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Old 28.01.2019, 19:36
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Using your own Sarl/ GmbH as a freelancer

Hi guys,

I hope you help me with something I have in mind.

It's 5 years that I'm working as a self-employed in Switzerland and I really like how easy is to manage the whole thing. However I've got some clients who are reluctant to operate with non incorporated entities. I'm talking about 5% of them...but you know, it's business.

This may be the stupidest question ever: would it make sense/ be legal to open a Sarl/ GmbH without employees and use it for those clients? That is, my sole-trader company bills the Sarl/ GmbH which in turn bills the client.

My current structure is quite optimal (trouble-free, tax, etc) and apart from the liability thing I don't see any other advantages of owning a company and becoming employer/ employee.

Furthermore, traditional umbrella companies I got into contact with in Switzerland either don't payroll self-employed individuals or change a very high fee.

Can anybody give me some advice?

Thanks
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Old 28.01.2019, 21:06
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Re: Using your own Sarl/ GmbH as a freelancer

I'm a believer in the KIS principle of doing business. Avoid setting up a legal entity structure if at all possible as it will cost money to open, maintain and liquidate.

To give your business additional credibility in the business world, consider registering it with the commercial register and possibly also with the VAT authorities. Also, review whether the simplified VAT sales tax rate method (Saldosteuersatzmethode) would work for your business.
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Old 28.01.2019, 21:45
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Re: Using your own Sarl/ GmbH as a freelancer

Some companies insist on dealing with contractors through an agent (acting as employer) that they specify to minimize their risk if things go wrong. They may not be interested in using your Sarl/GmbH because this may not limit their exposure sufficiently to such things as failure to observe employment laws, insufficient insurance etc. etc.
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Old 28.01.2019, 22:10
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Re: Using your own Sarl/ GmbH as a freelancer

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I'm a believer in the KIS principle of doing business. Avoid setting up a legal entity structure if at all possible as it will cost money to open, maintain and liquidate.
I'm a KISS believer myself and that's why I love being self-employed using a sole-trader structure.

Remember though that I don't really have a choice if I want to be eligible for certain clients.

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To give your business additional credibility in the business world, consider registering it with the commercial register and possibly also with the VAT authorities. Also, review whether the simplified VAT sales tax rate method (Saldosteuersatzmethode) would work for your business.
This's not really about credibility, I'm already registered in the commercial register and I've got a a VAT number.

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Some companies insist on dealing with contractors through an agent (acting as employer) that they specify to minimize their risk if things go wrong. They may not be interested in using your Sarl/GmbH because this may not limit their exposure sufficiently to such things as failure to observe employment laws, insufficient insurance etc. etc.
That's a very good point actually.

I might go to great lengths to (semi)incorporate and then I would still have to pay a fee to an agent anyway.
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Old 29.01.2019, 07:15
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Re: Using your own Sarl/ GmbH as a freelancer

Do a cost benefit analysis. If the figures are favourable, incorporate, if not don't.
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Old 05.02.2019, 11:04
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Re: Using your own Sarl/ GmbH as a freelancer

Not sure what your line of work is, it seems to work for you though.

I am coming from the other side - I think that, now that I am trying to become independent and start my own consultancy that having a registered company adds to the "credibility" and creates a better impression.

I find it better (for myself) to have a proper name, email address etc., rather than communicating via some @hotmail.com email....you know what I mean.


Payroll companies I think are not the solution to your issue. I am surprised that they wouldn't take you on, they were not difficult when I contacted them and they wouldn't take any risk anyway, they only pay you once they have been paid.
What kind of fees are you talking about? I was offered 5%.
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Old 05.02.2019, 11:36
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Re: Using your own Sarl/ GmbH as a freelancer

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Not sure what your line of work is, it seems to work for you though.

I am coming from the other side - I think that, now that I am trying to become independent and start my own consultancy that having a registered company adds to the "credibility" and creates a better impression.

I find it better (for myself) to have a proper name, email address etc., rather than communicating via some @hotmail.com email....you know what I mean.


Payroll companies I think are not the solution to your issue. I am surprised that they wouldn't take you on, they were not difficult when I contacted them and they wouldn't take any risk anyway, they only pay you once they have been paid.
What kind of fees are you talking about? I was offered 5%.
You can be self employed and have your own domain with proper email address, you don't have to have a GmbH/Sarl to do that.
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Old 08.02.2019, 08:53
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Re: Using your own Sarl/ GmbH as a freelancer

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You can be self employed and have your own domain with proper email address, you don't have to have a GmbH/Sarl to do that.
That is also true
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Old 08.02.2019, 09:39
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Re: Using your own Sarl/ GmbH as a freelancer

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Some companies insist on dealing with contractors through an agent (acting as employer) that they specify to minimize their risk if things go wrong. They may not be interested in using your Sarl/GmbH because this may not limit their exposure sufficiently to such things as failure to observe employment laws, insufficient insurance etc. etc.
Trading with a company increases risk, not reduces risk. Ltd. etc is a WARNING. Goldman Sachs has only been a corporation for 20 years.
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Old 08.02.2019, 11:26
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Re: Using your own Sarl/ GmbH as a freelancer

This is what I would say from an accounting perspective:

- your own limited liability company usually means a bit more effort than being self-employed
- you have to employ yourself and pay social security contributions which means you need at least some sort of payroll software or pay someone to do payroll for you
- not sure if you're already paying 2nd pillar pension insurance as it's not compulsory for self-employed individuals, but it's mandatory for employees (if they make above 21'330 CHF per year)
- only being able to pay yourself wages also means you can't simply withdraw or add funds to the company account without reasonable documentation (it's a treated as a loan from and to the company and subject to interest)
- generally, your accounting gets more complicated and things get a bit more "official" than when you're just self-employed
- if you're doing your own accounting so far, I would definitely recommend getting a fiduciary if you decide to found a company
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Old 08.02.2019, 13:28
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Re: Using your own Sarl/ GmbH as a freelancer

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Trading with a company increases risk, not reduces risk. Ltd. etc is a WARNING.
Shh. Don't tell everyone!

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- you have to employ yourself and pay social security contributions which means you need at least some sort of payroll software or pay someone to do payroll for you
I've been doing payroll, including with additional employees, using an Excel spreadsheet for years.

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only being able to pay yourself wages also means you can't simply withdraw or add funds to the company account without reasonable documentation (it's a treated as a loan from and to the company and subject to interest)
In some circumstances it makes sense to declare a dividend (income levelling over one or more years for example). Also your company can pay quite a few of your expenses.

Quote:
- generally, your accounting gets more complicated and things get a bit more "official" than when you're just self-employed
- if you're doing your own accounting so far, I would definitely recommend getting a fiduciary if you decide to found a company
I have an accountant - for advice and for doing my year end. We both use Sage, so it's quite straightforward.
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Old 08.02.2019, 21:09
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Re: Using your own Sarl/ GmbH as a freelancer

Actually the OP's question was 'can I operate a virtual Gmbh with no employees'? I read it the OP would like to keep operating as self-employed but have a virtual Gmbh to invoice-through businesses who don't want to deal with self-employed.

I guess it is not possible to register a company with no employees but maybe I'm wrong. On the other side, I wonder if it's possible to be self-employed and an owner of Gmbh(s) at the same time from tax perspective. I guess that if you own a Gmbh you are not sole trader anymore.

OP, regarding such businesses, it's a matter of negotiation. My colleague is currently working under an umbrella company in Germany, paying German taxes as it was impossible to deal with the client as self-employed. However a few months in the job he discovered that others managed to work directly as self-employed paying much much lower Swiss taxes on their income.
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Old 09.02.2019, 08:34
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Re: Using your own Sarl/ GmbH as a freelancer

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I guess it is not possible to register a company with no employees but maybe I'm wrong.

sure you can have a GmbH and no employees! The GmbH itself is the legal entity this is what is engaged in the contracts, the founder as CEO/COO/CFO if all one or many natural persons are the beneficial recipients of the profits. How you get the work done is a different question. _you_ or s/he or them on the board can get a monthly/yearly salary or the GmbH just distributes a dividend of the profits. if you are giving a salary then they are employees, if only a dividend distribution then employee is not the right word.


but you may have more scrutiny on your structure if there is a lot of 'work' i.e. profits and not many actual employees.


Particularly in IT, there are a lot of one-man show GmbHs, they work and operate as you expect, but then go dormant as the IT guys 'have' to deal with a payroll company for work with the bigger companies (Swiss pension law/preferred suppliers, etc.), but they keep coding on the side, and then take a dividend, or small additional salary. you check your own numbers to see what is cost-effective.
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Old 09.02.2019, 09:57
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Re: Using your own Sarl/ GmbH as a freelancer

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sure you can have a GmbH and no employees! The GmbH itself is the legal entity this is what is engaged in the contracts, the founder as CEO/COO/CFO if all one or many natural persons are the beneficial recipients of the profits.
I see, from tax perspective the owner/share holder is not an employee until s/he is paid salary. However, I'm curious about the rest of the story - can someone be an owner of Gmbh and a sole-trader (self-employed, independent, ... or whatever you call it here)? In my home country the sole-trader is a special business form with tax advantage but it's for one-man-things only, once you get additional source of income (even hypothetical like being a shareholder) you cannot continue this type of business.
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Old 09.02.2019, 13:27
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Re: Using your own Sarl/ GmbH as a freelancer

The Gmbh is not a lot more work or more complex than what you are already doing.

I would suggest to move all your sole trader activities in the Gmbh so all is in there. You can pay yourself salaries as you wish and your personal risk is lower (towards potential claims from unhappy customers). Gmbh accounting is very much the same as you are already doing. additional will be a balance sheet that probably is very simple (only payables, bank and receivables) and your registrations with AVS and LPP which is very straightforward.

You already have VAT accounting and excel will do fine or whatever you are already using. you can 'convert' the sole trader in into the Gmbh and keep using same name etc.

If you feel unsure you can ask a fiduciaire to do the annual report for the first year and maybe an example salary slip calculation. All of that explains you enough to do it yourself afterwards.
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Old 09.02.2019, 15:00
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Re: Using your own Sarl/ GmbH as a freelancer

I agree with Tinkiwinki.

There is an official designation here in CH of sole trader/one-man show and is as you described, but without the limitations of one-man one-income. with this setup in CH you can still have several income streams. But as I agree with Tinki, _IF_ you have the capital (CHF20k+~CHF2k of setup costs; can do your own accounts etc to minimise cost/maximise profits) it is my opinion and experience that a GmbH is more tax efficient all round.

within GmbH mode, it is the GmbH that is the Legal Entity, and it is GmbH which holds the contract for work with your clients (you would not normally name an individual). Your GmbH is limited in liability to the CHF20k above. How every the GmbH actually gets the work done is up to it, i.e. the CEO (majority of board of directors) acting as the 'voice' of the GmbH can hire people and pay a salary (even to themselves) or sub contract the work out.

more info here
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Old 09.02.2019, 20:01
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Re: Using your own Sarl/ GmbH as a freelancer

Not sure what Sarl is, but there is also AG company. It kind of sits between self-employment and gmbh. Still a company, but less palaver than with gmbh, yet it's a step up from self- employed...
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Old 09.02.2019, 20:07
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Re: Using your own Sarl/ GmbH as a freelancer

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Not sure what Sarl is, but there is also AG company. It kind of sits between self-employment and gmbh. Still a company, but less palaver than with gmbh, yet it's a step up from self- employed...
All the wrong way round. A Sarl is the French term for a GmbH (Ltd Liability Company in English). An AG is further above a GmbH, needing 50,000 or 100,000 starting capital instead of 20,000 for a GmbH.
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