Establishing a company

How do I establish a company?

Setting up your own company is an exciting, yet extremely challenging task. In addition to having a good business idea, you have to deal with a variety of regulatory and technical insurance issues before you can properly get up and running. 

Depending on its legal form, the company must be entered in the cantonal commercial register. When establishing an incorporated company, you should clarify the following points before registering it:

• Name and purpose of the company
• Amount of start-up capital
• Who will be shareholders
• Do I need any permits or authorisations
• Which insurance is mandatory 
• Will I have to charge VAT

As soon as your company is entered in the commercial register, you also have to register the company with the OASI/DI office and an accident insurer. If applicable, you will also need to sign up to an occupational pension fund and register for VAT.

What are common mistakes that are made when setting up a company?

Many people set up their own company to put their ideas into practice and to be their own boss. In doing so, they may have to overcome major barriers to market entry, such as certain capital or regulatory requirements.

A study by VZ shows that many people founding a company for the first time underestimate what it takes to work for themselves: their business plans or expected customer acquisition might be too optimistic, or their planned earnings might turn out to be lower than anticipated. 

In 25% of company closures, liability problems are a contributing factor. Many new company founders are not careful enough about clarifying in advance the best legal form for their company over the long term. And more than anything, many underestimate how many administrative tasks have to be performed in addition to actual business operations.

What impact does a company’s legal form have?

No matter whether a sole-trader, general partnership, LLC or PLC, choosing the right legal form is one of the most important decisions to be made when establishing a company. Your company’s legal form will dictate a number of things, for example capital requirements, accounting obligations, liability, taxes and insurance. 

Most new company founders opt to become a sole-trader, public limited company (PLC) or limited liability company (LLC).

• Setting up as a sole-trader is straightforward and does not require a minimum investment. If the company goes bankrupt, the owner is liable with their own private assets.
• A public limited company (AG) allows owners to exclude personal liability. This legal form also has a good reputation with the general public. 
• The LLC (GmbH) has become the most popular legal form for companies in Switzerland. As is the case for PLCs, shareholders are not personally liable in the event of bankruptcy.

What do new company founders have to consider with regards to insurance?

Before setting up your own company, you should carefully check which social, personal and business insurance the new company will need and what level of cover makes sense.

In technical insurance terms, owners of PLCs or LLCs are considered to be employees of their company. As such, all second pillar, pension fund and accident insurance policies are required alongside OASI, DI, LE and UI. Depending on the sector, certain companies have to take out insurance with SUVA. Only OASI, DI and LE insurance is mandatory for sole-traders. They can decide themselves whether to join a pension fund or take out accident insurance. 

While business and professional liability insurance is not mandatory, it is still recommended. You should also consider supplementary accident, daily allowance or cyber insurance, for example. A detailed risk analysis will help you identify the potential risks and therefore the insurance policies that make sense for your company.

How can new company founders find the best-value insurance?

It is worth taking the time to compare premiums and insurance benefits, as the differences between the various insurance companies are enormous. If you do not do so, you are missing out on the opportunity to save money, which is critical if you are on a tight budget.

Experience shows that SMEs pay up to 20% lower premiums if they obtain all their insurance from a single source at VZ. This is possible as VZ pools together numerous smaller insurance companies, which helps keep costs low. New company founders therefore benefit from the same lower costs which are usually only available to large companies. They have a single point of contact and need only sign one contract covering all their insurance policies. This helps keep administrative work to a minimum.

How can companies benefit from fiduciary services?

Many company founders find themselves in trouble after just a few years because they take on too much. They underestimate the administrative tasks that have to be carried out alongside their business operations. 

Accounts payable and receivable, VAT calculations, drafting financial statements, processing salaries and completing tax returns: many people set out to do all of these themselves, but become overwhelmed or do not manage them in time. Especially in the early days, founders should focus on their operational business and try to get as many customers as possible. That is why it is a good idea to leave all these fiduciary activities to experienced specialists.