Switzerland Fact-File Part 1:
Business Formation for Individuals

1.8 Switzerland Family Business Ownership

Types of Ownership Structure for Individuals in Business

A sole proprietorship is the simplest form of business structure and does not require complex and costly procedures to set up. Although the owner of a sole proprietorship bears all the risks and liabilities of the business, there is complete freedom to determine the policy and direction of the business. There is no need to register in the Commercial Register if turnover is below CHF100,000.

A General Partnership might be suitable where two (or more) individuals wish to invest in a new business venture. It is advisable to draw up a partnership agreement from the outset but like a sole proprietorship, a general partnership is not a business entity in its own right – the partners each have individual liability for taxes. A general partnership must be registered in the Commercial Register. Partners in a general partnership could be spouses or civil partners.

Swiss fiscal law dictates that the income of spouses is taxed jointly, a point to consider if setting up a partnership or employing a spouse. There is no reason why other family members (son, daughter) could not be employed by a business and the business does not need to be an incorporated entity for that to happen.

Where either of the aforementioned business forms employs staff, they must be treated as employees and appropriate deductions for tax and social insurance contributions made at source.

Incorporated business forms are more suited to larger businesses though it may be that a small business would benefit from incorporation, especially where liability needs to be limited.