Switzerland has five legal forms of business: the sole proprietorship, the general partnership, the limited partnership, the GmbH (limited liability company) and the AG (public limited company). In practice the choice comes down to four of them, and to a handful of questions: how much personal risk you are willing to carry, how much capital you can commit, whether you are alone or with partners, and how big you intend to grow. Solo and low-risk usually points to a sole proprietorship; an established or ambitious business points to a GmbH or an AG. This guide compares all five and walks you through the decision.
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The five legal forms at a glance
Swiss law offers five legal forms of business, which split cleanly into two families. The personal forms — sole proprietorship and partnerships — are simple to set up, need no minimum capital, but leave the owners personally liable for the debts. The capital companies — the GmbH and the AG — are separate legal entities that shield your private assets, in exchange for a minimum capital and a bit more formality.
- Sole proprietorship (raison individuelle / Einzelunternehmen) — one person, unlimited liability, no capital.
- General partnership (SNC / Kollektivgesellschaft) — two or more people, unlimited joint liability.
- Limited partnership (SCS / Kommanditgesellschaft) — a mix of fully liable and limited partners; rare in practice.
- GmbH (Sàrl, limited liability company) — separate entity, CHF 20,000 capital, the SME workhorse.
- AG (SA, public limited company) — separate entity, CHF 100,000 capital, shareholder anonymity.
For most entrepreneurs who come to us, the real shortlist is three: the sole proprietorship at one end, the GmbH in the middle, and the AG at the other. Partnerships still exist, but their unlimited liability sends most founders straight to a capital company.
Side-by-side comparison
The fastest way to read the landscape is across the criteria that actually drive the decision — liability, capital, founders and confidentiality.
| Criterion | Sole proprietorship | Partnership (SNC) | GmbH (LLC) | AG (Ltd) |
|---|---|---|---|---|
| Founders | 1 | 2+ | 1+ | 1+ |
| Minimum capital | None | None | CHF 20,000 | CHF 100,000 (50,000 paid in) |
| Liability | Unlimited, personal | Unlimited, joint & several | Limited to capital | Limited to capital |
| Separate legal entity | No | No | Yes | Yes |
| Owners public in register | Yes (the owner) | Yes (partners) | Yes (quotaholders) | No (shareholders) |
| Taxation | Owner’s personal income | Partners’ personal income | Corporate (company-level) | Corporate (company-level) |
| Best for | Freelancers, solo, low risk | Small joint ventures | SMEs, owner-managed | Larger projects, fundraising, holding |
Both the GmbH and the AG require at least one signatory resident in Switzerland. Sources: CO art. 552 ff., 772 ff., 620 ff.
The main legal forms, one by one
Each form answers a different stage and appetite for risk. Here is what defines each, in plain terms.
Sole proprietorship
The simplest way to do business in Switzerland: one person, trading under their own name, with no minimum capital and no incorporation. The trade-off is liability — you answer for the business debts with your private assets, because there is no separation between you and the company. Registration in the commercial register only becomes mandatory once annual turnover passes CHF 100,000. It is the natural starting point for freelancers and consultants testing an activity. We cover it in full in our guide to setting up a sole proprietorship in Switzerland.
General and limited partnership
A general partnership (SNC / Kollektivgesellschaft) is two or more individuals doing business together under a shared name. No minimum capital is required, but every partner is liable, jointly and severally, with their personal assets — so one partner’s mistake reaches everyone. The limited partnership (SCS / Kommanditgesellschaft) softens this for some partners: alongside at least one fully liable general partner, “limited” partners risk only their registered contribution. Both are taxed transparently, like a sole proprietorship. In practice they are uncommon — most founders who want to share a business prefer the liability shield of a GmbH.
The GmbH (limited liability company)
The GmbH is the workhorse of the Swiss SME. It is a separate legal entity, so your liability stops at the CHF 20,000 capital you contribute — your private assets stay out of reach. One founder is enough, the capital is modest and fully paid at incorporation, and the form carries real credibility with banks and clients. The catch, for some, is transparency: the quotaholders are named in the public commercial register. Full detail in our guide to setting up a GmbH in Switzerland.
The AG (public limited company)
The AG is the form of choice for larger ventures, for raising capital and for holding structures. Liability is again limited to the capital — CHF 100,000, of which at least CHF 50,000 is paid in at incorporation. Its signature advantage is confidentiality: shareholders are not listed in the commercial register, so ownership stays private. It is also the more natural vehicle when you plan to bring in investors or transfer shares. See our guide to setting up an AG in Switzerland.
How to choose the right legal form
There is no single best form — only the one that fits your risk, your capital and your ambition. Run your situation through four questions, in order, and the answer usually falls out on its own.
- How much personal risk can you carry? If you cannot afford to expose your private assets, you need a capital company (GmbH or AG), not a sole proprietorship or partnership.
- How much capital can you commit? Nothing rules out a sole proprietorship; CHF 20,000 opens the GmbH; CHF 100,000 the AG.
- Are you alone or with partners? Solo activities suit a sole proprietorship or a single-member GmbH; several owners point to a GmbH or an AG rather than a partnership.
- How far do you plan to grow? A local, low-risk activity can stay a sole proprietorship; a business that will hire, raise funds or seek investors belongs in an AG.
Translated into profiles, the pattern is clear:
- Freelancer or consultant, testing an idea → sole proprietorship: fast, cheap, no capital.
- Established SME, owner-managed, wanting a liability shield → GmbH: the default choice for good reason.
- Larger project, outside investors, anonymity or a holding → AG.
- Foreign founder building a real Swiss base → GmbH or AG, with a resident director — see our pillar guide to company formation in Switzerland.
My Swiss Company advice
Choose for where the business is heading, not only for where it starts. We regularly help clients incorporate a sole proprietorship into a GmbH once it grows — a clean, tax-neutral step when it is planned. The costlier mistake is the opposite: stretching a personal form well past the point where unlimited liability has become a real exposure. If you are unsure, map the next three years first, then pick the form.
How each legal form is taxed
Taxation follows the same two families. Personal forms (sole proprietorship and partnerships) are taxed transparently: there is no company-level tax, and the profit is added to the owner’s or partners’ personal income, taxed once at progressive rates. Capital companies (GmbH and AG) are separate taxpayers: the company pays corporate profit and capital tax, then any dividend is taxed again in the shareholder’s hands.
That second level — economic double taxation — sounds worse than it is. For a qualifying holding of at least 10%, only about 70% of the dividend is taxable at the federal level (with cantonal relief on top), and a reasonable salary remains fully deductible for the company. The effective profit-tax rate on the company itself runs from roughly 11.9% in Zug to around 21% depending on the canton.
| Form | Who is taxed | Key point |
|---|---|---|
| Sole proprietorship / partnership | The owner / partners | One level of tax, but personal progressive rates apply |
| GmbH / AG | The company, then the shareholder | Corporate tax (~11.9–21%); dividends partly taxed (≈70% on qualifying holdings) |
Indicative 2026 effective rates, varying by canton and commune. Source: Swiss Federal Tax Administration (FTA).
The practical takeaway: at low profit, a personal form is often lighter; as profit grows, the capital company tends to win on both tax efficiency and the liability protection it brings. The crossover point depends on your canton and how much profit you leave in the company — exactly the kind of calculation worth running before you choose.
Can you change form later?
Yes — and many businesses do. The most common path in Switzerland is to start as a sole proprietorship and incorporate into a GmbH or an AG once the activity proves itself and liability starts to matter. Under the Swiss Merger Act, that conversion can be carried out tax-neutral when the conditions are met: assets are transferred at their book value and a five-year blocking period is observed on the shares received.
So the first choice is not a life sentence. It is reasonable to begin simple and upgrade the structure as the business grows — provided the move is planned, not improvised, so it stays neutral on tax.
Important
Choosing the legal form is only the first decision. A GmbH or an AG also needs a signatory resident in Switzerland and genuine economic substance — effective management and accounting on the ground — particularly when the company is owned from abroad. Both matter as much as the form itself.
FAQ: legal forms of business in Switzerland
What are the legal forms of business in Switzerland?
There are five: the sole proprietorship, the general partnership, the limited partnership, the GmbH (limited liability company, CHF 20,000 capital) and the AG (public limited company, CHF 100,000 capital). The first three leave the owners personally liable; the GmbH and the AG are separate legal entities that limit liability to the capital.
Which legal form is best for a small business?
For a solo, low-risk activity, the sole proprietorship is simplest — no capital, no incorporation. For an established small business that wants to protect the owner’s private assets, the GmbH is usually the better fit: a CHF 20,000 capital buys limited liability and solid credibility with banks and clients.
What is the difference between a GmbH and an AG?
Both are capital companies with limited liability and the same tax treatment. The GmbH needs CHF 20,000 and lists its quotaholders publicly; the AG needs CHF 100,000 (CHF 50,000 paid in) and keeps shareholders anonymous. The GmbH suits owner-managed SMEs; the AG suits larger projects, fundraising and holding structures.
Do partnerships need a minimum capital in Switzerland?
No. Neither the general partnership nor the limited partnership requires a minimum capital, just as the sole proprietorship does not. The trade-off is liability: partners answer for the business debts with their personal assets (except limited partners, who risk only their registered contribution).
Can I change my company’s legal form later?
Yes. Converting a sole proprietorship into a GmbH or an AG is common as a business grows, and under the Swiss Merger Act it can be done tax-neutral when assets pass at book value and a five-year blocking period is respected on the shares received. Planning the step in advance is what keeps it neutral.
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Conclusion
The legal forms of business in Switzerland line up along a single axis: simplicity and personal liability at one end, formality and limited liability at the other. A freelancer testing an idea is well served by a sole proprietorship; an established or ambitious business almost always belongs in a GmbH or an AG. Run your risk, capital, partners and growth through the four questions above and the right form usually picks itself — and if it doesn’t, the choice is reversible.
My Swiss Company SA, a Swiss corporate services provider present in Geneva, Lucerne and Zug and active in 20+ countries, helps you choose the right structure and set it up end to end. Discover our company formation services or contact us for an initial consultation.
