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| || |Well, to start off. If one were to set up a GmbH and work from home, what is the best possible scenario for tax efficiency? Assuming that one needs all the usual to live ie. an apartment, transport, insurance and other items that can be lobbed onto the company bill so one can treat it as an expense etc.
How are these scenarios different in higher tax cantons and lower tax cantons? Perhaps this is too broad so maybe compare Zug with somewhere with higher taxes?
Maybe you can find a topic in the above mess to start with?
And, thanks for volunteering your vast knowledge for the benefit of all those who want to be more tax efficient!
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Let me then start by providing you with an answer to the above question. But before that let me start by providing an answer to another question.
Why do so many people want to form their own GmbH and why should they maybe not?!
A GmbH is an entity that is separated from the people who work for it. In this way it can be addressed in court, taxed and generally live its own life without a need or dependency on any one person. Indeed it is possible to set up a GmbH without any employees
Many people set them up to be a vehicle through which they can be employed and accept contracts to do work for others. The classic case is an IT contractor. The IT Contractor has just received a contract to work for a customer for the next 12 months but the customer funnily only wants the contractor to work through a company ie to have a company to company relationship and not company to individual. How strange?!
The reason for this is quite simple. The customer company would be accepting a silent liability if they had a company to individual relationship of such a duration. The reason for this is that the employing company has an obligation to pay AHV/IV/EO/ALV for any individual employed by it. As a "sole trader" there is no employing company so if the individual does not pay their contributions along comes the Social Insurance and presents a bill to the customer company - and they have to pay...
So back to our story. The IT contractor needs to have a company that will provide an umbrella for them to work. The GmbH requires minimum investment and can be quickly set up. All that is required is to pay 10K into a locked account, find a place to register it, write statutes and visit a notary publiy to have your company registered.
All the banks understand the need for a locked account and will probably charge you SFr. 200 for that but will open one immediately.
Writing Statutes is relatively straightforward and I can help with that as long as the language is German - the hardest part is your "Zweck" the purpose for the company existing in the first place.
Notary publics are easy to find given that they are all listed for each Kanton - a notary public is actually not a fully independent role. They are attached to the government through the canton where they are licensed to operate. They can however do work for companies in other cantons, and that could be cheaper dependent on whether they are employed by the canton or self employed.
Which only leaves the place to register your company. This should be easy but are you renting or do you own your accommodation? If you are renting you need to check your rental agreement and potentially ask the landlord who might well say no
So you decide to proceed. Eventually your company appears in the Schweizerhandelsamtblatt (SHAB) and there you are. Your company exists and bingo... Along come the letters. You will find first are bills from register lists. They have somewhere in the very small print that this is a service and you do not need to register. ie it is not the Company Register where you do need to be listed... Then comes the government... Your company needs to register for AHV and it needs to have accident insurance for the employees and it needs to be registered at the Gemeinde with an opening Balance. Insurances ah ha
Along come countless letters from insurance companies offering their wares... Worst point is you need to have some of them. You will need:
Company Pension (BVG) - this is in effect a fund in your company's name and there is a pot there into which the company can pay. Each month there needs to be a payment made to the employees of the company. The exact amount is determined according to the salary of the employee which you need to declare, the age of the employee which you need to declare and the level of payments according to age that you have agreed. There are minimums but no set maximums. As a rule of thumb 25% is the maximum.
Accident Insurance (BU/NBU) - here your choices are whether this shall be private insurance or obligatory insurance. Given that if you have an accident you will most likely get properly damaged it is worth paying the extra for private insurance.
And that is it! You will have the insurance companies try to sell you all kind of other insurances but the above is the minimum. Clearly you can insure plenty of other things and the only one that this story would need to consider and indeed I would recommend is for sickness. "Krankentagegeld". This will pay out your salary if you are sick for a long period, kicking in after x days. The x can be chosen but is usually 30 or 60 days. Additionally with this you can also increase the level of payment to 100% from the normal 80%. This is inherently sensible.
So there you have it your company is formed. And now you need to start working. That is not to say the work in getting here has not been included but you can hardly pay yourself for work when you have not had any income. So now you have to sit down and look at your market, ah you say I have my contract from the customer company. Whoops I need to have a contract with my company. So more work to create a contract and importantly an expenses regulation document. In this you can describe lots of ways of removing money from the business without paying tax on the income (or any social contribution or pension). Ah and now I am an employee I need to take my AHV form down to the local town hall and get it stamped so I am paying my contributions formally into a fund "Kasse".
Okay so now I am set-up, or at least I think I am. I go to the bank and open my account and I go off and buy my copy of Banana accounting so I can keep accounts - which is a requirement of course.
A few days to go till I start work at ABC AG and they ask me for my MwSt number. Holy cow what is that and how do I get one. Not only is there a register of companies but also register of those companies that are registered for VAT. So you need to register and that is not so easy as you would think. So much so that I must explain that separately...
But then you are finished and can start work. Whoopee and phew.
The total cost of this exercise becomes apparent in a few days when your bills arrive.
Notary: 1700 to 3000 depending on how much you/we do in advance.
Insurance: ca 3000 should see it okay note these need to be paid in advance...
Total expenses for set-up are thus around the 5K...
Ah ya while I am at it I need to have a company credit card and change my phone to the company and oh yes my personal phone at home and the internet connection...
And hopefully you are not setting or thinking of setting up your company in November or December because you will get another go at paying your insurances in December or January for the whole of the next year plus your BVG contributions. This can blow a big hole in 20000 even for a "one man band".
But they are all paid you still have 5K in the bank and you can finally go to work and earn some money.
And in part 2 I will directly compare why you might want to do this and indeed why you might not.