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Old 16.08.2015, 10:52
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Setting up a sole proprietorship in Zurich: Recommendations for the process

Hi everybody,

I am an EU national, living for the last two and a half years in Zurich under a EU/EFTA B permit. I have been working full time for a Swiss Employer, but now I am thinking about setting up my sole proprietorship company, as a sideline occupation in the beginning, and as cash (hopefully) starts to flow later on, I intend to decrease my employment to 80% or even 60% and then quit from my current employer. The business plan is to provide programming/software engineering services to a company outside Switzerland (I will not be looking for clients, the client is already there, we have been working together on a start-up basis and now I need to set up my company so that he can pay me on a monthly basis for my work).

For this reason, I want to set up my sole proprietorship properly, meaning that I want to hire an expert company to do that on my behalf. I want them to arrange all the documentation and submit all the paperwork and explain to me everything about tax, insurances in case something goes wrong in my business, health insurance requirements, bank account requirements, pension fund obligations, etc. I am looking for a general package, just to be sure that everything is in order. I am also willing to have them as my tax/legal advisors for the future.

Therefore, I would like your advise on the most suitable company to help me with the process. A quick google search revealed this company:

https://www.startups.ch/en/

Do you know them or does anyone have experience with them? Do you know how much they charge and if they are capable of handling such a task?

Also, do you have anybody else to suggest? English speaking of course as I don't speak any german... And how much should I expect to pay for this kind of service?
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Old 16.08.2015, 11:19
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

You don't need to pay a company to set yourself up as self employed, to set up a GmbH then yes, probably best. The company you linked to can do it for you. To set up as self employed, search the forum, there are plenty of threads already that explain how to do it.

But first off best check your employment contract, I'm guessing you work in IT, does it allow you to work freelance in competition with your employer?
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Old 16.08.2015, 11:26
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

Nope, I don't work for IT. I work for a purely engineering company, and the software services I am going to provide are on a totally different topic, so I am covered in this aspect. Of course, I will get the consent of my company first.

So what you mean is that a sole proprietorship is fairly simple to set-up, right? I don't need to go through the hassle of getting a company to do it on my behalf, right? But in any case, I will need to have legal/tax advise, so do you have anyone to suggest once the company is founded?
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Old 16.08.2015, 11:36
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

Here are a few threads to get you started. I'm sure the site you mention in your first post has been discussed many times.

Starting a business in Switzerland.

Einzelfirma & Gmbh details in Zurich? [starting a business]

Starting a business with Permit B

By the way, the search box is in the upper right corner of your screen, and the easiest way to get results is to enter a few words instead of a whole phrase. For example, "starting a business" will give far more results than "starting an engineering company." Good luck!
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Old 16.08.2015, 11:43
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

If you are setting up a business as a sole trader with expected annual revenues of less than CHF 100'000, you do not need to register the company and you do not have to obtain a VAT number. You will need to inform the canton that you are working Nebenberuflich and select an Ausgleichskasse that will invoice you quarterly for AHV social security on your expected Nebenberuflich income. After you submit your income tax filing, there will be a true-up by the Ausgleichskasse between what you actually earned and what you estimated you earned.

For income tax purposes, you should keep a simple Profit & Loss statement listing business income and expenses and net income. You would normally include this P&L with your annual income tax filing.

This might be helpful:
https://www.ch.ch/en/becoming-self-employed/

After you reach CHF 100'00 in annual revenues, you will need to register the business in the commercial registry and also obtain a VAT number.
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Old 16.08.2015, 23:16
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

Thank you so much for your post, which certainly clarifies some issues. No I have some questions related to my case, so maybe you can help.

The sole proprietorship is intended as a sideline occupation (at least in the beginning) with gross income below CHF 100'000. Therefore, I don't need to register it and I don't need to have a VAT number.

However, I intend to keep my everyday job, at least till some money starts flowing. This means that I will have Pillar 1 and Pillar 2 deductions and tax at source, plus my own personal health insurnance and private liability insurance. What happens in this case with the sole proprietorship?

1) I will have to make a tax declaration anyway, right? And I will have to declare the additional income only?
2) I will need to pay additional contributions to Pillar 1, is that correct? Does my current company have anything to do with it?
3) My client will need to get a statement from with the amount of money paid, like a receipt. How do I issue such a document if I am not registered? Is it a simple document that I can issue and print on my computer or does it need to have approvals from the canton?
4) This P&L that you are referring to (for tax purposes), does it have to be from a certified accountant or is it a simple document that even I can do it (not that I am going to do it, just asking).
5) Can I deduct company related expenses from my income (transportation expenses, communication expenses like mobile phones, internet, health and private liability insurance, etc.)?

And finally, if I decide to quit my job, does this still mean that I do not need to register if the earnings are below the threshold, or is it now obligatory to register?
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Old 16.08.2015, 23:58
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

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Thank you so much for your post, which certainly clarifies some issues. No I have some questions related to my case, so maybe you can help.

The sole proprietorship is intended as a sideline occupation (at least in the beginning) with gross income below CHF 100'000. Therefore, I don't need to register it and I don't need to have a VAT number.

However, I intend to keep my everyday job, at least till some money starts flowing. This means that I will have Pillar 1 and Pillar 2 deductions and tax at source, plus my own personal health insurnance and private liability insurance. What happens in this case with the sole proprietorship?

1) I will have to make a tax declaration anyway, right? And I will have to declare the additional income only?
2) I will need to pay additional contributions to Pillar 1, is that correct? Does my current company have anything to do with it?
3) My client will need to get a statement from with the amount of money paid, like a receipt. How do I issue such a document if I am not registered? Is it a simple document that I can issue and print on my computer or does it need to have approvals from the canton?
4) This P&L that you are referring to (for tax purposes), does it have to be from a certified accountant or is it a simple document that even I can do it (not that I am going to do it, just asking).
5) Can I deduct company related expenses from my income (transportation expenses, communication expenses like mobile phones, internet, health and private liability insurance, etc.)?

And finally, if I decide to quit my job, does this still mean that I do not need to register if the earnings are below the threshold, or is it now obligatory to register?
1) yes & all income will need to be declared
2) yes & no
3) You issue an invoice, no recipe required. You need to keep records
4) no
5) yes, but not health insurance, that is already a standard deduction

You need to start off being registered with the AHV as part time self employed, if you want to become full time self employed then you can register this change.

TBH you really don't have a clue about running a business, that would worry me if I were you.
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Old 17.08.2015, 08:27
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

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Thank you so much for your post, which certainly clarifies some issues. No I have some questions related to my case, so maybe you can help.

The sole proprietorship is intended as a sideline occupation (at least in the beginning) with gross income) below CHF 100'000. Therefore, I don't need to register it and I don't need to have a VAT number.

However, I intend to keep my everyday job, at least till some money starts flowing. This means that I will have Pillar 1 and Pillar 2 deductions and tax at source, plus my own personal health insurnance and private liability insurance. What happens in this case with the sole proprietorship?

1) I will have to make a tax declaration anyway, right? And I will have to declare the additional income only? YES
2) I will need to pay additional contributions to Pillar 1, is that correct? YES. Does my current company have anything to do with it? NO
3) My client will need to get a statement from with the amount of money paid, like a receipt. How do I issue such a document if I am not registered? Is it a simple document that I can issue and print on my computer or does it need to have approvals from the canton? PRINT A SIMPLE INVOICE FROM WORD. INVOICE TEMPLATES ARE AVAILABLE.
4) This P&L that you are referring to (for tax purposes), does it have to be from a certified accountant or is it a simple document that even I can do it (not that I am going to do it, just asking). SIMPLE P+L ONLY, NOT CERTIFIED. LIST YOUR REVENUES AND EXPENSES ON A SPREADSHEET. NO BALANCE SHEET REQUIRED.
5) Can I deduct company related expenses from my income (transportation expenses, communication expenses like mobile phones, internet, health and private liability insurance, etc.)? YES. REASONABLE AND NECESSARY BUSINESS EXPENSES. FOR ITEMS THAT ARE A MIX OF PRIVATE AND BUSINESS, E.G., INTERNET, YOU WILL NEED TO CAREFULLY TRACK AND ALLOCATE THEM.

And finally, if I decide to quit my job, does this still mean that I do not need to register if the REVENUES (not earnings) are below the threshold, or is it now obligatory to register?
REVENUES are your receipts. EARNINGS are REVENUES minus EXPENSES.

K-Tipp has an article from 2008 that covers this topic fairly well. (The VAT exemption is mentioned as CHF 75'000 revenues. This is out-of-date and is currently CHF 100'000).

https://www.ktipp.ch/artikel/d/einze...wirds-gemacht/

Search internet on Nebenberuflich Schweiz, Selbständig Schweiz.
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Old 17.08.2015, 09:21
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

Thanks everybody for the answers!!

Quote:
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1)

TBH you really don't have a clue about running a business, that would worry me if I were you.
I am going to be providing a software solution my friend, I am not an accountant. The client/partner is already there, I am not going to be looking for clients. Part of the job is already done, I just need to find a way to get paid and also set up something simple for future projects.
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Old 19.08.2015, 00:53
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

Now, some questions pop-up, regarding taxation and expenses. Let's assume for the sake of argument, that on top of my company salary, I earn an additional CHF 50'000. What are the expenses that I am expecting to pay?

A quick search revealed the following:
Pension contribution 7% = 3500
AHV 13% = 6500
Tax c.15% = 7500
Total Deductions:= CHF 17'500

Is this correct? Am I forgetting anything?
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Old 19.08.2015, 09:54
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

As a sole trader you don't need to contribute to any pension fund. On the following page you can calculate the total deductions for the AHV:

https://www.svazurich.ch/internet/de...tnehmende.html
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Old 19.08.2015, 10:17
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

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Now, some questions pop-up, regarding taxation and expenses. Let's assume for the sake of argument, that on top of my company salary, I earn an additional CHF 50'000. What are the expenses that I am expecting to pay?

A quick search revealed the following:
Pension contribution 7% = 3500
AHV 13% = 6500
Tax c.15% = 7500
Total Deductions:= CHF 17'500

Is this correct? Am I forgetting anything?
The Ausgleichskasse will invoice you for the social charges. If your business income is greater than CHF 56'400, these are the percentages:
AHV: 7.8%
IV: 1.4%
EO: 0.5%

This brochure describes self-employed social charges in English:

https://www.ahv-iv.ch/p/2.02.e

As a sole trader, you should note that there is no difference between you and your business. Social charges will be due on the full amount of the income that your business generates. Paying yourself a salary* will not be deductible as a business expense, if that's what you had in mind.

*-As a sole trader, this might be better called a "draw", i.e., money taken out of the business.

Beobachter has a book on setting up a business "Ich mache mich selbständig". It would probably be worth the CHF 68:

http://www.beobachter.ch/buchshop/ar...-selbstaendig/
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Old 21.07.2016, 16:08
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

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1) yes & all income will need to be declared
2) yes & no
3) You issue an invoice, no recipe required. You need to keep records
4) no
5) yes, but not health insurance, that is already a standard deduction

You need to start off being registered with the AHV as part time self employed, if you want to become full time self employed then you can register this change.

TBH you really don't have a clue about running a business, that would worry me if I were you.
In this example since he is Full employed, does he still need to register again with AHV as part time self employed? If so, where can anyone do this, is it possible online?

Thanks for the info.
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Old 21.07.2016, 16:12
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

My OH setup his sole trader through his accountant (truehand). All went very smoothly.

My brother set his up with the help of the business development office in the local Kanton. All went very smoothly (and he didn't incur extra costs)

Good luck!
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Old 21.07.2016, 16:39
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

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In this example since he is Full employed, does he still need to register again with AHV as part time self employed? If so, where can anyone do this, is it possible online?

Thanks for the info.
Although the person is already an employee, when he becomes self-employed he needs to register as self-employed with the SVA/ AHV. For Obwalden, this can be done by completing the form called "Anmeldung für Selbständigerwerbende" at this link under Produkte/ Beiträge Prämien/ Selbständigerwerbende/ Anmeldung:

http://www.akow.ch/site/index.cfm?vs...E&id_art=69559
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Old 21.07.2016, 17:19
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

Many thanks for the quick reply and the exact information. Cheers!.
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Old 23.07.2016, 22:17
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

You might also consider a payroll company that can handle structure and social deductions with billing capabilities. I use Fairplay. I'm happy with the services.
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Old 26.11.2016, 14:24
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

I am reviving this old thread I had started to ask a couple of questions. For the last 7 months, I have set-up my sole proprietorship in Zurich, registered with AHV as a sideline occupation, but not registered on the commercial register (my sideline turnover is below 100k, so I do not need to register with the commercial register and I also do not charge VAT for my services - something that I anyway wouldn't do as all my clients are abroad).

Now, I am fully prepared to quit my job, so I need to call AHV and inform them about changing my secondary occupation status to primary occupation. Still, the existing clients are going to be abroad, so no need to charge VAT.

However, after a discussion with my current employer, there seems to be an urgent need to finalize a specific project after I quit. They are willing to come up with an arrangement where I act as a consultant for them, so basically, the become the clients of my sole proprietorship. The facts are that they are going to be the only swiss client that I will have and that the fees that I charge them are going to generate for me an income that is more or less equal to what I am earning now as thei employee (this is a temporary solution and I am ok with it). So my question is, what are the overheads that I have to charge?

Let's assume that today, my gross salary is 100k. From that, there are the following deductions:

Pillar 1 (c.5.5% from my salary + c.5.5% from the employer side)
Pillar 2 (c.5.6% from my salary + c.8.4% from the employer side)
Tax (c.8.5% from my salary)
Pillar 3 (c 7'000 CHF p.a.)
Accident Insurace (no clue, this is from the employer)

So, based on the above, I think that if I want to maintain the same net income, I would need to apply an additional (5.5% + 8.4% + accident insurance + maybe 8.5% VAT). So a fair calculation would be +30%, that is 130k p.a. Is that correct? Am I missing something (a necessary insurance, additional contributions to AHV for primary occupation status, etc.).

For the Pillar 2, I will either put that money on Pillar 3a/3b, or go for a private pension plan with an insurance company.

Question No.2: The above is a hypothetical calculation for one year. The fact is that it is going to be for half a year or so, so let's say 50k + 30% = 65k p.a.. Now, this is below the 100k annual turnover for the VAT from domestic clients, but given my international clients (to whom I do not charge VAT), my total turnover will be over 100k. Do I still need to register in the commercial register, or am I fine?

Question No.3: How does all the above change if I decide to set-up a GmbH instead? Do I still need an additional 30% overhead, or is it something more that I need to take into account?

Thanks in advance!!
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Old 27.11.2016, 09:37
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

You will need to add accident insurance to your current health insurance policy and it should only be a few francs more each month.

As for the VAT it says turnover in this link

https://www.ch.ch/en/becoming-self-employed/

so I think you may need to reigster for VAT. Still it has an online tool to help you check this so why not use it to make sure.
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Old 29.11.2016, 12:51
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Re: Setting up a sole proprietorship in Zurich: Recommendations for the process

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Let's assume that today, my gross salary is 100k. From that, there are the following deductions:

Pillar 1 (c.5.5% from my salary + c.5.5% from the employer side)
Pillar 2 (c.5.6% from my salary + c.8.4% from the employer side)
Tax (c.8.5% from my salary)
Pillar 3 (c 7'000 CHF p.a.)
Accident Insurace (no clue, this is from the employer)

So, based on the above, I think that if I want to maintain the same net income, I would need to apply an additional (5.5% + 8.4% + accident insurance + maybe 8.5% VAT). So a fair calculation would be +30%, that is 130k p.a. Is that correct? Am I missing something (a necessary insurance, additional contributions to AHV for primary occupation status, etc.).

For the Pillar 2, I will either put that money on Pillar 3a/3b, or go for a private pension plan with an insurance company.

Question No.2: The above is a hypothetical calculation for one year. The fact is that it is going to be for half a year or so, so let's say 50k + 30% = 65k p.a.. Now, this is below the 100k annual turnover for the VAT from domestic clients, but given my international clients (to whom I do not charge VAT), my total turnover will be over 100k. Do I still need to register in the commercial register, or am I fine?

Question No.3: How does all the above change if I decide to set-up a GmbH instead? Do I still need an additional 30% overhead, or is it something more that I need to take into account?

Thanks in advance!!
Your hourly rate being self employed (or through your own GmbH) should, in my opinion, be at least 50% higher (and possibly double) than your employed rate. That has to take into account that you won't have guaranteed hours and you'll be responsible for your holiday and sick pay.

Re VAT, I'm pretty certain that if your sales are over 100,000 anywhere, you need to be registered even though you won't be charging VAT to your foreign clients. But this small amount of extra paperwork would work in your favour as you'll be able to claim back MwsT on taxable expenses such as petrol, telephone bills, stationary, delivery costs etc
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