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Old 28.05.2010, 11:17
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Working as Freelancer from Home

Hello Guys

My wife wants to start working from home as freelancer for software projects.

Details:

1. Non-EU National
2. Professional Engineer with a PhD with past overseas work experience.
3. B-permit with Work Permission
4. In Switzerland for last 2 years
5. Has not worked in Switzerland ever (No AHV, etc.)
6. I am 100% employed.

Now, after reading the discussions on this forum, I believe she can simply start invoicing her clients in her own name. She just needs to keep track of every expense and income. She can receive payments in private bank account (paypal, etc.) and when we file our usual end-of-the-year tax returns, she declares everything there. This goes till she earns more than (I think) 75K CHF. After which, she must register it as an Einzelfirma, etc. Is this understanding correct?

Further questions:
1. Does she need any AHV registration? If yes, where to order it?
2. Does she need to apply for any kind of selbstädigarbeit permission, in addition to her already existing work permission? She went to Gemeinde but (I fear) they did not understand completely and gave her the forms to apply for work permission.


Your feedback is much appreciated and is really needed.

Thanks
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  #2  
Old 28.05.2010, 21:16
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Re: Working as Freelancer from Home

While most of what you say would work out fine if your wife was running a business as opposed to supplying services.

When it comes to supplying services there are a lot more rules and regulations involved because the government wants to ensure that the customer is not just using this arrangement to avoid their social responsibilities.

For instance the AHV will not accept your registration unless you can show them that you are running a real business with respect to business risks, multiple concurrent customers etc... and without this registration her potential customers would be held responsible for AHV payments and pension contributions.

For this reason most companies will not take on software engineers directly as contractors unless they come via some kind of agency or have a limited company of their own.

The best idea would be to operate via an agency or one of these invoicing firms that are setup to handle the red tape involved and to give comfort to the client that they are not going to be exposed to additional payments for AHV or similar charges.

Good luck with that,

Jim
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Old 29.05.2010, 09:43
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Re: Working as Freelancer from Home

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This goes till she earns more than (I think) 75K CHF.
I think it's 100K
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Old 29.05.2010, 10:07
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Re: Working as Freelancer from Home

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I believe she can simply start invoicing her clients in her own name. She just needs to keep track of every expense and income. She can receive payments in private bank account (paypal, etc.) and when we file our usual end-of-the-year tax returns, she declares everything there. This goes till she earns more than (I think) 75K CHF. After which, she must register it as an Einzelfirma, etc. Is this understanding correct?

Further questions:
1. Does she need any AHV registration? If yes, where to order it?
2. Does she need to apply for any kind of selbstädigarbeit permission, in addition to her already existing work permission? She went to Gemeinde but (I fear) they did not understand completely and gave her the forms to apply for work permission.
  1. This has been covered here a number of times before and you'll learn more by searching the forums with the search function.
  2. She will need to be registered as self-employed. This can be done at your local tax office by filling in a form and supplying a couple of invoices and quotations.
  3. Once accepted, she will be charges AHV - social contributions - based on the previous year's net income.
  4. You/she will need to ask for and complete the Hilfsblatt A supplement to the tax form where all income and expenses can be shown.
  5. The CHF75,000 now to be 100,000 refers to the level before you need to be registered for VAT
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  #5  
Old 29.05.2010, 10:56
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Re: Working as Freelancer from Home

I just remembered another point on the services/body shopping type businesses:

If you operate as an independent or via your own company you are required to get a special licence from the Kanton and this requires a bond of 50K from what I remember. I can't remember the rules on this one, but think it is required if you spend more than a few days on site per month with the client, take instruction for the client and so on....

Again this is another reason why even people with their own company choose to go over a third party rather than directly to the client as the bond is difficult to get unless you are willing to lodge 50K at 0% with the bond issuer. Most of the agencies have special rates for this kind of thing depending on if they find you the client or if you have the client already and just want to make use of their bond certificate.

It is years ago since I had to set up all this stuff, so perhaps there is someone up here who has been through the process more recently.

Good luck with that,

Jim
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  #6  
Old 30.05.2010, 01:36
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Re: Working as Freelancer from Home

Jim2007, what you're talking about is AVG license, and it's needed for the one reselling others' work time, not for the one providing services.

deneb, you might find this useful.

An experienced software engineer would easily make 100K or more (net revenue, before taxes and social costs), working 3-4 days a week. In this regard, it makes sense to register her own GmbH from the beginning.

If she is a good Perl developer with Linux experience, she can send the CV directly to me
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  #7  
Old 30.05.2010, 07:21
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Re: Working as Freelancer from Home

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...If you operate as an independent or via your own company you are required to get a special licence from the Kanton and this requires a bond of 50K from what I remember....
Depends on the Canton. Not required for "one-man GmbH" in BS or BL. They've worked out that being able to give some money to the employees in case of company failure is pretty moot when there is only one employee.

Unless you've multiple (3 in BS/BL) clients, you cannot be self-employed. Your options are to set up a GmbH (20'000CHF seed money into the company + ~5'000CHF set up costs), or being an agency employee. Even with the GmbH route, you can end up going via an agency. ( I worked direct for one client for two years, then their lawyers got antsy and now I work through an agency. I get paid more quickly mind).
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Old 30.05.2010, 11:41
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Re: Working as Freelancer from Home

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Your options are to set up a GmbH (20'000CHF seed money into the company + ~5'000CHF set up costs)
please don't add confusion. Set-up costs are part of that 20K grounding capital, not on top of it.

Also CHF 5000 seems a bit too high, how did you spend it? I paid:

  1. CHF 800 for paperwork to my accountant/Treuhand
  2. CHF 600 to the public Notary
  3. CHF 700 to the Register of Commerce.
That's it, and my GmbH was fully operational.
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  #9  
Old 30.05.2010, 12:19
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Re: Working as Freelancer from Home

Notar and other fees vary over time and according to canton.
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Old 30.05.2010, 21:33
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Re: Working as Freelancer from Home

In ZH the Notarys are state employees and charge modest standardized fees. Many Cantons have entrepreneurial lawyers acting as notarys. They charge whatever amuses them. Nevertheless CHF 5'000 to launch a GmbH sounds exorbitant.
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Old 30.05.2010, 22:34
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Re: Working as Freelancer from Home

It was a long time ago.
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Old 31.05.2010, 00:50
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Re: Working as Freelancer from Home

forgot one more point in my list of costs:

4. CHF 200 to UBS for opening a company founding account
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Old 31.05.2010, 16:46
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Re: Working as Freelancer from Home

Thanks AbFab. I did search the forums and read many threads but it looked that my situation was unique in that my wife had no prior AHV card or job and she has a work permission. In fact, I learned quite a lot from your answers to other threads.

Referring to point 2 below: Do you still need to register as self-employed when your B-permit says "mit Erwerbstätig."?

Point 5: Before you reach the limit for VAT (whatever is current), you do not charge VAT to your clients?

Thanks again.


Quote:
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  1. This has been covered here a number of times before and you'll learn more by searching the forums with the search function.
  2. She will need to be registered as self-employed. This can be done at your local tax office by filling in a form and supplying a couple of invoices and quotations.
  3. Once accepted, she will be charges AHV - social contributions - based on the previous year's net income.
  4. You/she will need to ask for and complete the Hilfsblatt A supplement to the tax form where all income and expenses can be shown.
  5. The CHF75,000 now to be 100,000 refers to the level before you need to be registered for VAT
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Old 31.05.2010, 16:52
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Re: Working as Freelancer from Home

Hello Stainslav

Thanks for your helpful comments. We are re-thinking our options in light of your suggestion to start with our own GmbH.

After reading yours and Jim2007's posts, I am a bit confused. So, are these ca. 20K CHF other than the 50K deposit he mentioned?

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please don't add confusion. Set-up costs are part of that 20K grounding capital, not on top of it.

Also CHF 5000 seems a bit too high, how did you spend it? I paid:

  1. CHF 800 for paperwork to my accountant/Treuhand
  2. CHF 600 to the public Notary
  3. CHF 700 to the Register of Commerce.
That's it, and my GmbH was fully operational.
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Old 31.05.2010, 16:56
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Re: Working as Freelancer from Home

You only need the 50K deposit (in most cantons) if you are supplying staff (ie. yourself) to clients, in the way a consultancy or bodyshop might. If you work through an agency, this is not an issue.
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Old 31.05.2010, 17:07
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Re: Working as Freelancer from Home

Hi there,
Iam sorry that I have no Idea for your question but because your wife is softwae engineer and my husband is also software engineer from ETH and Iam web and graphic designer, we want to make a sofrware engineer group or any subject in this field. Any one that interested in, just give me a message.
Thanks
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Old 31.05.2010, 17:29
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Re: Working as Freelancer from Home

Thanks for the useful information. What I am struggling to understand is the difference between running a business and supplying services. So please help me by answering the question:

Given:

1. You as a GmbH (after reading some comments, my wife is seriously thinking about founding a GmbH) take software development work from a well-established Switzerland-based AG company.
2. The GmbH has one employee: You

So is it running a business or supplying services? I really am unable to differentiate between the two.

Furthermore, when you say "The best idea would be to operate via an agency or one of these invoicing firms", does it still apply when you have your own GmbH?

Thanks for your time.

Quote:
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While most of what you say would work out fine if your wife was running a business as opposed to supplying services.

When it comes to supplying services there are a lot more rules and regulations involved because the government wants to ensure that the customer is not just using this arrangement to avoid their social responsibilities.

For instance the AHV will not accept your registration unless you can show them that you are running a real business with respect to business risks, multiple concurrent customers etc... and without this registration her potential customers would be held responsible for AHV payments and pension contributions.

For this reason most companies will not take on software engineers directly as contractors unless they come via some kind of agency or have a limited company of their own.

The best idea would be to operate via an agency or one of these invoicing firms that are setup to handle the red tape involved and to give comfort to the client that they are not going to be exposed to additional payments for AHV or similar charges.

Good luck with that,

Jim
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Old 31.05.2010, 17:44
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Re: Working as Freelancer from Home

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Thanks AbFab. I did search the forums and read many threads but it looked that my situation was unique in that my wife had no prior AHV card or job and she has a work permission. In fact, I learned quite a lot from your answers to other threads.

Referring to point 2 below: Do you still need to register as self-employed when your B-permit says "mit Erwerbstätig."?

Point 5: Before you reach the limit for VAT (whatever is current), you do not charge VAT to your clients?

Thanks again.
2) Yes. Being self-employed means one is paying ones own AHV and social costs. This is vital to potential employer/clients, or they could be liable for these.

5) No. You can't collect VAT and put it in your pocket!

By the way, I cannot see any point in forming a company AG/GmbH. It seems total over-kill...
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Old 31.05.2010, 17:45
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Re: Working as Freelancer from Home

Actually my husband has AG company and he knows a lot about these stuff.
Now he is at work and will answer your questions in few hours.
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Old 31.05.2010, 18:02
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Re: Working as Freelancer from Home

Thanks again.

I did not mean to keep the VAT ourselves. We, in fact, have not even started the work, let alone billing. I was just afraid that even before registering for VAT, you might be required to collect VAT and forward it to the Tax-authorities.

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2) Yes. Being self-employed means one is paying ones own AHV and social costs. This is vital to potential employer/clients, or they could be liable for these.

5) No. You can't collect VAT and put it in your pocket!

By the way, I cannot see any point in forming a company AG/GmbH. It seems total over-kill...
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