What is Sole proprietorship?

A sole proprietorship is the simplest and most common business structure in Switzerland, owned and operated by a single individual. This form of business is especially popular among small business owners, freelancers, and self-employed professionals. In Switzerland, sole proprietorships are governed by the Swiss Code of Obligations (CO) and require registration if the annual turnover exceeds CHF 100,000.

Key Features of a Sole Proprietorship in Switzerland

  1. Ownership and Liability
    The sole proprietor has full control over the business but also assumes unlimited personal liability for its debts and obligations. This means that the owner’s personal assets can be used to settle business liabilities.
  2. Registration Requirements
    Sole proprietorships must be registered in the Swiss Commercial Register if annual turnover exceeds CHF 100,000. For smaller businesses, registration is optional but recommended for credibility.
  3. Taxation
    The sole proprietor and the business are treated as a single entity for tax purposes. Business income is taxed as part of the owner’s personal income.
  4. Flexibility and Simplicity
    This structure offers minimal administrative burdens, no required minimum capital, and straightforward setup and management processes.

Advantages and Considerations

A sole proprietorship allows individuals to start a business quickly with low costs and full decision-making authority. However, the unlimited liability and reliance on the owner’s financial and operational capacity can be risks.

In Switzerland’s entrepreneurial landscape, a sole proprietorship is ideal for small-scale ventures and independent professionals seeking simplicity and control, while carefully considering the implications of personal liability.