Sole proprietorship, KlG, KmG, GmbH (LLC) or AG (Ltd): minimum capital, liability, taxes, formation costs, transferability — the complete comparison for Swiss company founders.
Choosing the legal form is the single most important early decision in any Swiss company formation. It determines minimum capital, liability, taxes, formation costs, transferability and whether you need a notary. This overview compares the five central legal forms — sole proprietorship, general partnership (KlG), limited partnership (KmG), limited liability company (GmbH) and stock corporation (AG) — across all practice-relevant criteria.
Note: This overview is general guidance. Which legal form fits a specific situation depends on many individual factors (industry, profit expectation, investors, internationality, tax residence). Before the final choice a brief legal check is worth it.
The comparison table at a glance
| Criterion | Sole proprietorship | KlG | KmG | GmbH | AG |
|---|
| Minimum capital | – | – | – | CHF 20,000 | CHF 100,000 (CHF 50,000 paid in) |
| Number of founders | 1 | min. 2 | min. 2 | min. 1 | min. 1 |
| HR registration | mandatory ≥100k turnover | immediate | immediate | constitutive | constitutive |
| Liability | personal, unlimited | joint, unlimited | general partner unlimited, limited partner up to contribution | company capital | share capital |
| Notary required | no | no | no | yes | yes |
| Formation costs | CHF 80–300 | CHF 160–500 | CHF 200–600 | CHF 1,200–3,000 | CHF 1,500–4,000 |
| Bookkeeping | simple <500k, double from 500k | double | double | double | double |
| Audit | – | – | – | opt-out <10 FTE | mandatory (limited/ordinary) |
| Taxes | income + AHV self-empl. | personal, pro rata | personal, pro rata | profit + capital + dividend partial-taxation | profit + capital + dividend partial-taxation |
| Transferability | very cumbersome | very cumbersome | very cumbersome | quota shares via articles amendment | shares freely (restrictions possible) |
| Anonymity | public (owner) | public (partners) | public (general partner) | public (shareholders) | shareholders not public |
| Social security | AHV self-empl., no ALV | AHV self-empl. | AHV self-empl. | manager = employee (AHV + ALV) | board = employee (AHV + ALV) |
| Typical use | solo freelancer, craft, side activity | 2+ partners without investors | 2+ partners with silent investors | SME, family, smaller investors | growth, investors, anonymity |
Sole proprietorship — fast, cheap, personally liable
The sole proprietorship is the most frequent legal form for solo activities in Switzerland. It arises automatically when a permanent gainful activity is taken up — no formation deed, no notary.
Character: owner and company are legally identical. No separation of private and business assets.
Advantages: no formation costs apart from the HR entry (if needed), no notary requirement, fast AHV registration, simple bookkeeping (milchbüchlein up to CHF 500,000 turnover), no minimum capital, full profit flows directly to private assets.
Limits: unlimited personal liability with all private assets, difficult transfer (no "share" sale possible), no separation of ownership and management, classified as self-employed for social security (no ALV — no unemployment benefit entitlement), family name mandatory part of the business name (Art. 945 CO).
HR registration: mandatory from CHF 100,000 annual turnover (Art. 36 para. 1 HRegV). Below voluntary — but often advisable for name protection, credibility and business-account opening. Guide: Forming a sole proprietorship in Switzerland.
General and limited partnership — partnership models
General partnership (KlG): two or more natural persons run a commercial, manufacturing or other business under common firm name (Art. 552 CO). All partners are jointly and severally liable with their private assets — including for obligations entered into by another partner.
Limited partnership (KmG): variant with two shareholder classes — general partner (unlimited liability) and limited partner (liable only up to the registered limited amount, Art. 594 CO). Practice-relevant primarily for silent investors.
Character: no minimum capital, no notary, HR registration mandatory immediately (Art. 552 para. 2 CO, Art. 594 para. 2 CO). Very personal legal form — partners must trust each other.
Advantages: flexible contract design (partnership agreement), full profit participation, no double taxation (pass-through taxation via the partners), fast formation.
Limits: personal liability of the general partner, difficult to add new partners without amendment, every partner is jointly empowered to sign (can bind the partnership).
Practice: less common in Switzerland today — those needing liability limitation usually go directly to GmbH.
GmbH — the most chosen legal form for SMEs
The limited liability company (GmbH) is the most frequent legal form for young Swiss companies with growth intent. Minimum capital CHF 20,000, fully paid in on a blocked account before formation.
Character: separate legal personality. Shareholder liability limited to the share capital (Art. 794 CO). Notarial deed required, commercial register entry constitutive (Art. 779 CO).
Advantages: liability limitation, separate tax personality (profit and capital tax at company level), managing-director salary is company expense (tax-deductible), social security via the company (with ALV entitlement), possibility of quota-share transfer via articles amendment.
Limits: notary costs (CHF 700–2,000), HR fee CHF 420, higher administrative burden (double-entry bookkeeping, potential audit), shareholders publicly visible in the commercial register, lower anonymity than AG, partner changes more cumbersome (notarial approval).
Important: at least one person with signature authority must be domiciled in Switzerland (Art. 814 para. 3 CO). Relevant for foreign founders — see the dedicated guide: Founding a company in Switzerland as a foreigner.
Further: Guide: Founding a GmbH in Switzerland.
AG — the choice for investors and growth
The stock corporation (AG) is the standard form for larger companies, investor participation and structures with clear separation between ownership (shareholders) and management (board of directors). Share capital at least CHF 100,000, of which at least CHF 50,000 paid in (Art. 632 CO).
Character: separate legal personality. Shareholders are not publicly visible (share register kept only internally). Highest transferability of shares. Notarial deed required.
Advantages: liability limitation, highest credibility with banks and investors, shareholder anonymity, free share transferability (unless restricted by articles), clear governance via board, broad investor structure possible.
Limits: higher formation costs (notary CHF 1,000–3,000, HR fee CHF 420), higher minimum capital, audit obligation (limited audit from >10 FTE, ordinary audit from statutory thresholds), higher running costs (board meetings, minutes, GA).
Important: as with GmbH, at least one board or director member must be domiciled in Switzerland with signature authority (Art. 718 para. 4 CO).
Further: Guide: Founding an AG in Switzerland.
Special cases — cooperative, association, foundation
Three further legal forms suitable for specific purposes:
- Cooperative (Art. 828 CO): at least 7 members, member-promotion purpose, democratic structure. Classic: housing, insurance, consumer cooperatives. HR entry constitutive.
- Association (Art. 60 CO): ideal, non-economic purpose. HR entry mandatory only for commercial activity or audit obligation. Typical: sports, cultural, political associations.
- Foundation (Art. 80 CO): dedication of assets to a defined purpose. Requires deed of foundation, notarial deed, supervision by Federal Foundation Authority.
For classic gainful activity cooperative, association and foundation rarely apply — they are purpose-bound.
Quick comparison: which legal form for which situation
Solo freelancer with < CHF 100,000 turnover: sole proprietorship without HR entry. Fastest, cheapest start.
Solo freelancer with liability risk (e.g. consulting, IT service): GmbH from day 1. Liability protection outweighs the CHF 20,000 capital.
SME with 2–5 employees, regional business, family participation: GmbH. Standard, accepted, manageable.
Growth company with investor plans: AG. Share transferability + anonymity + credibility.
2 or more equal partners without investors: GmbH (with shareholder agreement). General partnership only if liability is no concern.
Silent investor + active manager: limited partnership or GmbH with restriction rules.
Foreign founders (UA, RU, EU, third country): GmbH or AG with Swiss-resident signatory (Art. 814/718 CO). For UA/RU additionally sanctions-compliance review.
Holding structure for participations: AG with holding status.
When legal advice is useful
A brief legal check before formation prevents expensive corrections later. Useful especially for:
- Complex shareholder structures — multiple founders with different contributions, voting ratios, restriction rules
- International participation — domicile requirement, sanctions compliance, tax-residence themes, Lex Koller
- Contributions in kind or in lieu of cash — e.g. trademarks, IP, machinery — valuation and Stampa declaration
- Planned investor entry — choice of AG vs GmbH, restriction rules, shareholder agreements
- Conversion of existing structures — sole proprietorship → GmbH, GmbH ↔ AG, merger, demerger
- Industries with special regulation — banks, insurance, pharma, food, medicinal products
Related topics
Official sources
Frequently asked questions
Which legal form is best for a single founder?
For solo activities without investors and limited liability risk, a sole proprietorship is fastest and cheapest. With higher liability exposure, growth plans or future investors, a GmbH (LLC) is the typical choice from day one.
What is the key difference between GmbH and AG?
The GmbH has a minimum capital of CHF 20,000 and its shareholders are listed by name in the commercial register. The AG requires CHF 100,000 share capital (CHF 50,000 paid in), shareholders are not publicly visible, and shares are in principle freely transferable. AG suits investor structures and higher anonymity.
Must I always register my sole proprietorship in the commercial register?
No. Registration is mandatory from CHF 100,000 annual turnover (Art. 36 para. 1 HRegV). Below that it is voluntary — but usually advisable for name protection, credibility with banks and landlords, and lease agreements in the company name.
Which legal form is most tax-efficient?
Not answerable in absolute terms. At low profits the sole proprietorship is cheaper (only income tax + AHV self-employment contribution). From approx. CHF 100,000–150,000 annual profit a GmbH/AG structure with managing-director salary + dividend often becomes attractive. The exact threshold depends on canton, family status and profit use.
Can I change the legal form later?
Yes, the Merger Act (FusG) governs conversions. Common path: sole proprietorship → GmbH (asset transfer, notarial act). A switch GmbH ↔ AG is possible via conversion (Art. 53 ff. FusG). Conversions are tax-neutral under certain conditions.
Do I need a lawyer or is a fiduciary enough?
For a sole proprietorship or a standard formation a fiduciary often suffices. Legal advice pays off for: complex shareholder structures, international participation, planned investors, trademark or IP contributions, Lex-Koller-relevant constellations and founder agreements (shareholder agreements).
Which legal form works for foreign founders?
Both GmbH and AG are possible. Key: at least one person with signature authority must be domiciled in Switzerland (Art. 814 para. 3 CO for GmbH, Art. 718 para. 4 CO for AG). For UA/RU founders additionally sanctions-compliance review. More in the dedicated guide.