Starting a Business in Switzerland: AG, GmbH, or Sole Proprietorship?

Switzerland offers three main legal forms for business: the AG (Aktiengesellschaft), the GmbH (Gesellschaft mit beschrankter Haftung), and the Einzelfirma (sole proprietorship). Each has distinct capital requirements, liability exposure, tax treatment, governance obligations, and registration processes. The right choice depends on your planned activities, funding needs, number of founders, and whether you need shareholder privacy or plan to raise external investment.

The three main structures compared

Swiss AG (Aktiengesellschaft)

The AG is Switzerland's joint-stock company — equivalent to a corporation or PLC. It is the preferred structure for holding companies, regulated entities, businesses planning to raise investment, and founders who want shareholder privacy. AG shareholders are not listed in ZEFIX (the public commercial register). Only directors and authorised signatories appear publicly, which makes the AG the standard structure for international founders who do not want their ownership publicly searchable.

Key AG characteristics

• �Minimum capital: CHF 100,000 authorised; CHF 50,000 minimum paid-in at formation (OR Art. 621, 632). Since the 2023 OR reform, capital may be denominated in a foreign currency (USD, EUR, GBP) with board approval.
• �Shares: Freely transferable by default unless restricted in the articles. Can issue different classes of shares (voting shares, preferred shares, participation certificates).
• �Board of directors: At least one director domiciled in Switzerland with individual signature authority (OR Art. 718(4)).
• �Annual general meeting (GV): Required annually, within 6 months of financial year end, to approve accounts and elect board.
• �Dividend distributions: Subject to 35% federal withholding tax (VStG Art. 13); refundable to qualifying Swiss shareholders.

Swiss GmbH (Gesellschaft mit beschrankter Haftung)

The GmbH is a limited liability company with lower capital requirements and simpler governance than an AG. It is the preferred structure for SMEs, single founders, professional service firms, and businesses where all founders are actively involved in management. Unlike the AG, GmbH quotaholders (shareholders) are publicly listed in ZEFIX — their names, addresses, and ownership percentages are searchable. Share transfers require a notarised deed.

Key GmbH characteristics

• �Minimum capital: CHF 20,000, fully paid-in at formation (OR Art. 773, 777c). No phased payment option unlike the AG.
• �Quotaholders: Publicly listed in Handelsregister and ZEFIX. Each Stammanteil (quota) has a minimum nominal value of CHF 100.
• �Management (Geschaftsfuhrer): At least one managing officer domiciled in Switzerland with individual signature authority (OR Art. 814(3)).
• �Share transfers: Require a notarised deed — more cumbersome than AG share transfers. Statutory pre-emption rights apply unless articles exclude them.
• �Conversion: A GmbH can be converted to an AG (Umwandlung) if the business grows and the benefits of the AG structure outweigh the conversion costs.

Einzelfirma (sole proprietorship)

The Einzelfirma is not a legal entity — it is the owner conducting business in their own name. There is no separate legal personality, no minimum capital, and no limited liability. The owner's personal assets are fully exposed to business creditors. It is appropriate only for very small businesses, freelancers, and consultants who do not take on significant contractual or liability risk.

Registration with the Handelsregister is mandatory only when annual revenue exceeds CHF 100,000 (OR Art. 934). Below that threshold, the sole proprietor can operate without registration, though without limited liability. For tax purposes, the net profit of the Einzelfirma is taxed as personal income — there is no separate corporate income tax, but also no access to the participation exemption or corporate tax planning tools available to an AG or GmbH.

The formation process

Step 1: Name reservation and check

Company names are checked via zefix.ch for uniqueness and non-conflict with existing entries. The name must not be misleading, must be unique in Switzerland, and must not use protected terms (e.g., "Bank", "Insurance", "Swiss" in certain contexts) without regulatory approval.

Step 2: Articles of association (Statuten)

The Statuten define the company's purpose, share capital, board structure, dividend policy, and governance rules. They are drafted with the fiduciary and reviewed by the notary. For an AG, the Statuten can include clauses restricting share transfers, creating multiple share classes, and regulating board compensation. For a GmbH, they define the managing officers, transfer restrictions, and pre-emption rights.

Step 3: Capital deposit

The share capital (CHF 50,000 for a standard AG; CHF 20,000 for a GmbH) must be deposited in a blocked formation account at a Swiss bank. The bank issues a capital confirmation certificate (Einzahlungsbestatigung), which is required at the notarial deed signing. For non-resident founders, this step takes 5–30 days due to enhanced KYC requirements.

Step 4: Notarial deed

The incorporation is formalised by a notarial deed (offentliche Beurkundung) signed before a Swiss notary. The deed records the formation act, the articles of association, the appointment of the first board or management, and the capital deposit. Non-resident founders who cannot appear in person sign a notarised and apostilled power of attorney in their home country, authorising the fiduciary to sign on their behalf.

Step 5: Handelsregister entry and post-formation

The dossier is filed with the cantonal Handelsregisteramt. In Zug, processing takes 7–14 business days. The company is published in the FOSC (Swiss Official Gazette of Commerce) and appears in ZEFIX. Legal existence begins from the date of Handelsregister entry. Post-formation steps include opening an operating bank account, registering for VAT (if annual turnover will exceed CHF 100,000), and registering with the cantonal AHV compensation office if employing staff.

Tax considerations: why corporate form matters

An AG or GmbH pays corporate income tax at the combined Zug rate of 11.85% on net profit. The owner then receives dividends, which are subject to 35% federal withholding tax (refundable to Swiss residents). For a Swiss-resident owner, the effective total tax on earned profit distributed as a dividend is approximately 35% (corporate tax + income tax on dividend, with partial credit for corporate tax already paid).

An Einzelfirma owner pays personal income tax on all business profit at the applicable cantonal and federal rates — which in high-tax cantons can exceed 40%. In Zug, the combined personal income tax for a higher earner is lower than other cantons, but still significantly higher than the 11.85% corporate rate. The choice of structure has meaningful tax implications from day one.

Further reading

• >Swiss AG vs GmbH — detailed comparison
• >Swiss AG formation — full entity guide
• >Swiss GmbH formation — requirements and process
• >Starting a business as a foreigner — non-resident guide
• >Swiss company formation cost — fees and capital explained