Requirements, AHV and VAT registration, commercial-register entry from CHF 100,000 turnover, bookkeeping, liability and the typical move to a GmbH.
The sole proprietorship is the fastest and cheapest legal form for solo activities in Switzerland. It arises automatically when a permanent gainful activity begins — no notary, no deed, no minimum capital. In exchange: personal, unlimited liability. This guide walks through every administrative step and shows when the move to a GmbH pays off.
Before you start: If weighing sole proprietorship vs. GmbH, read Swiss legal forms compared.
Overview — the 5 steps to a sole proprietorship
| # | Step | Duration | Mandatory from |
|---|
| 1 | Choose firm name with family name | 1 day | immediately |
| 2 | Register at AHV compensation fund (self-employment) | 1–3 weeks | immediately |
| 3 | Commercial-register entry | 5–20 days | from CHF 100,000 turnover |
| 4 | VAT registration at ESTV | 1–2 weeks | from CHF 100,000 turnover |
| 5 | Business account + bookkeeping setup | 1–2 weeks | – |
Total: 1–4 weeks to a ready-to-operate sole proprietorship.
Step 1 — Firm name with family name
For a sole proprietorship the family name is mandatory part of the firm name (Art. 945 CO). Additions are permitted as long as they do not suggest a partnership with other persons.
Permitted: "Müller Consulting", "Anna Müller IT Services", "Müller Architecture". Not permitted: "Müller & Partner" (suggests partnership), "Müller AG" (suggests stock corporation).
Before choosing, check whether the name is already protected as firm or trademark — Zefix and Swissreg.
Step 2 — AHV registration as self-employed
Anyone self-employed in Switzerland must register with the cantonal AHV compensation fund. The fund checks whether genuine self-employment exists:
- Own premises (home office counts)
- Own economic risk (order loss, material outlay)
- Multiple clients (not just one principal — otherwise risk of disguised employment)
- Own marketing materials, own invoices
Upon recognition as self-employed:
- AHV contribution: 5.371% of net profit (2026), minimum CHF 514/year
- IV + EO contributions additionally (together ~10% of net profit)
- No ALV obligation — but also no entitlement to unemployment benefit
- 2nd pillar (BVG) is voluntary — recommended via a collective foundation
- 3rd pillar with increased tax deduction for self-employed (up to 20% of net profit, max. CHF 36,288 in 2026)
Step 3 — Commercial-register entry
Mandatory from annual turnover CHF 100,000 (Art. 36 para. 1 HRegV). Below voluntary.
Reasons for voluntary entry below CHF 100,000:
- Name protection in the municipality of the firm seat (Art. 956 CO)
- Business-account opening — many banks require HR entry
- Leases in the firm name instead of private person
- Credibility with customers and suppliers
Cost: CHF 80 for HR entry of a sole proprietorship plus possibly fiduciary fees.
Application is informal at the cantonal commercial-register office — application with certified signature, ID copy, indication of firm, seat, purpose and personal details.
Disadvantage of entry: the business is subject to bankruptcy proceedings rather than only seizure proceedings. In insolvency, all assets (including private) are counted in.
Step 4 — VAT registration
Mandatory from worldwide annual turnover CHF 100,000 (Art. 10 MWSTG). Registration at the Federal Tax Administration (ESTV) — online or in writing.
Accounting method choice:
- Effective method: all input VAT deductible, but quarterly with detail
- Net-tax rate method: industry-specific flat rate, simpler semi-annual filing — recommended for most solo activities
Voluntary VAT registration below CHF 100,000 makes sense when:
- large investments with high input-VAT deduction are upcoming
- customers are mainly VAT-liable businesses (for them VAT is pass-through)
Step 5 — Business account and bookkeeping
Business account: no legal requirement for a sole proprietorship, but strongly recommended for clean separation. Banks offer sole-proprietorship accounts (PostFinance, ZKB, Raiffeisen, neobanks). Often a condition for HR entry.
Bookkeeping:
- Turnover < CHF 500,000: simplified records ("milchbüchlein") — revenue, expenses, assets (Art. 957 para. 2 CO)
- Turnover ≥ CHF 500,000: double-entry bookkeeping with balance sheet and P&L
- Records must be kept 10 years (Art. 958f CO)
Software: Bexio, Run my Accounts, Klara, Pebe Smart — all suitable.
Taxes for the sole proprietorship
The profit is taxed directly with the owner as income (federal income tax + cantonal/municipal income tax). No separate corporate tax as with capital companies.
Example: net profit CHF 80,000, married without children, resident in Zurich:
- Federal income tax: approx. CHF 850
- Cantonal/municipal tax Zurich: approx. CHF 11,000
- AHV/IV/EO self-employment contribution: approx. CHF 8,000
- Total burden: approx. CHF 19,850 (approx. 25% of profit)
For comparison GmbH with same profit (director salary CHF 60,000 + dividend CHF 15,000): only marginally cheaper, more effort and side costs. Tipping point to GmbH usually from profit CHF 100,000–150,000.
When to switch to a GmbH
Liability risk increased: you give consulting recommendations, program software for clients, do construction services — all with damage potential that can hit you personally. GmbH liability protection pays off.
Hiring employees: in a sole proprietorship the "employer" is also personally liable for wage obligations, social insurance, BVG. GmbH separates this.
Co-founder joins: sole proprietorship is solo. With 2+ persons → general partnership (with personal joint liability!) or directly GmbH.
Profit permanently > CHF 100,000–150,000: GmbH structure with director salary (BVG optimisation) + dividend (partial taxation) often becomes more tax-efficient.
Investor entry: sole proprietorship is not transferable in shares. GmbH (or AG) offers quota or share entry.
Conversion process: sole proprietorship can be transferred via conversion under FusG or via contribution-in-kind formation GmbH. Tax-neutral if the 5-year lock-up for shares is observed.
When legal advice is useful
- Choice sole proprietorship vs. GmbH at medium liability risk — cost comparison + tax simulation
- Conversion sole proprietorship → GmbH — tax neutrality, lock-up, asset transfer
- Disguised-employment risk — when only one main client exists, AHV back-claim risk over years
- Industries with special licensing — e.g. medical devices, medicinal products, financial services
- International activity — double-taxation treaties, permanent-establishment concept, EU-area VAT
Related topics
Official sources
Frequently asked questions
When must I register my sole proprietorship in the commercial register?
Registration is mandatory from CHF 100,000 annual turnover (Art. 36 para. 1 HRegV). Below that voluntary — but often useful for name protection, business-account opening, leases in the company name and credibility.
How much does forming a sole proprietorship cost?
Almost nothing except the HR fee of CHF 80 (if registered) — no notary, no deed cost, no minimum capital. A fiduciary may charge CHF 200–500 for setup.
Do I have to register with AHV?
Yes. Anyone self-employed in Switzerland must register with the cantonal AHV compensation fund. The fund verifies self-employment (own premises, own risk, multiple clients) and sets the self-employment contribution accordingly.
When am I VAT-liable?
From CHF 100,000 annual turnover (Art. 10 MWSTG). Below voluntary — useful when input VAT from investments should be deductible. Registration at the Federal Tax Administration (ESTV).
Which bookkeeping is required?
Up to CHF 500,000 turnover, simplified records suffice (revenue, expenses, assets). From CHF 500,000 double-entry bookkeeping is mandatory (Art. 957 CO). The tax declaration requires clean records regardless.
When should I switch from sole proprietorship to GmbH?
When liability exposure rises (consulting, IT services with damage potential), when employees are hired, when a co-founder joins, when investors are envisaged, when profit is permanently > CHF 100,000–150,000 (tax optimisation via director salary + dividend).
What is the advantage of sole proprietorship over GmbH?
No formation costs beyond HR entry, no minimum capital, no double-entry bookkeeping below CHF 500,000, full profit flows directly to private assets, fastest registration. Disadvantage: unlimited personal liability.