Legal status: choosing between sole trader, Sàrl or SA

The three main legal statuses in Switzerland

Sole proprietorship (sole trader): you operate alone, without creating a separate legal entity. No minimum capital required, simplified formalities, but unlimited liability on your personal assets.

Limited liability company (Sàrl): the most popular form among Swiss SMEs. Minimum capital of 20,000 CHF, liability limited to contributions, flexible structure suited to small teams.

Public limited company (SA): status for large-scale projects requiring significant investments. Minimum capital of 100,000 CHF, formal governance, maximum attractiveness for investors.

Sole trader status: simplicity and flexibility

Sole trader status represents the most accessible solution for starting a business in Switzerland. You retain complete control over your decisions and benefit from great management freedom.

This status is particularly suitable for freelancers, consultants and service providers who wish to test their business without significant initial investment. Administrative simplicity allows you to focus on business development rather than formalities.

Advantages of sole trader status

Sole trader status has several major advantages:

• No minimum capital required to start

• Registration in the commercial register optional (mandatory only if turnover exceeds 100,000 CHF)

• Reduced formation formalities: simple tax declaration

• Complete freedom in management and decisions

• Simplified accounting without double-entry obligation

A compliant invoicing tool like BePaid allows you to easily manage your Swiss QR-invoices from the start.

Disadvantages and risks

The main risk of sole trader status concerns unlimited liability: your business debts engage your personal assets (home, savings, property).

Other disadvantages to consider:

• Less professional image with certain clients and partners

• More difficult access to bank credit

• Social security contributions (AVS, AI, APG) to plan for and pay personally

• Less clear separation between personal and business finances

Sàrl: the balance between protection and accessibility

The Sàrl (Limited liability company) represents the preferred choice of many Swiss SMEs. It offers an excellent compromise between legal protection and financial accessibility.

This legal form is particularly suitable for entrepreneurs who wish to protect their personal assets whilst maintaining a relatively flexible management structure. It also reassures business partners and facilitates banking relationships.

The Sàrl allows several people to associate with clearly defined shares, whilst maintaining simpler governance than an SA.

Capital and formation formalities

To create a Sàrl, you must raise minimum capital of 20,000 CHF, of which at least 10,000 CHF must be paid up immediately upon formation.

Formation costs include:

• Notary fees for the authentic deed (800 to 1,500 CHF)

• Commercial register registration (600 to 800 CHF depending on canton)

• Publication in the Swiss Official Gazette of Commerce (200 to 300 CHF)

Realistic total budget: between 1,500 and 3,000 CHF depending on your canton and the complexity of the articles of association.

Limited liability and credibility

The main advantage of the Sàrl lies in liability limited to contributions. In case of financial difficulties, only the share capital is engaged, not your personal assets.

This legal protection comes with better credibility:

• More professional image with clients and suppliers

• Increased confidence from banks for granting credit

• Ease in signing significant commercial contracts

• Possibility of welcoming partners with clearly defined shares

Administrative obligations

A Sàrl involves stricter accounting obligations than sole trader status:

• Mandatory double-entry bookkeeping

• Preparation of annual balance sheet and profit and loss account

• Organisation of annual general meetings

• Maintenance of official registers (minutes, share register)

These obligations generally require the support of an accountant or fiduciary. BePaid facilitates your invoicing and payment tracking, but does not replace a chartered accountant for complete accounting.

SA: the structure for large-scale projects

The Public limited company (SA) is aimed at entrepreneurs who are targeting significant growth, fundraising or a complex shareholder structure.

This legal form offers the greatest institutional credibility and facilitates the entry of external investors. It also allows shares to be transferred easily without modifying the articles of association.

In return, the SA imposes heavy administrative obligations and high operating costs. It suits projects requiring substantial investments from the outset.

Capital and governance

The formation of an SA requires minimum capital of 100,000 CHF, of which at least 50,000 CHF must be paid up immediately.

The governance structure is more formal:

• Mandatory board of directors (minimum one member)

• Audit body required depending on company size

• Annual general meeting of shareholders

• Clear separation between ownership (shareholders) and management (directors)

Formation costs generally amount to between 3,000 and 5,000 CHF minimum, to which are added recurring audit fees.

Advantages and constraints

Advantages of the SA:

• Liability strictly limited to contributions

• Transfer of shares facilitated without modification of articles of association

• Maximum attractiveness for investors and financial partners

• Optimal institutional credibility

Constraints to anticipate:

• Heavy accounting and audit obligations

• High annual administrative costs (audit, meetings, publications)

• Reduced flexibility in day-to-day management

• Significant formalism for all strategic decisions

Tax comparison of the three statuses

Taxation varies significantly depending on the legal status chosen.

Sole trader: you are taxed on your net income (profit) at the personal income tax scale. Your profit is added to your other possible income.

Sàrl and SA: double taxation to anticipate. The company pays tax on profit (rate varying by canton, generally 12-20%). Then, dividends paid to partners/shareholders are taxed as income, with a reduced rate.

Concerning VAT, the registration threshold is set at 100,000 CHF annual turnover, regardless of status. The standard rate is 8.1%.

Comparative table: costs and characteristics

How to choose the right status for your business

The choice of legal status depends primarily on your situation and ambitions.

Choose sole trader status if: you are starting a service business alone, you wish to test your project with minimal investment, you prioritise administrative simplicity.

Opt for a Sàrl if: you are partnering with other people, you wish to protect your personal assets, you need credibility with clients and banks.

Create an SA if: you are planning significant fundraising, you are targeting rapid growth with external investors, your business requires a formal structure.

You can start as a sole trader then transform your structure into a Sàrl or SA when your business develops. Whatever your status, BePaid supports you in managing your invoices compliant with Swiss standards.

The choice of legal status depends on your personal situation, ambitions and risk tolerance. Sole trader status is perfectly suited to low-risk activities and business start-ups, with quick setup and minimal costs. The Sàrl offers a good compromise between asset protection and accessibility, ideal for projects requiring certain credibility. The SA is essential for large-scale projects requiring significant investments.

Whatever the structure chosen, managing your invoicing remains a central issue. Sole traders, Sàrl or SA must all issue invoices compliant with Swiss standards and ensure rigorous tracking of their payments. Try BePaid for free to create your compliant QR-invoices, automate your reminders and track your cash flow in a few clicks. Free version available, no commitment, with 10 invoices and 5 clients included.