Founding a Ltd. or LLC with a contribution in kind – here's what you should bear in mind
Cash isn't the only thing that counts: if you want to found a limited company or an LLC, you need a capital contribution. But it doesn't have to be in Swiss francs! You can also make so-called in-kind contributions to the foundation of your corporation.
Founding with a contribution in kind – this is how Foundera can support you.
Your stock portfolio, stamp collection, real estate, construction equipment or electric car – you can use many things as a contribution in kind for the foundation of your LLC or limited company. As with a foundation with a cash contribution, the nominal capital of an LLC must be at least CHF 20,000 and that of a limited company at least CHF 100,000. This means that the contribution in kind must reach this value. In the case of a limited company, you can also found a company with a partial contribution and then you have to contribute 20% of the capital (but at least CHF 50,000). You then owe the company the rest and have to pay it later.
However, there are a few things to keep in mind when using this form of foundation: for example, you have to have an audit report prepared by an authorised auditing company. Depending on the type and complexity of the contribution in kind, this audit can cost between CHF 400 and 3,000. That's why it's important to be well prepared!
Foundera will help you to pass the audit of your contribution in kind with flying colours. So that you can quickly found your LLC or Ltd. with a contribution in kind.
- Personalised advice – we will explain to you exactly what costs you can expect for the contribution in kind audit. And what the process will look like exactly.
- Lots of tips – for example, if you wish, we can also refer you to an inspection body for contributions in kind.
- Transparent costs – with Foundera, you receive advice and support at a fixed price. For the foundation of an LLC or a limited company with a contribution in kind, you pay from 1,199 CHF excl.
- 2 years of support – even after the foundation, we are your point of contact for questions about your business for two years.
Founding a limited company or LLC with a contribution in kind – the requirements
Becoming self-employed is always a big step. But sometimes you have a great idea for a company, but not enough money for the nominal capital that you need for the foundation of a limited company or LLC. The good news is: you can still found a company – with a contribution in kind.
But there are strict rules for this scenario. For example, your contribution in kind must fulfil the following points:
- It must be assessable. This means that it must have a clear value and thus be saleable. This value must be confirmed by an auditing company.
- The contribution in kind must be transferable. So there must be no legal obstacles to the sale of your contribution in kind. A right of residence in your grandmother's house, for example, is not transferable!
- It must be available. Your contribution in kind must be available to your corporation when your limited company or LLC is entered in the commercial register. Supply contracts or specific services are not always available and are therefore not suitable.
- The contribution in kind must be realisable. If your company is dissolved, the contribution in kind must be realisable – that is, there must be at least a small market for the Ming vase, for example.
Okay, so those are the requirements. But what exactly is suitable as a tangible fixed asset?
Tangible fixed assets that occur frequently usually incur rather low costs for the auditors. These include, for example:
- Vehicles such as delivery vans, driving school cars, lorries – here you need copies of the vehicle documents and an official valuation by an auditor. An offer from a car dealer is not sufficient.
- Real estate such as your company building – a valuation report, an extract from the land registry, a signed purchase agreement, photos and a publicly certified contribution-in-kind agreement serve as proof.
- Machinery and tools such as ovens, lathes, hammer drills – photos, invoices and possibly even expert reports are necessary in this case.
- IT equipment such as laptops, monitors, printers – proof of purchase and photos are important.
- Material storage with raw materials, spare parts – lists, invoices and photos are helpful here.
- Furniture such as expensive, unique designer pieces – you can present photos, invoices and even an expert opinion if necessary.
- Software, whether bought or developed in-house in individual cases – the difficulty here usually lies in its usability and valuation.
Rather unusual are stamp or coin collections, vintage cars or the inherited Ming vase. Of course, real experts are needed to value these. This makes these contributions in kind more expensive.
Two types of evaluation
The type of valuation of your contribution in kind that you need to found an LLC or a limited company depends on the purpose for which an item is valued:
- If your contribution in kind consists of things that are necessary for your company, such as cars or IT equipment, then these items are valued at their purchase price. Note that even such items are depreciated from their original value. A car, for example, is not worth the same after four years as it was when you first bought it.
- Any items that you do not need for your business – such as a Ming vase or a stamp collection – are only included in your contribution in kind at their liquidation value. This may therefore differ from the original purchase price!
As you can see, there are a few things to consider. But with Foundera, you have an experienced partner at your side who will also provide you with comprehensive advice on these points – and also make recommendations.
The advantages and disadvantages of a foundation with a contribution in kind at a glance
✅ More liquidity: If you found a limited company or LLC with a contribution in kind, you may have more free company capital to invest.
✅ Less paperwork: If no cash capital is paid into the nominal capital, you do not need a capital contribution confirmation from your bank.
✅ Many possibilities: For example, you can transparently contribute vehicles to the company assets.
✅ Contribution of an existing business: For example, if you have already run a successful business as a sole proprietor, you can contribute it to the foundation of an LLC or a limited company.
❌ Additional costs: You have to hire an auditing company, which will cost you extra money. This also applies in particular if you only contribute part of the nominal capital in the form of a non-cash contribution – because then you have to pay for both the audit report and the setting up of a capital contribution account.
❌ Loss of value: It is possible that your non-cash contribution, such as a block of shares, may unexpectedly lose value.
❌ Different valuations: Depending on the auditing company, the valuation can turn out differently – especially when it comes to special contributions in kind such as software.
As you can see, you should think carefully about whether you want to pursue a foundation with a contribution in kind. And, of course, you should also think carefully about which contribution in kind you choose as nominal capital for your limited company or LLC.
FAQ «Founding a Ltd. or LLC with a contribution in kind»: You ask, Foundera answers
How are contributions in kind evaluated?
A foundation with a contribution in kind is also called a ‘qualified foundation’ or a ‘contribution in kind foundation’. In this case, special auditing companies check whether the contributions in kind correspond to the stated value and can replace the necessary cash contribution. For cars, the usual valuation lists help. It becomes more difficult if the contribution in kind is unusual, such as a coin collection.
Incidentally, the items that serve as a non-cash contribution to your foundation will be recorded in the commercial register, along with their value.
How are contributions in kind valued in an LLC or a limited company?
Audit firms are responsible for evaluating contributions in kind during the foundation of an LLC or a limited company. They prepare the necessary expert opinions that are required for this special type of start-up financing.
How does a contribution in kind work?
A qualified foundation of this kind differs significantly from a foundation with a cash contribution in only one respect: you need an evaluation of your contribution in kind by an auditing company.
You will also need additional documents such as a contribution agreement, the inclusion of the contribution in kind in the formation report, and of course the audit report from the auditing company. Foundera takes care of all of this.
However, in the case of a foundation with a contribution in kind, the capital payment confirmation that you need from your bank when founding with cash does not apply.
What are examples of contributions in kind?
In principle, anything of value can be used as a contribution in kind to found a limited company or LLC: real estate, cars, PCs, printers, software or warehouses, for example. Or even valuable pieces of furniture, a vintage car or a stamp collection. But one thing is important: the rarer the contribution in kind, the more expensive the valuation by the auditing company tends to be.