Does the Incorporation Process Take?
The time required to set up a company varies depending on different factors. Generally, it can take up to six weeks to complete all formalities and register the business in the Commercial Register. The exact duration depends on how quickly the necessary documents are prepared and how efficiently the authorities process the application.
Checklist to Incorporate Limited Liability Companies in Switzerland
Setting up a LLC in Switzerland requires completing several key steps to ensure legal compliance and smooth operation. This checklist outlines the essential requirements and formalities for a successful company foundation.
1. Preparation
Before starting the company formation process, a business idea must be developed, followed by the creation of a business plan and a financial strategy. Choosing a company name that includes “GmbH” is essential. Additionally, it must be ensured that the minimum share capital of CHF 20,000 is available. Business founders should also familiarize themselves with the legal requirements and potential challenges before they proceed.
2. Deposit of Share Capital
The required CHF 20,000 share capital must be transferred to a business account at a Swiss bank. Depending on the bank, processing times and conditions may vary. The bank will then issue a confirmation of deposit. After the company is established and registered in the Commercial Register, the deposited capital can be used for operational purposes.
3. Appointment of Governing Bodies
When setting up the company, three governing bodies must be represented:
- Shareholders’ Meeting – Decides on profit distribution, approves the annual report, and appoints the management.
- Company Management – Responsible for running the business, representing it externally, and handling administrative and legal obligations.
- Auditor (if required) – A standard audit is only necessary if two of the following thresholds are exceeded for two consecutive years:
- Balance sheet total: CHF 20 million
- Revenue: CHF 40 million
- Average full-time employees: 250
For companies below these thresholds, a limited audit is generally sufficient. Shareholders may unanimously opt out of an audit, provided there are no legal or statutory objections.
4. Articles of Association
The articles of association define key aspects of the foundation of your company, including its business purpose, registered office, administration, and minimum capital. These foundational documents are essential when you create a limited liability company and must comply with company law regulations. Ensuring proper documentation at this stage is a crucial step in setting up a legally compliant business.
5. Registration in the Commercial Register
Once a notary has notarized the certificate of incorporation and certified the signatures of all authorized individuals, the company will be registered in the federal commercial register. After successful registration, the company receives an official extract, serving as proof of its existence. This step also ensures that liability is limited to the contributed capital, protecting shareholders from personal liability. Proper registration makes it possible to set up a business in accordance with Swiss regulations.
6. Additional Registrations
Switzerland also requires certain businesses to complete further registrations with social security institutions such as unemployment insurance and pension funds.
A timely review of obligations helps prevent unforeseen additional costs and ensures compliance with legal requirements.
Conclusion
Creating a limited liability company offers many advantages, particularly for small and medium-sized businesses. With a minimum capital requirement of CHF 20,000 and limited liability for shareholders, this legal structure is an attractive option.
The company creation process includes developing a business idea, drafting a business plan, selecting the name of your company with the required “GmbH”, and depositing the minimum capital into a blocked account. Afterwards, the articles of association need to be defined and the company must be registered in the commercial register.
It is essential to inform oneself beforehand about additional registrations, such as with social security institutions or tax authorities, to avoid unexpected administrative costs.
While this capital company provides many benefits, potential downsides like management costs and increased obligations to keep records should also be taken into account.
Ultimately, choosing the right legal personality depends on the specific needs and goals of the business.
