Incorporating your Limited Liability Company in Switzerland – LLC

The Limited Liability Company (LLC) is the most popular legal form for new businesses in Switzerland. An LLC comes into existence through registration in the commercial register, is suitable for small and medium-sized enterprises (SMEs) and is established across all sectors.

Using IFJ's digital service, the most widely used in Switzerland, you can effortlessly and affordably find your new LLC.

For the incorporation, at least one person is required. This can be a natural person or another company (legal entity). The founding capital (nominal capital) must be at least CHF 20,000 (OR 773) and can be provided in cash or as an in-kind contribution (e.g., vehicle or machinery).

Each partner contributes to the company's capital (nominal capital) with at least one nominal share. In the LLC, the personal liability of the shareholders can be excluded. The liability is limited to the share capital and each shareholder is only liable up to the amount of his/her registered share capital, unless the Articles of Association provide otherwise by way of exception.

The transfer of nominal shares requires only a written agreement the parties concerned and a resolution by the shareholders' meeting, which does not have to be notarized. (Digital Service for the Transfer of Nominal Shares).

The nominal capital can also be held in the foreign currency most relevant to the business activities. If a foreign currency is used as the nominal capital, the commercial accounting and financial reporting must also be in the same currency. Currently allowed currencies, in addition to the Swiss Franc, are the Euro, US Dollar, Pound Sterling, and Yen. Cryptocurrencies are excluded (OR 621). The nominal value of the shares can be less than one centime, as long as it is greater than zero. We recommend setting a nominal value of CHF 1, 10, or 100.

How much does it cost to incorporate an LLC, and how long does it take for the LLC to be registered?

The cost of incorporating an LLC often ranges from CHF 750 to CHF 2,000. With IFJ, the legally and notarially executed incorporation costs a maximum of CHF 500. If you open the capital/business account with the banking partner PostFinance, the incorporation costs only CHF 300.

Not to forget: Thanks to further well-known partners, you receive additional startup deals that completely cover your incorporation costs and support the start of your company.

These additional third-party costs are incurred with every LLC incorporation:

• Commercial registry office CHF 500 - 700
• Signature certification CHF 20 - 50 per signature
• Capital deposit account CHF 145 - 300

If you incorporate with an in-kind contribution, you will need an auditor to examine and evaluate your asset(s). Additional costs will be incurred for this. We would be happy to advise you on this (info@ifj.ch und +41 (0)71 242 98 98).
ATTENTION: after your company has been entered in the commercial register, you will sometimes receive invoices from private or pseudo-official registers. These register entries are not required for your business activities and can be ignored.  

How long does it take to incorporate an LLC in Switzerland?

On average, the incorporation of an LLC takes 2 - 4 weeks. Depending on the canton and the workload of the offices, this can vary. Especially before the summer vacations and before Christmas, the offices have a higher workload, which increases the processing time.

How is an LLC formed?

To incorporate an LLC, one or more natural and/or legal persons are required. Similar to a corporation, the formation and operation of a "single-person LLC" is also possible.

Each LLC must be represented by at least one person who is resident in Switzerland and has sole signing authority. This person must have access to the registry of shareholders and beneficial owners.

The Company Name of an LLC?

Choosing a company name is subject to various regulations. For example, a name cannot be chosen if it is already being used by another company; for this, you can check www.zefix.ch to see which companies already exist in Switzerland. A significant advantage is that Limited Liability Companies (LLCs) can freely choose their company name while adhering to general principles. The addition of "LLC" is mandatory. For example:

• Schulthess Plastering LLC
• Carpentry QWERTZ LLC
• Cosmetic Meier LLC Bern

A company can use fantasy names, include information that describes the people mentioned in it, or indicate the nature of the business. The company name must be truthful and not cause deception (prohibition of deception) or contravene public interests.

How do I register my LLC in the commercial register?

To register in the commercial register, several documents must be created and signed. This includes the commercial register application, statutes, Lex Friedrich and SME declaration, as well as the founding certificate. The IFJ takes over this process completely so you can focus on your activities during the formation.

All documents will be made available to you digitally in a personal online area, so you can comfortably print and sign them from anywhere. The signed documents can be sent to us by mail or email. Our lawyers and notaries carry out the certification and submit all necessary documents to the responsible commercial register office.

What insurance is needed for an LLC?

After your LLC is entered in the commercial register, it must be registered with the compensation office (social insurance). Normally, you will receive a registration form from your responsible social security office (SVA). In the case of an LLC, the staff is automatically classified as non-self-employed for social security purposes – including the owner(s). In addition to old age and survivors' insurance (AHV), disability insurance (IV), and income compensation allowances (EO), unemployment insurance (ALV), pension fund, and accident insurance are also mandatory.

Further insurances are of central importance for the LLC. It's important that the different needs are analyzed and tailored solutions are created. An overview of what insurances might be necessary for your new company can be found at www.ifj.ch/durchstarten/versicherungen.

Experts from Helvetia are available for personal consultation.

Who is liable in an LLC?

The term "limited liability" refers exclusively to the shareholders and not to the company itself.

Further liability of the shareholders exists if the articles of association provide for additional contributions and ancillary obligations. Such obligations can only be used to cover balance sheet losses, to ensure the proper continuation of the business, or in cases statutorily defined. The amount of these obligations must not exceed twice the nominal value of the share capital (OR 795).

The managers of an LLC are personally liable for damages they cause through intentional or negligent breach of duty (OR 754 in conjunction with OR 827). There is also personal liability for certain social security contributions.
 

Who supervises the LLC?

The shareholders' meeting is the supreme body of the LLC and determines the statutes, the management, and the audit office, if necessary (see section "Audit"). The meeting also approves the profit and loss account and balance sheet, decides on the use of profits, and exonerates the manager(s). The management of the LLC corresponds to the board of directors of a corporation. In principle, all shareholders are entitled and obligated to collectively manage and represent the company. They may also appoint third parties (i.e., non-shareholders) to manage the company.

The law stipulates that 5% of the annual profit must be allocated to the statutory reserve until it reaches 50% of the share capital. . If there is a loss carryforward, it must be compensated for before the allocation to the reserve. The determination of dividends can only occur after the allocations to the statutory profit reserve and to the voluntary profit reserves have been completed.

The statutory capital reserve can be repaid to the shareholders if the statutory capital and profit reserves, taking into account any losses, exceed half of the nominal capital registered in the commercial register.

When an LLC generates profits, the shareholders have the right to be involved in these profits in accordance with their shareholdings. The distribution of the profit share is only permissible from the net profit and the reserves formed for this purpose. Interest is not paid on the share capital.

Accounting in an LLC

In Switzerland, the LLC is obligated to maintain accounts and financial reporting (OR 957a). This includes an inventory, a complete balance sheet, and a profit and loss statement with all supporting documents. The accounting records and reports related to the accounting must be retained for at least ten years, and the annual report and the audit report must be kept in writing, either on paper or electronically, and signed (OR 958f).
 

Waiver of Audit (Opting-Out)

An LLC can waive the limited audit (OR 727a Abs. 1) with the consent of all shareholders if the company has no more than 10 full-time positions on an annual average. This waiver also applies for the following years. Each shareholder has the right to request a limited audit at the latest 10 days before the general assembly; in this case, the shareholders' meeting must elect an audit office. This office checks the accuracy of the accounting annually and prepares a report for the shareholders' meeting.

An LLC is subject to the ordinary audit (OR 727)if it exceeds at least two of the following thresholds in two consecutive fiscal years:

• Balance sheet total: CHF 20 million
• Turnover: CHF 40 million
• Full-time positions: 250

Taxation of the LLC in Switzerland

The LLC is subject to what is known as double taxation. The company is liable to pay tax on the net profit, and the shareholders must pay tax on the profit distributed as a dividend as income. Capital and wealth taxes are also payable on the share capital of the LLC and the shareholders. Withholding tax must also be taken into account, which must be deducted from the dividends paid out. This is then refunded to the shareholders later as part of the settlement of their income tax return.

The transfer of nominal shares in an LLC is only possible through a written agreement (OR 785). The assignment of nominal shares requires the approval of the shareholders' meeting. Unless otherwise regulated by the statutes, approval requires a majority of at least two-thirds of the votes represented and the absolute majority of the total nominal capital associated with exercisable voting rights. You can easily handle a nominal share transfer through the digital legal service of IFJ.

 

Liquidation of an LLC

The shareholders' meeting can decide to liquidate the LLC in an orderly manner at any time with a majority of two thirds of the votes. A LLC is also liquidated in the event of bankruptcy or if a reason for dissolution specified in the articles of association or prescribed by law arises. Exceptionally, any shareholder can also apply to the competent court to dissolve the LLC for good cause - irrespective of the share of share capital in the company. However, the hurdles for the approval of such an action are high. The voluntary liquidation of an LLC occurs in several steps and can be easily initiated online through the digital legal service of IFJ. Please note that we can only process unanimously approved liquidations in our online service.

What should be included in the statutes of an LLC?

The statutes of an LLC must contain at least the most central regulatory points. The term "statutes" refers to the fundamental legal norms that a company establishes for itself. The legislature has set the minimum requirements for an LLC (OR 776). The statutes must be publicly notarized. The following information must be included in the statutes:

• The company's name, domicile, and purpose
• The amount of the nominal capital and the number and nominal value of the nominal shares
• The form of communications from the company to its shareholders

In the IFJ's founding service, founders have access to standard statutes that have been proven thousands of times, which include all the legally required points as well as some additional points: management, representation, pre-emptive rights, etc. This will give you a solid foundation for the start of your entrepreneurial life.

Advantages:

• Relatively low share capital: Only a comparatively low share a minimum nominal capital of CHF 20'000 is required.
• Only one person is necessary for the formation.
• Liability is in general limited to the fully paid-in nominal capital.
• Business name: There is freedom in the choice of name, but the addition "LLC" must be included.
• Tax progression: The division of profit, where the salary of the shareholders is considered an expense, can reduce the tax progression peak.
• The capital gain from the sale of the nominal stake is tax-free.
• An LLC can be converted into a corporation without liquidation.

Disadvantages:

• Double taxation: Taxation occurs both on the earnings and capital of the LLC as well as on the income and assets of the shareholders.
• The costs of incorporation are higher compared to sole proprietorships.
• Transparency: Organs, capital, and nominal stakes are publicly accessible in the commercial register.
• Administrative effort: There is increased administrative effort due to minutes, shareholder meetings, tax forms, etc.
• Unemployment benefits: The managing directors of an LLC are not entitled to unemployment benefits unless they leave the company or their job permanently; this also applies to spouses or partners working in the LLC.

The success of creating an LLC in Switzerland relies on meticulous planning and a thorough understanding of the Swiss market. Before embarking on the creation of an LLC, it is essential to conduct market research to identify the specific opportunities and challenges in your sector. Establishing an LLC in French-speaking Switzerland or online also requires a clear understanding of legal and tax obligations. It is advisable to consult with experts in business law and taxation to ensure that your LLC fully complies with Swiss legislation. Another crucial aspect is financial management: developing a solid financial plan and securing the necessary startup funds are indispensable steps. Finally, creating an LLC in Switzerland means engaging in an innovative ecosystem where quality, precision, and excellence are paramount. By focusing on these values, your LLC can stand out and thrive in the competitive Swiss environment.

How can we assist you in the creation of your LLC?

IFJ is one of the leading addresses in Switzerland for company formation. Since 1989, we have supported over 200'000 company formations with the help of experts, lawyers, and notaries. Now it's your turn.

Advantages:

• Sign up for the free company formation course.
• Schedule a consultation appointment
• Order our free checklists
• Attend our free conferences
• Use our business plan tool
• PostFinance business account
• Capital contribution processing
• Swisscom CHF 300.- starting credit
• Management software
• Support from renowned partners

Your LLC creation in the main cities of Switzerland

Switzerland, particularly the cities of Zurich, Basel, Bern and Lugano offers an attractive economic environment for setting up your LLC and positions you advantageously in dynamic and diverse markets. We help you navigate the local business landscape and ensure that your LLC in Switzerland takes full advantage of all available opportunities. Our in-depth knowledge of local specifics enriches your project and turns the establishment of your LLC in Aargau, Thurgau, Fribourg, Valais or Lucerne into a lasting success.

In addition to setting up LLC, we offer a wide range of complementary services covering all necessary aspects for the development and management of your business. Whether it's tax consulting, risk management strategies, or accounting services, our team is equipped to provide comprehensive support. Establishing your LLC with our help is not just about getting started; we are committed to providing continuous support to ensure the long-term success and growth of your business.