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Sole proprietorship or company: where to start

Even before the first client, one question comes up often: should you set up a company, or start in your own name? In Switzerland, the answer is usually simpler than you fear, especially at the beginning.

The sole proprietorship: the simplest way to start

In your own name, you are the business. You invoice under your name, with no start-up capital and no company to create. It's the route most freelancers take when they begin, because it's fast and cheap.

The trade-off is that you're liable for your business's debts with your personal assets. As long as your risk stays limited (little investment, no major commitments), it stays reasonable. Registration in the commercial register becomes mandatory above CHF 100,000 of annual turnover. Below that, you can register voluntarily, but it isn't required.

The LLC: separating your assets

The LLC (Sàrl/GmbH) is a company distinct from you. Your liability is limited in principle to the company's capital, which is CHF 20,000 to be paid in at the outset. In exchange for this protection, you accept more formalities and costs: heavier bookkeeping, incorporation fees, a salary to pay yourself.

It makes full sense when your activity grows, when the financial risk rises, or when you want to bring in a partner. At the very start of a solo activity, it's often not necessary.

Where to start, in practice

For a large share of freelancers, the path is the same: start as a sole proprietorship to test and launch the activity without complicating things, then switch to an LLC later if the volume and the risk justify it. Starting simple doesn't stop you from evolving afterwards.

These pointers are deliberately general. For your precise situation, especially on liability, taxation and pension provision, talk to your compensation fund (caisse de compensation) or a fiduciary before deciding.