Sole proprietorship or GmbH – which is right for you?

In short: A sole proprietorship is simple, cheap and has no minimum capital – but you are liable with all your assets. A GmbH needs at least CHF 20,000 in share capital and a notarial deed; as a rule, only the company’s assets are liable for its debts. The right choice depends on risk, income and your plans.

The comparison

	Sole proprietorship	GmbH
Minimum capital	none	CHF 20,000
Set-up	comes into existence with the business	notarial deed, then commercial register
Commercial register	compulsory from CHF 100,000 in revenue	always – the GmbH exists once registered
Liability	you, with all your assets	in principle only the company’s assets
Business name	must contain your surname	“GmbH” must be included
Accounting	simplified below CHF 500,000	always full accounts
Taxes	the profit is your income	the company pays profit tax, distributions are your income
Social insurance	you are self-employed	you are an employee of the GmbH
Transparency register	not affected	reporting compulsory

Arguments for a sole proprietorship

• Few formalities and low costs.
• No capital required.
• Less administration.
• No double taxation of company and owner.

Arguments for a GmbH

• Liability: as a rule, only the company’s assets are liable for the GmbH’s debts. Exceptions exist, e.g. if managing directors breach their duties.
• Social protection: as an employee, accident and unemployment insurance are compulsory.
• Business name: more freedom, but with “GmbH”.

Costs of a GmbH

The federal SME Portal gives guide values: CHF 700 to 2,000 for the notary, CHF 600 for the commercial register entry (capital up to CHF 200,000) and, if needed, CHF 600 to 2,000 for advice.

What next?

Many start with a sole proprietorship and switch later as the business grows. Switching has tax consequences – get advice. To get started: Start a sole proprietorship or Set up a GmbH.