How to open a limited liability company in Switzerland?

How to open a limited liability company in Switzerland?

With its dynamic economy, strong currency and favourable tax system, Switzerland is a country that attracts many investors. If you wish to develop a business activity in Switzerland, you can create your Swiss company by choosing among the many legal forms offered. This is the case, for example, of the SARL (Swiss limited liability company), the creation of which requires certain conditions and procedures. From the conditions to be respected to the documents to be provided and the steps to be followed, RISTER explains the process of creating an LLC in Switzerland.

What is an LLC in Switzerland?

The SARL is one of the most widely used legal forms in Switzerland. It is a personal capital company that can be formed by one or more persons. This legal form is specifically designed for family businesses and SMEs. It borrows the operating principles of the public limited company and the general partnership.

To set up a limited liability company in Switzerland, you must contribute a minimum of CHF 20,000 in capital. This contribution can be made either in cash (cheques, transfers, etc.) or in kind (real estate, equipment, etc.). In any case, the operation of limited liability companies is ensured by various bodies. More specifically, these are:

• the partners' meeting,
• the management body,
• the auditing body.

There are currently more than 92,000 limited liability companies in Switzerland. This legal form is the third most popular type of company in Switzerland, just behind the sole proprietorship and the public limited company. The LLC is so popular with entrepreneurs because of the many advantages it offers.

Why set up a limited liability company in Switzerland?

To open a limited liability company in Switzerland, the minimum starting capital is CHF 20,000. In concrete terms, you do not need to have large amounts of money before setting up this type of company. The other important detail is that the capital is not money blocked in a bank account. It is money that the founder of the limited liability company can use as he or she sees fit to develop the business.

The SARL is also a form of company that involves a limited financial commitment. This means that as a partner, your liability is limited to the company's share capital, unless the articles of association provide otherwise. In the event of the bankruptcy of the limited liability company, you are thus afforded greater protection for your private assets or wealth. In other words, you will not be personally liable for the debts incurred by the company.

Another advantage of the limited liability company in Switzerland is that it can be set up by a single person. However, once the company has been set up, you have the option of adding further partners without the need for a notarial deed. Your company will then change from a one-person limited liability company to a multi-person limited liability company.

Furthermore, you are free to convert your limited liability company into a public limited company without liquidation. This obviously gives you more freedom to develop your company and adapt it to your needs. Finally, profits from the sale of shares in a SARL are not taxed in Switzerland, as there is no capital gains tax for individuals resident in Switzerland, provided certain conditions are met.

Who can open a limited liability company?

Anyone can set up a limited liability company in Switzerland:

• Swiss citizens,
• foreign nationals,
• legal entities

However, the company must be represented by at least one person residing in Switzerland. If you are a foreigner and do not live in Switzerland, you must appoint a manager or director who lives in the country. This person must also be resident in Switzerland. This person must also be in possession of a valid residence permit.

What documents are required to set up a limited liability company?

Before you can set up your limited liability company, you need to gather a number of documents. These are important to open your company and have its existence validated by the relevant authorities. Among the elements you need are:

• your authenticated signature and that of the other partners or managers of the company
• the document confirming the deposit of the share capital in a deposit account at a bank,
• the articles of association, which contain the rules for the operation and management of the company,
• the memorandum of association,
• the waiver of limited control...

In addition to the documents mentioned above, other specific documents prepared by your notary must be attached to your company's creation file.

What are the steps to follow in order to open an LLC in Switzerland?

There are several steps to setting up a limited liability company in Switzerland. These are more or less long, but relatively simple and easy. In any case, you have the possibility to be assisted throughout the process by a professional.

Budget the costs of setting up your company

As a first step, you should estimate and plan for the costs associated with setting up your SARL. To do this, clearly state the amount of your share capital. Then plan for other expenses that you will incur. These include administrative and management expenses (consultancy fees, notary fees, registration fees, bank charges, etc.).

Choose the name of the business

Once you have budgeted for your project, it is time to choose the name under which your company will operate. This name will be protected throughout Switzerland. The choice of company name is completely free. However, you are required to add the words "SARL" to the name.

Set the share capital

This is where you define the share capital of your company and the basic contribution of each shareholder or partner. In order to be entitled to the company's profits, all partners must participate in the capital with at least one share.

In a limited liability company, the minimum share capital is CHF 20,000. It is divided into shares and its nominal value must be at least CHF 100. The share capital must be deposited in a deposit account at a bank of your choice. However, this amount is only paid up on presentation of the extract from the commercial register.

Appoint the manager and partners

If the establishment of your limited liability company is a collective project, you must determine the role of each partner in the company. In principle, all partners must perform management functions. They must also participate in all decisions that are not taken by the general meeting. However, it is possible to appoint a third party as manager or director, especially if you live outside Switzerland.

Draw up the company's articles of association

The drafting of the articles of association is a fundamental step in the process of creating a limited liability company in Switzerland. These foundation documents must be drawn up before a notary and cover the following points:

• the name of the company,
• the total amount of share capital,
• the sector of activity of the company,
• the full address of the registered office,
• the amount of the contribution made by each partner,
• contributions in kind,
• the names of the persons in charge of the management,

The articles of association should also address the conditions for increasing the share of the company.

Determine the company's bodies

As soon as the articles of association have been drawn up, the various bodies of your limited liability company must be set up. You must appoint the shareholders' meeting, the management body and finally the auditing body. Apart from the mandatory nature of the appointment of these bodies, they are essential for the smooth running of your company.

Convene the founding general meeting

The founding meeting is essential for the creation of your limited liability company. It is during this meeting that the articles of association will be adopted or amended. The meeting also appoints the managers and approves the annual accounts.

Register the company in the trade register

Without this step, your company will have no legal existence. Registering your limited liability company in the commercial register is therefore an essential step. It requires the completion of two forms, the "Stampa declaration" and the "Lex Friedrich declaration", depending on the canton. Following this formality, you will be given a company identification number (IDE) in the Swiss register of companies and establishments.

Clarify your VAT liability

LLCs are required by law to clarify their VAT liability. However, this depends on your sector of activity and your annual turnover. In concrete terms, if you generate less than CHF 100,000, you are not necessarily subject to VAT. For you to be subject to VAT, you must generate a turnover of more than CHF 100,000 from individuals or companies domiciled in Switzerland.

How long does it take to set up a limited liability company in Switzerland?

It takes about 6 weeks to open a limited liability company in Switzerland. However, it is possible to reduce this time considerably by having a company that is an expert in setting up companies accompany you. If you wish to open a limited liability company in Switzerland, let RISTER accompany you. We are best placed to set up your company and advise you on the matter.

Contact us to start your initial consultation now. We would be delighted to get to know you and define the next steps in your project to establish a company in Switzerland.

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SETTING UP A LIMITED LIABILITY COMPANY IN SWITZERLAND

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