Dear All,

Would love some advice on the best structure from a tax perspective on setting up a company in Vaud. Is it better to be an "independent" or to take the plunge and set up a SARL? Note that I have a C permit, am aware of the CHF20,000 requirement and have three clients.

Any small business owners out there who have evaluated the difference and why did you choose one over the other?

What are the benefits of setting up the SARL? Bigger pension contributions? More write-offs? Less personal income tax? How does the lower corporate tax benefit me personally - through dividends?

Administratively it seems that a SARL is more labour and cost intensive and the benefits may not outweigh the costs, but I think I am missing something here.

Any advice is much appreciated. Thank you!

I have the same question. What was your conclusion and why?

Well, I would suggest going for an Sàrl rather than going as an independent. I have been working for 2 1/2 years as an independent, currently working to set up an LLC.

Granted that the tax rate for an independent is lower than for the Sàrl, but there are a few other advantages for setting up an LLC.

1. Working as an independent, you are not allowed to pay any unemployment deductions; thus, you are not entitled to any unemployment benefits if your business tanks (regardless of whether you've worked 6 months or 10 years).
2. If your revenue exceeds CHF 100'000.-/year, registration at the Register of Commerce is mandatory.
3. As an independent, you are personally liable for any debt you get through your activity, thus meaning, the "Office des poursuites et faillites" (My apologies, it's impossible to translate that into English), but basically they can and will repossess any personal property from you.
4. Non payment of social charges is a penal offense (Fine or imprisonment depending on gravity and amounts)

Now, the conditions and advantages for setting up an LLC...

1. As you have mentioned, the CHF 20'000.- minimum capital is true, however it must be liberated at 50% at time of start-up and any subsequent debt must be paid until concurrence of the capital remaining to be invested. i.e. if you start with a capital of 20'000.-, invested at 50% (thus 10'000.-) and after six months, you have 50'000.- in debt, you will only be liable for 10'000.-. With an Sàrl, you cannot be personally liable for any debt, unless it is foul-play.
2. The 3 client rule does not apply
3. There is no longer a minimum capital limit (formerly at 2'000'000.-) and you can start an Sàrl alone (as opposed to the old law which required 2 people minimum)
4. The LLC requires two bodies: a General Assembly (you are allowed to be a single share-holder) and an Administration
5. The registration at the Register of Commerce is mandatory
6. There is a state tax (between 7 and 10% on profit) and a federal tax (8.5% flat rate on profit)
7. Your company name is protected on a national level
8. An LLC requires statutes, approved and signed by the General Assembly (yourself if alone)
9. Capital may only be invested in property, furniture purchases
10. When working for an Sàrl, you are an employee of the company, thus you get a fixed monthly salary with payment of all Social charges
11. Non payment of social charges is a penal offense (Fine or imprisonment depending on gravity and amounts)

Hope this helps...