Founding a limited liability company in Switzerland: a step-by-step guide

Are you dreaming of setting up your own company and want to play it safe? A limited liability company (GmbH) could be just the thing for you. The GmbH is a limited liability company and a popular legal form in Switzerland. It offers many advantages, such as the limitation of liability to the company’s assets.

In this blog article, you will learn everything you need to know about setting up a GmbH – from the business idea to registration in the commercial register.

Checklist: Founding a GmbH step-by-step

Founding a GmbH requires a number of steps. Each of these is essential in order to finance the company, to be legally secure and ultimately to have the formation officially confirmed by a notary.

First of all: At least one legal or natural person (shareholder) must be registered as the founder of the GmbH. In addition, at least one managing director with signing authority must be resident in Switzerland.

Also, how does the formation of a GmbH in Switzerland work? We will go through the individual points with you in detail so that you have a checklist to hand for setting up your company.

1. Business idea and business plan

The first step in setting up a GmbH is to have a clear business idea. Think about what product or service you want to offer and who your target group is.

A detailed business plan for your company is essential. It helps you to concretize your vision and later serves as a basis for financing.

 Your business plan should include the following points:

• Executive Summary: Brief summary of the entire plan.
• Company description: What is the idea and what makes your company unique?
• Market analysis: Who are your competitors and what does the market look like?
• Organization and management: Who are the founders and what qualifications do they have?
• Product or service offer: Detailed description of your offer.
• Marketing and sales strategy: How do you reach your customers?
• Financial planning: sales forecasts, profit and loss accounts and capital requirement planning.

2. Choose company name

A unique and memorable company name can have a major impact on the success of your company. Important: The company name of your GmbH must be unique and available in the commercial register. You should check this in advance.

3. Appointment of the auditors / waiver of limited audit

Like public limited companies, limited liability companies must have an ordinary audit carried out and appoint an auditor for this purpose. An ordinary audit is mandatory if companies exceed two of the following three criteria in two consecutive years:

• Balance sheet total of 20 million francs
• Sales of 40 million francs or
• 250 full-time positions.

Companies that are not required to have an ordinary audit are generally subject to a limited audit. If you employ fewer than ten full-time employees and have the unanimous consent of all shareholders, you can issue a waiver.

The auditors should be appointed before the articles of association are drawn up. This is important as the decision must be recorded in the founding documents. The waiver of a limited audit is a separate document.

4. Draw up articles of association

The articles of association are the foundation of your GmbH and form the legal basis for your company. They define the purpose of the company and regulate the internal processes and relationships between the shareholders. This can prevent later conflicts and simplify decisions, for example with regard to the distribution of profits.

The articles of association should contain the following points:

• Company name and registered office: Name and registered office of the company.
• Purpose: The purpose and activities of the company.
• Share capital: Amount of share capital (at least CHF 20,000).
• Company bodies: Regulations on persons, such as management and representation.
• Profit distribution and reserves: How profits are distributed and reserves are formed.
• Announcement: The form of notification of the company to its shareholders.
• Appointment of the auditors

If there are several shareholders, a shareholders’ agreement should also be drawn up. A shareholders’ agreement in Switzerland regulates the rights and obligations of the shareholders of a limited liability company, including the distribution of share capital, voting rights and management, in order to ensure clear structures and conflict resolution.

Did you know that Nexova AG prepares the articles of association for you and also takes care of all the other steps involved in setting up a limited liability company for you? You can find more information here.

5. Contribute share capital and open an account

If you want to set up a GmbH, you need share capital of at least CHF 20,000. This part of the formation costs must be paid in full before you apply for the legal form.

To contribute the share capital in the form of cash, you must open a capital contribution account. The money is frozen there during the formation process. Once the company has been successfully founded, your capital is freely available to you again.

The share capital can also be contributed in the form of contributions in kind (e.g. machinery, real estate), click here for more information on founding a company with contributions in kind.

6. Create a certificate of incorporation

The deed of incorporation is drawn up and notarized by a notary. This is a formal act that officially confirms the formation in Switzerland and makes it legally effective.

During notarization, the notary checks whether the incorporation documents are correct and complete. The deed of incorporation contains important information such as

• Names of the shareholders
• Amount and subscription of share capital
• Appointment of the management

7. Entry in the commercial register

The last formal step in founding your company is the entry in the commercial register. To do this, you submit all the necessary documents to the relevant commercial register in the canton where your company is based.

You must submit these documents:

• Articles of Association (partnership agreement)
• Certificate of incorporation
• Confirmation of payment of the share capital
• Commercial register application

After checking and approval, you will receive confirmation of the entry in the commercial register. Your GmbH is now officially founded and you can start your business activities.

8. Value added tax declaration

The formation of your limited liability company is complete. But before you start your business activities, there is one last important step: apply for entry in the VAT register at the Federal Tax Administration (FTA).

This is important to ensure that your GmbH is correctly registered from the first turnover subject to VAT and can pay VAT correctly.

How long does it take to set up a GmbH?

The duration of the GmbH formation can vary, but the entire process usually takes between two and four weeks. This time frame depends on various factors, such as the preparation of the documents, the opening of the bank account, the availability of a notary and the processing time of the commercial register office.

Careful preparation of the documents, fast communication and early appointments are useful to make the foundation process efficient. What is even more efficient? Leaving the formation (and the paperwork) to real professionals who will set up a GmbH for you in the shortest possible time. Just get in touch with us.

Founding a GmbH: Typical formation costs for your company

The formation costs of this legal form are made up of various items. Here is an overview of the typical costs:

• Notary fees: The costs for notarization by a notary vary depending on the canton and the scope of the deed of incorporation. They are generally between CHF 500 and CHF 2,000.
• Commercial register fees: Fees of around CHF 500 to 700 are incurred for entry in the commercial register.
• Share capital: The minimum share capital is CHF 20,000 and must be paid in full before the company is founded. These are indirect costs, as you can use the money for your business activities once the company has been successfully founded.
• Advisory services: Costs for legal and tax advice can vary depending on requirements and scope. It is advisable not to save money here in order to prevent problems later on.

Additional costs may be incurred for the preparation of documents and certified translations if your documents are in a language other than German, French or Italian.

Found a limited liability company: You should pay attention to this

Legal framework

Compliance with legal requirements is crucial for a successful start-up. Here are some important points:

• Code of Obligations (OR): The provisions of the Swiss Code of Obligations govern the formation and operation of limited liability companies.
• Complete documents: Make sure that all necessary documents are complete and correct to avoid delays.
• Dates and deadlines: Adhere to all important dates and deadlines, especially for submission to the Commercial Register Office.

Tax aspects

A GmbH is an independent legal entity and is subject to corporate taxation. We advise you to seek tax advice at an early stage in order to avoid potential tax traps and benefit from tax advantages.

You should be aware of these tax aspects:

• Profit taxation: The profits of the GmbH are subject to corporation tax.
• Value added tax (VAT): If the turnover limit is exceeded, the GmbH is liable for VAT.
• Tax prepayments: Plan regular tax prepayments to avoid financial bottlenecks.

Liability and responsibility

The formation of a GmbH offers the advantage of limited liability. This means that the shareholders are only liable with the capital they have contributed and not with their private assets.

Nevertheless, the shareholders are responsible for the proper management of the company and compliance with legal regulations.

• Shareholder liability: Shareholders are only liable to the extent of the share capital they have contributed.
• Management: The managing directors are responsible for the proper conduct of business and compliance with legal regulations.
• Compliance: The GmbH must comply with all relevant laws and regulations, including accounting and reporting obligations.

How much profit must a limited liability company make?

There is no legally prescribed profit margin that a GmbH must achieve. However, it is important that the GmbH, like any other form of company, operates economically and is profitable in the long term.

Here are some considerations for the profitability of a GmbH:

• Covering operating costs: Your GmbH should generate enough profit to cover ongoing operating costs such as rent, salaries and material costs.
• Profit distribution: After deducting all costs, sufficient funds should also remain for the distribution of profits to the shareholders.
• Setting aside reserves: It is advisable to set aside a portion of the profit as reserves in order to cushion unforeseen expenses or economic fluctuations.
• Reinvestment: Part of the profit should be reinvested in the growth of the company, for example in new projects, marketing or the expansion of the product range.

Advantages and disadvantages of the “GmbH” legal form

The GmbH is a popular choice among the various legal forms for a corporation in Switzerland. Why? Because it offers entrepreneurs and investors many advantages. However, this legal form also has stumbling blocks that we should not ignore.

Advantages

One of the biggest advantages is the limited liability, which protects the private assets of the partners, as they are only liable with the company’s assets.

The minimum share capital of CHF 20,000 is relatively low, which also makes it possible for smaller companies to set up.

The GmbH also offers legal security through clear legal regulations and structures, which ensures orderly management.

After all, a GmbH enjoys a high reputation with business partners and banks, which makes it easier to initiate business and take out loans.

Advantages

Founding a GmbH in Switzerland also has some disadvantages. The initial costs for the notary, commercial register and any advisory services can be relatively high.

In addition, the formation and operation of a GmbH involves a number of formalities and administrative tasks, which leads to increased bureaucracy.

Finally, the profits of the GmbH are subject to corporation tax, and income tax is also payable on distributions to the shareholders, which can lead to double taxation.

For more details see our in-depth comparison of GmbH pro´s & con´s.