Create a Company in Switzerland: Individual vs. Legal Entity

Switzerland offers a stable and attractive environment for entrepreneurship. Before filing your articles of association, it is essential to choose the appropriate legal form. Two families coexist: the sole proprietorship (natural person) and the company with legal personality. This choice affects your liability, taxation, obligations and remuneration.

Natural person: entrepreneur and business are one

We speak of a sole proprietorship (SP) or a general partnership (GP) when there are several partners. The entity is not separate from the person: you are taxed privately on the profit.

Advantages

• Simple and fast creation (little formality, low costs).
• Light accounting for small structures.
• Integrated taxation into private income (no double taxation).

Disadvantages

• Unlimited liability (on private assets). In a GP, it is joint between partners.
• Less attractive to investors/banks.
• More complex transfer/sale.

Income declaration

As a natural person, all business profit is considered income and subject to social contributions (AVS, AI, APG). Even profits not withdrawn in cash are taxed and charged as the entrepreneur’s income. There is no strict separation between salary and dividends.

Legal person: the company is a separate entity

The most common forms are LLC and SA. The company has its own legal personality: it holds the rights/obligations and is primarily liable with its capital.

Advantages

• Limited liability to contributions.
• Better credibility (banks, partners, tenders).
• Easier transfer (share/stock transfer).

Disadvantages

• Creation formalities (articles, notary, registers).
• Required capital (LLC: CHF 20,000; SA: CHF 100,000 of which 50,000 paid in).
• Double taxation (profit at company level + dividends at private level).

Salary and dividends

As a legal person, the manager receives a salary subject to social contributions. The remaining profits may be distributed as dividends, generally less charged in social contributions but subject to income tax for shareholders. This leads to the famous double taxation: the company pays tax on profits, then the shareholder pays tax on dividends received.

Quick comparison

Obligations not to forget

• Registration with AVS/social insurance (employees/self-employed).
• VAT from CHF 100,000 annual turnover (or voluntary).
• Accounting adapted to size.
• Legal registers (legal persons), assemblies, reports.

How to choose?

Ask yourself: What level of risk do I accept? Do I need investors? What image do I want to give? What is my creation and management budget? SP/GP is suitable for low-risk activities, quick start and self-employed. LLC/SA is essential when liability, credibility and growth are priorities.

Digital Admin supports you

• Advice on the legal form suited to your project.
• Support opening bank account, notary, registrations (RC, AVS, VAT).
• Digital Admin application: quotes → orders → invoices, auto-calculated VAT, supplier & payment management, PDF reports ready for the fiduciary.
• AI Assistant: instant answers to your administrative and accounting questions.

Try the application for free and start with a solid foundation: Create my account.

Conclusion

The choice between natural person and legal person determines your liability, taxation, social charges and growth path. With Digital Admin, you secure your creation and simplify daily management thanks to tools designed for Swiss companies.