This article walks through the three most common forms for founders in Switzerland: the sole proprietorship (Einzelfirma), the limited liability company (GmbH) and the company limited by shares (AG). Figures refer to 2026.

Liability: who pays if things go wrong

With a sole proprietorship there is no separation between you and the business. You are liable for business debts with all your private assets, including your savings or your share in a property. If you are married, your spouse's assets are generally not affected, but the household budget certainly is.

A GmbH and an AG are legal entities. Creditors can only claim the company's assets. This separation has limits: if you personally guarantee a business loan, you remain personally liable for that loan. And anyone managing the company can be held personally responsible for breaches of duty, for example if social security contributions are not paid (Art. 52 of the Federal Act on Old-Age and Survivors' Insurance, AHVG). This point is often underestimated when setting up a company.

Capital and set-up effort

A sole proprietorship needs no minimum capital. You register with the compensation office (Ausgleichskasse) as self-employed, and once turnover reaches CHF 100,000 a year, you must register in the commercial register. The cost is in the low hundreds of francs.

A GmbH requires share capital of at least CHF 20,000, which must be fully paid in at incorporation. The money does not sit idle: you may use it to run the business, but it belongs to the company. Incorporation requires a public deed from a notary and registration in the commercial register. Notary, register and bank together usually cost a low four-digit amount, depending on the canton and the effort involved; online incorporation services are at the lower end, an individually advised set-up with bespoke articles at the upper end.

An AG requires share capital of at least CHF 100,000. At least 20 percent, and no less than CHF 50,000, must be paid in at incorporation. The process and costs are comparable to a GmbH, but the capital tied up is two and a half to five times higher.

One difference that matters in practice: in a GmbH, the partners are listed by name in the public commercial register. In an AG they are not; shareholders are only recorded in the internal share register. If discretion matters to you, or if you plan to give shares to employees or investors later, an AG is usually easier.

Both a GmbH and an AG generally need an auditor. With fewer than ten full-time positions on annual average and the consent of all partners or shareholders, you can opt out of the audit. This saves several thousand francs a year and is commonly used by small companies.

Taxes: income or profit

This is where the biggest difference lies, and it depends heavily on how much the business earns.

With a sole proprietorship, profit is taxed as income together with your other income. There is one tax return, no separate corporate tax filing, and you can offset losses against other income, such as a part-time salary. For low to moderate profits this is often the cheapest solution. As profit rises, however, you move up the progressive scale: every additional franc is taxed at your marginal rate, which depending on where you live and how much you earn can be well above 30 percent.

A GmbH and an AG pay profit tax on their earnings and capital tax on their equity. The effective profit tax rate ranges from around 12 to 21 percent depending on canton and municipality (federal, cantonal and municipal combined, as of 2025). What you take out of the company is taxed again privately. There are two ways to do this:

• Salary: for the company it is an expense that reduces profit. For you it is income, and social security contributions apply.
• Dividend: it is paid out of profit that has already been taxed. If you hold at least 10 percent of the capital, it is taxed at 70 percent of its value at federal level and at no less than 50 percent in the cantons (partial taxation). No AHV contributions are due on dividends.

Combining salary and dividends leaves some room for manoeuvre, but not unlimited room. The compensation offices check whether your salary is appropriate for the work you do. If it is conspicuously low and the dividend high, part of the dividend may be reclassified as salary after the fact, with contributions and interest on arrears. Conversely, the tax authorities make sure the salary is not excessive.

As a rough guide: as long as profit is in the range of a normal salary, a company brings few tax advantages, and the ongoing cost of bookkeeping, annual accounts and two tax returns often cancels them out. A GmbH or AG becomes interesting when profit is regularly meant to stay in the business, for example for investment, or when liability is a real concern.

Social insurance and pensions

Your choice of legal form also determines your status for social insurance.

As the owner of a sole proprietorship you are self-employed. You pay AHV/IV/EO contributions (old-age, disability and income compensation insurance) on your own, in 2026 at most 10 percent of your earned income; on incomes below CHF 60,500 a reduced rate applies. You have no unemployment insurance, and occupational pension cover (BVG) is voluntary. You are not automatically insured against accidents under the Accident Insurance Act (UVG). What this means for your pension planning is covered in the article Pension planning for the self-employed.

In a GmbH or AG you are an employee of your own company. The usual contributions apply to your salary, split equally between the company and you. If your annual salary exceeds CHF 22,680 (as of 2026), you are compulsorily insured in the occupational pension scheme, and the company must join a pension fund. This usually gives you much better cover against disability and death than in a sole proprietorship, and you can make voluntary buy-ins. Accident insurance under the UVG is compulsory for employees.

One point many people only discover when they need it: if you hold an employer-like position in your own GmbH or AG, you pay unemployment insurance contributions but generally do not receive unemployment benefits as long as you have not definitively given up that position. You should not count on this benefit in your planning.

VAT: independent of the legal form

VAT liability depends on turnover, not on the legal form. From worldwide turnover of CHF 100,000 a year from taxable supplies you must register, whether as a sole proprietorship or a GmbH. Below that threshold you can register voluntarily, which pays off if you make large investments and want to reclaim input tax.

Switching later: conversion

The legal form is not a decision for life. Many start as a sole proprietorship, test their business model and switch once profit or risk increases.

The Mergers Act (Fusionsgesetz) provides orderly ways to do this. A sole proprietorship registered in the commercial register can transfer its business, with assets and liabilities, to a new GmbH or AG (transfer of assets). A GmbH can later be converted directly into an AG without dissolving the company.

For tax purposes, moving from a sole proprietorship into a company can be tax-neutral if the business continues and the book values are carried over. The condition: you must not sell the shares within five years of the restructuring. If you do, the hidden reserves are taxed retrospectively. So if you already know you want to sell the business in three years, take that into account when choosing the timing.

The reverse route, from a GmbH back to a sole proprietorship, is more involved: the company is liquidated, and the reserves you receive in the process are taxed as income.

Which form suits whom

Experience shows a few patterns that work as a starting point:

• You are starting alongside a job or with little capital, the liability risk is manageable, and profit will be modest in the first years: a sole proprietorship is usually the simplest and cheapest solution.
• You work with client contracts that could lead to large claims, you are hiring staff, or profit is well above what you need to live on: a GmbH is the right framework for most small businesses.
• You plan to bring in investors, give employees a stake, or anonymity of ownership matters to you: then an AG is worth a look, despite the higher capital.

These patterns do not replace a calculation with your own numbers. Ask yourself two further questions: how do you want to protect yourself against disability and in old age? And how much money do you need privately from the business each month? The answers often shift the calculation more than the tax rates.

How we can help

Our legal form test gives you a first idea of which legal form fits your situation in a few minutes. If you want to work through the decision with your own figures, including the consequences for pensions and finances for each legal form, the Starter package is designed for that.

This article is aimed at self-employed people running a sole proprietorship. If you set up a GmbH or AG and pay yourself a salary, you count as an employee for social insurance purposes; the differences are explained in the article Choosing a legal form. Figures refer to 2026.

AHV: paying contributions on your own

As a self-employed person you pay the full contributions to AHV, IV and EO (old-age, disability and income compensation insurance) yourself. In 2026 they amount to at most 10 percent of your earned income (AHV 8.1, IV 1.4, EO 0.5 percent). For incomes between CHF 10,100 and CHF 60,500 a sliding scale with lower rates applies, and the minimum contribution is CHF 530 a year. On top of that come the administrative costs of your compensation office. From 2027 the thresholds will rise slightly, and the minimum contribution will increase to CHF 541.

The basis is the income shown in your tax assessment. Because this often arrives one or two years later, the compensation office first charges provisional contributions based on your own estimate. Once the assessment is available, the difference is settled. There is a trap here: if your actual income is more than 25 percent above the estimate, the compensation office charges 5 percent interest on arrears on the additional payment. If your business does better than expected, it is best to report this early and adjust your provisional contributions.

There is no unemployment insurance for the self-employed. If you give up the business, you have no entitlement to daily allowances from your self-employed activity. That makes the reserve, discussed further below, all the more important.

Pension fund: voluntary, but possible

Occupational pension cover (BVG) is not compulsory for the self-employed. Without a pension fund, your provision consists of AHV and whatever you build up privately. For many people this is not enough to maintain their standard of living in retirement, and in the event of disability or death the gap is often even larger.

You can insure yourself voluntarily, and there are three common routes:

• Association scheme: many professional and trade associations run their own pension scheme that members can join. The conditions are often tailored to the sector.
• Your employees' pension fund: if you have staff, you can insure yourself with the pension scheme that covers your employees.
• Substitute Occupational Benefit Institution (Stiftung Auffangeinrichtung BVG): it accepts self-employed people who have no other option. The plan is simple and essentially corresponds to the legal minimum.

A pension fund is more than a savings account. Contributions and later buy-ins are deductible from taxable income, and you are insured against disability and death under fixed rules. The downside: you tie up money that the business may need, and contributions are due regularly, even in a weak year.

If you run a GmbH or AG and pay yourself a salary above CHF 22,680 (as of 2026), the question does not arise: you are then compulsorily insured. How to find a suitable solution in that case is described in the article Choosing a BVG solution without commissions.

The larger pillar 3a

Without a pension fund, you can pay considerably more into pillar 3a than employees can. The limit is 20 percent of your net earned income, up to a maximum of CHF 36,288 a year. This amount applies unchanged in 2025 and 2026. For comparison: with a pension fund, the maximum is CHF 7,258.

For the self-employed, net earned income means the profit from the income statement after deducting AHV contributions and after tax adjustments. With a profit of CHF 90,000, the limit is therefore just under CHF 18,000, not the maximum. Contributions are deductible from taxable income, which for middle and higher incomes quickly adds up to several thousand francs in tax a year.

If you are voluntarily insured with a pension fund, the smaller pillar 3a of CHF 7,258 applies to you. You cannot have both. Since 2026 you can also make up for gaps from previous years, at the earliest for contribution years from 2025; the conditions are explained in the article on pillar 3a catch-up payments.

Two practical tips: spread your savings across several 3a accounts or custody accounts, so that you can withdraw them in stages later and reduce the withdrawal tax. And set the amount so that it does not endanger the business's liquidity even in a weaker year. You can decide on your pillar 3a contribution afresh each year; there is no obligation to pay in the same amount every year.

Risk cover: illness, accident, disability

Retirement can be planned. A long absence due to illness or accident cannot, and for the self-employed it is usually the greater risk.

Daily sickness allowance: as an employee you continue to receive a salary for a certain time when you are ill. As a self-employed person you have no income from day one, but your fixed costs keep running. Daily sickness allowance insurance pays an agreed daily amount after a waiting period. The longer the waiting period, the lower the premium; with a good reserve you can choose a waiting period of 30, 60 or 90 days. It is important to take out the insurance while you are healthy, as pre-existing conditions may be excluded.

Accident: the self-employed are not automatically insured under the Accident Insurance Act (UVG). In the event of an accident, your health insurer pays the treatment costs, but no daily allowance and no disability pension from accident insurance. You can take out voluntary UVG cover, with Suva or a private insurer depending on your sector. This gives you essentially the same protection as employees, including daily allowance and pension.

Disability and death: without a pension fund, the only income if you become unable to work due to illness is the disability (IV) pension. The maximum full IV pension is CHF 2,520 a month (as of 2026), and only with a complete contribution record and corresponding income. If you have a family or commitments such as a mortgage, you should close this gap with a disability income pension and, if necessary, a lump sum on death. This can be done through a pension fund or a separate risk insurance policy. Pure risk insurance is usually much cheaper than products that combine saving and insurance, and it is easier to adjust when your situation changes.

Liquidity reserve

The reserve is the least exciting part of pension planning and often the most important in the first years. It bridges the waiting period of your daily allowance insurance, a weak quarter or an additional demand from the compensation office, without you having to touch your pillar 3a or your retirement savings.

As a guideline, we consider three to six months of private and business fixed costs sensible, kept separate from the provisions for taxes and AHV. If your income fluctuates strongly or you depend on a few large clients, rather more. The reserve belongs in a separate account that you do not use day to day.

When starting out: withdraw pension money or not

If you become self-employed and are no longer compulsorily insured, you can have your vested benefits from the pension fund paid out in cash; if you are married, your spouse must give written consent. The same applies to pillar 3a savings, provided you withdraw them within one year of starting self-employment.

This can provide start-up capital without a loan. But it is also your retirement provision that you are putting at the risk of your own business, and in the event of disability it is then missing. The withdrawal is also taxed separately. We advise making this decision only once the business plan is in place and it is clear whether the money is really needed. Once withdrawn, it cannot be paid back tax-free.

How we can help

Which of these building blocks make sense in your situation, and which do not, depends on your income, family, sector and plans. In the Advanced package we record your starting position, review liquidity, pension set-up, pillar 3a and insurance, and summarise the results in a report. If needed, we go through it with you in a final meeting.

This article explains your obligations as an employer under the Occupational Pensions Act (BVG), how the solutions on the market differ, which criteria count when comparing them and how a tender works. Figures refer to 2026.

Your obligations as an employer

If you employ people whose annual salary with you exceeds CHF 22,680 (entry threshold, as of 2026), you must join a registered pension scheme. This also applies to you if you are the managing partner of your GmbH or AG and pay yourself a corresponding salary. Cover against death and disability starts on 1 January after the 17th birthday, and retirement savings start on 1 January after the 24th birthday.

You bear at least half of the contributions. More is permitted and common in many companies; less is not. In the mandatory part, the insured salary is the AHV salary minus the coordination deduction of CHF 26,460 (as of 2026). Many pension plans deviate from this, for example with a lower coordination deduction or one adjusted to the level of employment, which mainly benefits part-time staff.

Two obligations are often overlooked. First, you must choose the pension scheme in agreement with your staff; the same applies if you later terminate the affiliation agreement and switch. Second, the AHV compensation office checks whether you are affiliated. If you are not, you will be assigned to the Substitute Occupational Benefit Institution (Stiftung Auffangeinrichtung BVG), retroactively and with the costs that this entails.

Collective foundation, joint foundation, association scheme

Small and medium-sized businesses rarely have their own pension fund. They join an institution that insures many employers. There are two basic forms.

In a collective foundation (Sammelstiftung), each affiliated employer has its own pension unit with separate accounts. Depending on the foundation, your pension unit has its own interest rate and even its own funding ratio. This allows a plan that fits your company; it also means that an unfavourable claims history, such as several disability cases, feeds directly into your premiums.

In a joint foundation (Gemeinschaftsstiftung), all employers share one common pool. There is one funding ratio, one interest rate and usually a choice of standard plans. Risks are spread across all companies, which is often more stable for small businesses with few insured people.

There are also association schemes for individual sectors. Some are inexpensive and well suited to the sector, but occasionally they are simply the solution chosen out of habit, without ever having been compared.

Full insurance or semi-autonomous

The second major distinction concerns who bears which risk.

With full insurance, a life insurance company takes on all risks, including investment risk. There is no underfunding, no restructuring measures and the assets are fully covered at all times. The price: the insurer must invest very cautiously and hold a lot of capital. The interest credited to retirement savings is therefore usually close to the legal minimum rate, which is 1.25 percent in 2026. Only a few insurers still offer full insurance.

With a semi-autonomous solution, the foundation bears the investment risk itself and only insures the risks of death and disability with an insurer. It can invest more in equities and real estate and, in good investment years, often credits considerably higher interest to retirement savings than full insurance does. In poor stock market years, however, it can fall into underfunding, in extreme cases with restructuring contributions from employer and employees.

For most small businesses today, a semi-autonomous collective or joint foundation is the standard. Full insurance can make sense if you want to rule out any possibility of restructuring and are willing to give up interest for it. You should weigh this up deliberately, not simply because it was in the first quote.

Criteria for comparison

Quotes look similar at first glance and differ greatly in the detail. These points deserve a close look:

• Costs: administrative costs per insured person and year, plus the asset management costs shown in the annual report. They are not presented the same way in every quote; they only become comparable once converted to the same basis.
• Risk premiums: what does insuring death and disability cost for your workforce? There are considerable differences between providers for the same benefits.
• Interest: how much interest was credited to retirement savings over the last five to ten years, in the mandatory and extra-mandatory parts? A single good year says little.
• Conversion rate: in the mandatory part, the legal rate is 6.8 percent. Rates for the extra-mandatory part are not regulated, and many foundations apply a lower, enveloping rate to the entire balance. For employees who want to draw a pension, this is a key point.
• Funding ratio and reserves: a funding ratio above 100 percent says little on its own. What matters is whether the fluctuation reserve is filled, which technical interest rate is used and how high the proportion of pensioners is. A foundation with many pensioners has to use part of its returns for their pensions.
• Plan design: can the coordination deduction, savings contributions and optional plans be set to suit your staff?
• Contract: notice period, minimum term and what happens to pensioners when you leave. Many people only read these points when they want to switch.

Why commissions can distort the choice

Most SMEs find their pension fund through a broker or insurance intermediary. For the employer this seems free of charge. The broker, however, is paid by the pension scheme, with a commission that is often calculated as a percentage of contributions or as an amount per insured person, every year for as long as the contract runs. These costs flow into the foundation's administrative costs and are therefore ultimately borne in part by the insured.

This does not have to lead to a poor solution. But it creates an incentive that does not fully match your interest: providers that pay no or lower commissions appear less often in the selection, and a switch that would deprive the broker of ongoing remuneration is rarely recommended. The law requires intermediaries to disclose the type and source of their remuneration (Art. 48k of the BVV 2 ordinance). In practice it pays to ask actively and request the answer in writing: how high is the commission, how is it calculated, and which providers were approached?

How a tender works

A proper tender usually follows these steps:

1. Record the starting position: workforce with ages, salaries and levels of employment, the existing pension plan, ongoing disability cases and pensioners.
2. Define requirements: which benefits should be insured, how high should savings and risk contributions be, and what is your risk tolerance for investments?
3. Approach providers: several collective and joint foundations with identical documents, so that the quotes are comparable.
4. Evaluate quotes: bring costs, premiums, interest and contract terms onto the same basis and weight them.
5. Decide together with staff: employees or their representatives must agree to the affiliation. A short briefing on the main differences builds trust here.
6. Implementation: sign the affiliation agreement, terminate the existing contract on time, usually at year end with six months' notice, and oversee the transfer of assets.

For a newly founded company some of these steps fall away, but the logic remains the same. Anyone who only realises after founding that they need a pension fund often has little time; in our experience a tender takes a few weeks.

How we can help

In the BVG analysis we run the tender for you: we record your starting position, obtain the quotes, make them comparable and discuss the choice with you. We work exclusively for a fee and accept no commission from any pension scheme.