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Foundation Quiz

Do you want to become self-employed in Switzerland?

You can start your own business in Switzerland with a wide range of business ideas. But did you know that this does not automatically make you self-employed? We will explain what exactly this means, how you can become self-employed and what requirements you need to fulfil to do so.

What exactly does self-employment mean in Switzerland?

Even if it may not be obvious at first glance, there is a big difference between being self-employed and being a self-employed person. The former is a colloquial term used to describe anyone who runs their own business, regardless of the legal form of that business. The latter is an official status and is precisely defined.

The self-employed status of a sole proprietorship

If you are officially ‘self-employed’, it means that an authority – more precisely, the relevant compensation office – has certified that you work on your own account, are independent in your work and bear the economic risk yourself. In other words, you have a sole proprietorship and can prove it. For example, you have sent invoices to various customers in your name.

Colloqually, you would probably also describe it as ‘self-employment’ if you had set up a limited liability company (GmbH) or a limited company (AG). However, in the eyes of the state, you would not be considered ‘self-employed’. In the following, when we talk about ‘self-employment’, we are referring to the official status, even if certain aspects also apply to the colloquial meaning.

Self-employment as a way out of unemployment

Are you currently unemployed and want to start your own business? We often receive enquiries from people in this situation who are being supported by the regional employment centre (RAV).

The RAV often supports this desire to become self-employed while unemployed, in the form of time that can be invested in self-employment at the expense of the unemployment insurance. This is a great opportunity – however, you should definitely discuss this plan with your local RAV office in advance. If you become self-employed without prior consultation, you will immediately lose all claims.

In addition, there is basically no way back from self-employment to unemployment: if your business does not take off, you will not receive unemployment benefit, but will be on your own! The only exceptions are if self-employment has been approved by the RAV.

Becoming self-employed – what do you need to consider?

Regardless of whether you want to be registered as ‘self-employed’ or not, you should consider the following fundamental topics before a foundation:

We will be happy to advise you on all these aspects!

AG Gründen CH

What are the prerequisites for self-employment?

To be officially recognised as a self-employed person, you need to be approved by the relevant compensation office. Having a business idea is not enough. While it is advantageous to have your sole proprietorship entered in the commercial register, this is not enough either. You must be able to prove that you work in your own name, independently and at your own risk.

Until your status is recognised, you will be in a grey area between employed and self-employed for a certain period of time. This is unpleasant but normal. It becomes problematic if you only have one customer over a long period of time. This may indicate pseudo self-employment with the corresponding problems.

What do you need to be classified as self-employed?

Do you want to be classified as self-employed? Then it's best to take a look at the registration form of your local cantonal compensation office (SVA). This will help you to assess which documents you should submit. Unfortunately, there are no clear rules as to when exactly this status is recognised – the decision lies with the compensation office in each individual case.

The SVA Zurich, for example, recommends keeping the following records:

  • articles of association (if you are a partner in a partnership)
  • customer contracts/offers (two each from different customers)
  • invoices or receipts (three each from different customers)
  • incoming payments (three each from different customers)
  • business expenses (expenses for marketing and advertising, work materials, etc.)
  • Invested equity capital (e.g. purchases of material, furniture, tools)
  • Rental, purchase or lease agreement for the business premises or means of transport
  • Power of attorney (if a trust office has been commissioned)

The more of these documents you have, the better your chances of being classified as self-employed.

Tip: To minimise your risk, you can also consider becoming part-time self-employed at first.

The 2nd and 3rd pillars of retirement provision – possible early withdrawal

Have you become self-employed? If so, you can bring forward the payment of your pension fund and your pillar 3a of the occupational pension plan for your self-employment. You can discuss the exact requirements for this with your pension fund and the provider of your pillar 3a. 

Find out more
Selbstständigkeit Schweiz

When is self-employment worthwhile in Switzerland?

The question of whether self-employment is worthwhile is very individual and depends on many factors. For example, whether your business idea is well received in the market, whether your business model is well thought out and you have calculated correctly, whether you are making your offer known to the relevant target groups and whether there is a large enough demand for it.

On the one hand, self-employment gives you a great deal of freedom, but on the other hand, you are also responsible for yourself – not least with regard to insurance and pensions. The section on the pros and cons of self-employment goes into more detail on this aspect.

Lower risk: becoming self-employed on a part-time basis

Are you unsure whether self-employment is the right path for you? Then consider whether you want to build up your business part-time at first. This way, you can test your idea on the market while still having a secure income from your permanent position.

How much money do I need to start my own business?

The only way to become self-employed is to operate as a legal form of a sole proprietorship. Unlike a limited company or an LLC, you do not need nominal capital. Even an entry in the commercial register is not mandatory for the foundation. On our page about sole proprietorships, you can find out why it still makes sense.

Of course, your business idea and how you implement it has a big influence on how much starting capital you need.

What taxes do I pay as a self-employed person?

With a sole proprietorship, your profits are taxed directly as income. The advantage is that you can deduct from your income all expenses that you can justify with your business activities. Whether the tax burden for you is better with a sole proprietorship or another legal form – such as a corporation (LLC or limited company) – depends on your place of residence, the registered office of the company and your personal financial situation.

AG Gruüden Schweiz – Beratung Foundera

Overview: The main advantages and disadvantages of self-employment

If your compensation office has confirmed that you are self-employed, then this status brings with it a certain amount of freedom.

Advantages of self-employment: freedom and flexibility

  • As a self-employed person, you are not obliged to pay into a pension fund (2nd pillar of the pension system). You are free to decide whether and how much you pay in. You also have the option of paying up to 20% of your income (maximum CHF 35,280) into the 3rd pillar instead of a pension fund.
  • You can (subject to certain conditions) withdraw your 2nd or 3rd pillar to set up your own business.
  • While accident insurance is compulsory for employees, as a self-employed person you are exempt from this insurance requirement. If you had founded a limited company or an LLC, this would not be the case. Because even then you would be employed – in your own company.
  • You can deduct business expenses directly from your taxable income.

Challenges of self-employment: personal responsibility and risk

The freedoms mentioned above also have their downsides:

  • If your business does not go as planned, you will not receive any money from unemployment insurance (ALV). And that's even though you pay money into the ALV for an income of CHF 2,300 or more per year.
  • If you don't voluntarily insure yourself with a pension fund or against accident, illness and disability, then in the worst case you could end up with nothing. You may then only receive a minimal pension of a few hundred francs a month for the rest of your life.
  • If you use your 2nd and 3rd pillar pension funds for self-employment and do not pay into them again, then the most you will receive after retirement is the full OASI pension of CHF 2,450 per month (as a single person).

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