Selecting the right legal structure for your business is crucial. The most common legal forms for small and medium-sized enterprises (SMEs) in Switzerland are the sole proprietorship, the limited liability company (LLC or Sàrl), and the corporation (SA). Other, less common legal forms like the general partnership (SNC), the limited partnership, the simple partnership (SS), the cooperative, and the association can also be suitable, depending on your business needs.
The choice of legal form has significant implications for your business, affecting liability, minimum capital requirements, creation procedures, and general organization. Tax treatment is also influenced by the chosen structure.
For example, the minimum capital required to establish an LLC is CHF 20,000, while a corporation requires CHF 100,000. In contrast, a sole proprietorship or general partnership can be formed without a minimum capital requirement.
The formalities for setting up a business also vary by legal form. A sole proprietorship only needs to be registered in the commercial register if its annual turnover exceeds CHF 100,000. In contrast, a corporation must be established by a notarial deed and registered in the commercial register.
Our specialized lawyers can personally advise you on the most appropriate choice for creating your own business.
What is the liability of the members of a commercial entity?
The liability of members of a commercial entity directly depends on the chosen legal form.
Risk exposure is a key distinction between capital companies (LLC, SA) and partnerships.
If you do not wish or are unable to bear the risks and liabilities of your business with your personal assets, you should consider operating through a capital company.
In a sole proprietorship, the owner is personally and unlimitedly liable for the business’s actions and debts. The same applies to members of a general partnership, who are jointly liable for the partnership’s debts.
Conversely, members of a capital company have two separate assets: their personal assets and the company’s assets. Their liability is thus limited to the company’s assets, provided that the shares have been fully paid. Creditors cannot directly pursue the members of a capital company in bankruptcy, except in specific cases.
The higher the business risk or financial contribution, the more advisable it is to choose a capital company.
What is the importance of a corporate statute?
The statutes include essential information about the legal entity, such as its name, purpose, and registered office. They also contain rules on the entity’s organization, including the designation of governing bodies and the voting rights of members during the general assembly. Reading the statutes reveals the powers of the company’s representatives and their decision-making authority.
The statutes will be published in the commercial register, making the information accessible and binding on all interested parties.
For a corporation, the statutes will also include crucial information about the share capital and paid-in amount, details about the shares (number and nominal value), and the appointment of board members and the audit body. The law sets minimum content requirements for the statutes of capital companies, which must be authenticated.
Besides the basic requirements, it is recommended to add specifics to your statutes, such as contributions in kind, general assembly procedures, and how to convene the board of directors.
Reviewing the statutes allows a commercial law attorney to gather information about the entity’s functioning, helping to develop strategies according to the current project, issue, or dispute.
Why is the purpose of my commercial entity important?
The purpose of your commercial entity is a critical element at its founding as it defines the reasons for the entity’s creation, its mission, and objectives. This purpose will be included in the statutes and inform the public about the company’s activities.
The entity’s purpose can be economic, commercial, or non-profit. It is also essential that the purpose is lawful: an immoral or illegal purpose will prevent the company’s formation.
The purpose provides a guiding principle for the company’s mission while limiting potential business activities. For capital companies, the representatives’ powers are precisely defined by the purpose, allowing them to engage the entity only in activities related to the stated purpose.
The challenge in defining the company’s purpose is to make it broad enough for growth while precise enough for stakeholders to understand the company’s mission.
Some legal forms, by law, cannot primarily be for profit. For instance, associations and foundations must pursue an ideal purpose (political, artistic, religious, charitable activities, etc.). An association’s purpose deemed of public utility can qualify it for tax exemption. A commercial law attorney can advise you on meeting these conditions.
