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Old 23.03.2015, 18:45
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General Partnership - anyone have an experience setting up

Hi all,

I've searched the forum, but can't seem to find much on "general partnerships". My wife was planning on setting herself up as an Einzelfirma, but due to only having one client we have been advised she has 2 options: 1) work through an umbrella/payroll company (we are investigating Accurity.ch); 2) set up as a general partnership w/ me.

Are the requirements to establish the general partnership more relaxed compared to a sole-proprietorship (i.e we don't need to have 3 clients). The specialist from startups.ch seemed to indicate it was easier and having multiple clients may not be necessary.. but am very keen to hear from any EF's who have any knowledge/experience in this area?

TIA

Last edited by rocksteady; 23.03.2015 at 18:56.
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Old 23.03.2015, 18:58
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Re: General Partnership - anyone have an experience setting up

Pay some specialist for an hour of advice. Option 2 is not to set up a partnership but any form of company... I'd never EVER set up a general partnership as you two would be liable with your entire savings if something goes wrong... setting up a GMBH is not expensive and in most cases worth it.
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Old 23.03.2015, 19:06
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Re: General Partnership - anyone have an experience setting up

From what I understand there isn't any more risk by setting up a general partnership than (the very popular) sole-proprietorship - both have the unlimited liability. Also not sure how long the business will last, so am reluctant to setup a GMBH.

I take your point on paying for advice - we did already - and now they have come back on their original suggestion. They proposed the general partnership, saying it could be possible, but I just can't seem to find much information on it...and am reluctant to pay for more bad advice!
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Old 27.03.2015, 10:39
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Re: General Partnership - anyone have an experience setting up

Hi Rocksteady!

How are you? I will try to give you further info about the General Partnership legal structure:

This type of partnership is used by small businesses that targets activities of individuals. It is a partnership aggreement concluded by at least two partners. A general partnershipp has to be entered in the Commercial Register and it acts in its own name regarding the Swiss law. Here are the main advantages of this legal structure:
- No capital (own funds) requirements.
- Partnership agreement stipulates authorities and responsibilities.

And some disadvantages:
- Partner's right to express an opinion reduces independence.
- Partners are subject to debt collection under bankruptcy proceedings.
- Not suitable for start-ups

If you want some more information or advice about this type of partnership or any other SME legal forms, I would recommend you to visit the platform for company foundations: http://www.gruenden.ch/en
They provide good comparisons http://www.gruenden.ch/fileadmin/cus...en2_112011.pdf between the different legal forms and accurate explanations!

I hope I could help answering your question! Good luck to you and your wife with your future projects!
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Old 27.03.2015, 11:31
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Re: General Partnership - anyone have an experience setting up

There is no requirement to have 3 clients, a new business will likely have ZERO clients, taking a risk is what is required, not being an employee & pretending to be self employed is what is not allowed.
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Old 29.03.2015, 18:44
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Re: General Partnership - anyone have an experience setting up

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There is no requirement to have 3 clients, a new business will likely have ZERO clients, taking a risk is what is required, not being an employee & pretending to be self employed is what is not allowed.
Seconded - frankly, you got poor advise from the "specialist".. If liability is not an issue, sole propiertorship might be the cheapest and most adequate solution for the beginning. Once the business picks up, my guess is that you'll end up with a GmbH sooner or later, but there is no reason to rush things too much.
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Old 29.03.2015, 21:12
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Re: General Partnership - anyone have an experience setting up

fatmanfilms is right ofc. But seeing those numbers mentioned implies that your wife may be trying to act as selfemployed simply to bypass regulations. If so it doesn't matter how you set up the whole thing, it won't be recognized (until she has, indeed, 3 customers) - she'll be assumed to be an employee and treated accordingly. She may even end up being liable for all social security deductions, insted of just half.
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Old 29.03.2015, 21:29
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Re: General Partnership - anyone have an experience setting up

if your running an sole proprietorship (einzel....) IF ANYONE
has any legal issues against you.. your entire capitol is liable..
IF you own a house, CAR, money in bank, Savings, pensions, ANYTHING
can be taken from you. All's it takes is one legal company in a dispute
with you for $$$ amount to sue you for cost recovery.
That could be small or huge depending on canton, fees, legal charges etc...
If you own anything the only way to go in Switzerland is GmbH or AG or Limited Liability.

Trying to save money by using a single person company if you have any assets is a very dangerous thing here. On the other hand, if your renting, own a 2000 f car, and don't have any money or savings in the bank here that can be seized. well more power to ya..

Get good legal advice. dont try to DIY business setup, changing or modifying a company is costly with notary fees and company house fees.

Don't forget if you have any debts registered against you, (even if you have settled and paid) your PERMIT could be at risk during renewal, or moving from L/B to C or trying to become swiss. ( Here any financial issues or even bad credit can and will be used to boot you out... )
you can FORGET IT... so keeping your legal issues clean and company taxes, AVH etc up to date and squared away is very important. best luck.
Up to you... just small advice..
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Old 29.03.2015, 22:06
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Re: General Partnership - anyone have an experience setting up

To be honest the whole situation is a real pain; my wife simply has a short contract to deliver a project for a business that needs her expertise for 6 months. She's also open to finding other work. Setting up a GMBH for a short piece of work is cumbersome and having 3 clients is arbitrary-- they could each be for 100 CHF or 1 million CHF.

It's also not the case that the company is trying to duck its responsibilities to hire my wife - they simply see this as getting outside help, and when its done, she's gone. They are paying her fairly, so just wish there was an easier mechanism to take this on...
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Old 29.03.2015, 22:26
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Re: General Partnership - anyone have an experience setting up

1. There is no 3 clients requirement.
2. Having a entry in the debt enforcement's office registry does not per se endanger her permit.
3. Liability risks have been way overstated, this is not the US.

Think about whether what your wife will do carries the risk of resulting in substantial liability risk (then GmbH), if not, go ahead as planned, Einzelunternehmen will work.

BTW: A viable alternative would be for the company to hire her for 6 months, fixed-term employments end without need for termination notice or the like, that would save you the trouble of establishing her self-employment with the social security agency (no worries, that isn't such big of an issue).
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Old 29.03.2015, 22:34
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Re: General Partnership - anyone have an experience setting up

Would you mind clarifying why you don't think she needs 3 clients?

If I understand correctly, she can set up an Einzelunternehmen in the commerce registry, without 3 clients. Instead the 3 client issue arises when she tries to get the Ausgleichkasse to confirm and accept her as self-employed. This seems to be the stumbling block, as i'm told they need 3 clients.
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Old 29.03.2015, 22:47
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Re: General Partnership - anyone have an experience setting up

You can (but only have to under certain circumstances) register with the commercial registry without any clients whatsover, correct.

Whether or not the Ausgleichskasse accepts her self-employment does not depend on the number of client, you can also have 5 "clients" and be considered an employee of all of them.

Rather, what actually matters is whether your factual set-up is that of someone who is employed or of a true third party who provides consulting services.

If you speak some German, a number of criteria are listed here:

https://www.svazurich.ch/pdf/Checkliste_se.pdf

but in your case, based on what you wrote and what I assume (and unless you mess it up for some weird reason) I have little doubt they will accept the self-employment (one time project, limited duration, don't mean to treat her like an own employee, she bills for her services, probably won't have to report like an employee, probably discretion in when she does the work).
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Old 30.03.2015, 00:25
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Re: General Partnership - anyone have an experience setting up

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If I understand correctly, she can set up an Einzelunternehmen in the commerce registry, without 3 clients. Instead the 3 client issue arises when she tries to get the Ausgleichkasse to confirm and accept her as self-employed. This seems to be the stumbling block, as i'm told they need 3 clients.
Exactly.

If your wife makes herself complicit by trying to set up some fake self-employment situation she may end up paying the full amount herself, as opposed to the employer paying at least 50%. That's exactly the reason for the 3-clients-rule as far as the Ausgleichskasse is concerned.
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Old 30.03.2015, 08:36
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Re: General Partnership - anyone have an experience setting up

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if your running an sole proprietorship (einzel....) IF ANYONE
has any legal issues against you.. your entire capitol is liable..
IF you own a house, CAR, money in bank, Savings, pensions, ANYTHING
can be taken from you. All's it takes is one legal company in a dispute
with you for $$$ amount to sue you for cost recovery.
That could be small or huge depending on canton, fees, legal charges etc...
If you own anything the only way to go in Switzerland is GmbH or AG or Limited Liability.

Trying to save money by using a single person company if you have any assets is a very dangerous thing here. On the other hand, if your renting, own a 2000 f car, and don't have any money or savings in the bank here that can be seized. well more power to ya..

Get good legal advice. dont try to DIY business setup, changing or modifying a company is costly with notary fees and company house fees.

Don't forget if you have any debts registered against you, (even if you have settled and paid) your PERMIT could be at risk during renewal, or moving from L/B to C or trying to become swiss. ( Here any financial issues or even bad credit can and will be used to boot you out... )
you can FORGET IT... so keeping your legal issues clean and company taxes, AVH etc up to date and squared away is very important. best luck.
Up to you... just small advice..
It's actually worse than that as you can't go bankrupt in the same way as you can in the UK or USA so your still on the hook for the next 20 years.....
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Old 30.03.2015, 20:45
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Re: General Partnership - anyone have an experience setting up

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It's actually worse than that as you can't go bankrupt in the same way as you can in the UK or USA so your still on the hook for the next 20 years.....
Actually, under Swiss law, rocksteady is not on the hook for anything as he is not liable for his wife's debts..

Also, in order for there to be an issue, his wife would first have to mess up in a way that a) causes a damage which b) constitutes a recoverable claim, then someone would have to sue, win the trial and only then there can be a true liability problem affecting ones assets.

While the statements who advocate opting for a GmbH/AG are in principle right when liability protection is concerned (there is such thing like piercing of the corporate veil in Swiss law), they are not very helpful in the case at hand, are based on a fragmentary understanding of Swiss law and make it appear like it was a totally unreasonable choice to opt for a sole proprietorship, which it is not.
There are over 300'000 sole propriertorships in Switzerland (AG 100k, GmbH 75k), it is a well established and totally fine way of doing business for a lot of cases. I don't feel like trying to scare people is the best way to help them..
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