Swiss Sole Proprietorship:
The Complete Guide (2026)

Over 52% of Swiss businesses are sole proprietorships. Discover everything you need to know to set up, manage, and grow your Einzelfirma with confidence.

The sole proprietorship (known as Einzelfirma in German or raison individuelle in French) is the most common legal form in Switzerland. Easy to set up, with no minimum capital and favorable taxation, it appeals to freelancers, consultants, tradespeople, and independent professionals looking to get started quickly.

This guide covers:

what a sole proprietorship is and its legal characteristics
the concrete advantages and disadvantages
step-by-step setup process
taxation, accounting, and social security contributions
the critical thresholds (CHF 100,000 and CHF 500,000)
comparison with the GmbH and when to consider transitioning

Already self-employed? Magic Heidi simplifies invoicing, accounting, and VAT for Swiss sole proprietorships.

Definition

What is a sole proprietorship?

The sole proprietorship (Einzelfirma) is the simplest legal form in Switzerland. It does not create a separate legal entity — you and your business are one and the same.

No separate legal entity

The business and its owner are a single entity from a legal standpoint.

Single owner only

Reserved for individuals operating on their own. No partners allowed.

Can hire employees

Despite the name, you can employ staff and engage subcontractors.

52% of Swiss businesses

It is the most popular legal form, with over 326,000 active entities.

Who should choose a sole proprietorship?

A sole proprietorship is particularly well suited for:

Freelancers and consultants: developers, designers, translators, coaches
Tradespeople and service providers: plumbers, electricians, photographers
Liberal professions: architects, therapists (subject to specific regulations)
Online businesses: e-commerce, digital marketing, content creation
Side businesses: supplementary income alongside salaried employment

If you are starting out on your own, testing an idea, or prioritizing simplicity, a sole proprietorship is generally the best starting point.

Advantages

The 8 advantages
of a sole proprietorship

Simple, fast, and affordable — the sole proprietorship offers considerable benefits for Swiss freelancers and self-employed professionals.

No minimum capital

Unlike the GmbH (CHF 20,000) or AG (CHF 100,000), you can start with zero capital investment.

No mandatory bank deposit
No escrow account
No notary fees at setup
Launch costs from CHF 0

Quick and simple setup

No articles of incorporation, no notary, no blocked capital. You can start your business in a matter of days.

AHV registration: the only mandatory step
Commercial register optional below CHF 100,000
No notarized deed required
Minimal administrative procedures

No double taxation

Your profits are taxed only once as personal income, unlike GmbHs and AGs which are subject to corporate tax and then dividend tax.

Taxed at the progressive personal rate
No separate corporate profit tax
No dividend tax
Business expenses directly deductible

Simplified accounting

If your annual turnover is below CHF 500,000, simplified accounting (income, expenses, assets) is sufficient.

No mandatory balance sheet or income statement
Simple record of income and expenses
Inventory of assets and liabilities
Software like Magic Heidi is ideal for this

Full autonomy

You make all decisions yourself, without shareholder meetings or board of directors.

Complete management freedom
No minutes required
No partner conflicts
Maximum agility in decision-making

No mandatory audit

No audit obligation, regardless of the size of your business.

Save CHF 2,000-5,000/year in audit fees
No formal management report
No annual accounts filing
Fewer administrative constraints

The disadvantages you need to understand

The sole proprietorship also has important limitations. Before you start, evaluate these risks to make an informed choice.

⚠️

Unlimited personal liability

You are personally liable for all business debts with your entire private assets: savings, real estate, vehicles

📛

Restricted business name

The business name must include your surname. You cannot use a brand name alone.

🚫

No partners or investors

It is impossible to bring in a partner or raise external funding. Growth is limited to personal financing.

📉

No unemployment insurance

Self-employed individuals do not contribute to unemployment insurance. If you lose your business, there is no automatic coverage.

🔄

Difficult to transfer

The business has no independent legal existence. In case of death or retirement, it ceases to exist unless assets are transferred.

💸

Limited tax optimization

No option to pay yourself a salary or dividends to reduce the overall tax burden.

Setup steps

Setting up your sole proprietorship:
step by step

Creating a sole proprietorship in Switzerland is one of the simplest business setup processes. Follow these steps to get started in full compliance.

Practical guide

The 6 steps to get started

From verifying your business name to opening a bank account, here is the complete process for setting up your sole proprietorship.

Step 1

Choose and verify your business name

Your business name (Firmenname / raison sociale) must include your surname. You can add a first name, a fantasy name, or a description of your activity. Try our business name generator for inspiration.

Required: include your surname (e.g., 'Smith Consulting')
Prohibited: using AG, GmbH, Group, or any misleading terms
Check availability on zefix.ch (central index)
Name protection applies only within the same municipality

Step 2

Register with AHV as self-employed

This is the most important step. Contact the AHV compensation office in your canton to obtain self-employed status. See our guide to registering as self-employed for details.

Mandatory once income exceeds CHF 2,500/year
Provide invoices, contracts, and proof of multiple clients
Demonstrate economic risk and independence
Decision within 2-6 weeks

Step 3

Commercial register (if applicable)

Registration in the commercial register is mandatory above CHF 100,000 annual turnover, but can be done voluntarily before that.

Mandatory from CHF 100,000 annual turnover
Voluntary below that (boosts credibility)
Via EasyGov or the cantonal commercial register office
Cost: approximately CHF 120-250

Step 4

VAT registration (if applicable)

VAT liability is mandatory from CHF 100,000 turnover. Voluntary registration is possible below this threshold.

Mandatory from CHF 100,000 annual turnover
30-day deadline after reaching the threshold
Choose between effective method and flat tax rate method
Voluntary registration allows you to reclaim VAT on purchases

Step 5

Arrange the necessary insurance

Some types of coverage are mandatory, while others are strongly recommended to protect your business.

Mandatory: AHV/IV/EO (social security contributions)
Mandatory if you have employees: accident insurance (UVG)
Recommended: professional liability insurance
Optional: 2nd pillar (occupational pension / BVG)

Step 6

Open a business bank account

While not legally required, a separate account makes accounting and tax audits much easier.

Recommended: separate personal and business finances
Necessary for VAT registration and the commercial register
Compare fees across banks (CHF 5-25/month)
Digital alternatives: Yuh, neon, Revolut Business

Setup costs: how much does it cost?

The sole proprietorship is the cheapest legal form to set up in Switzerland:

Item	Cost
AHV registration (self-employed)	Free
Commercial register (if applicable)	CHF 120-250
VAT registration	Free
Business bank account	CHF 0-25/month
Accounting software	CHF 0-30/month
Total startup cost	CHF 0-500

Compare this with a GmbH (CHF 2,000-5,000 + CHF 20,000 capital) or an AG (CHF 5,000-10,000 + CHF 100,000 capital).

With Magic Heidi: start for free with 3 invoices and 3 expenses, then upgrade to unlimited from CHF 24.99/month.

Critical thresholds

The financial thresholds that change everything

In Switzerland, certain revenue milestones automatically trigger new obligations for your sole proprietorship. Knowing them lets you plan ahead.

CHF 2,500: AHV registration

Once your annual self-employment income exceeds CHF 2,500, you must register as self-employed with the AHV.

CHF 100,000: Commercial register & VAT

Above CHF 100,000 in annual turnover, registration in the commercial register and VAT liability become mandatory.

CHF 500,000: Full accounting

Simplified accounting is no longer permitted. You must maintain double-entry bookkeeping (balance sheet + income statement).

Taxation

Taxation of a
sole proprietorship

Understanding how you will be taxed is essential for evaluating the profitability of your business structure.

Income tax

Your business profits are added to your personal income and taxed at the applicable progressive rate.

Three levels: federal, cantonal, municipal
Progressive rate based on total income
No separate corporate profit tax
Business expenses are deductible

Social security contributions (~10%)

AHV/IV/EO contributions amount to approximately 10% of net income for incomes above CHF 60,500.

Income > CHF 60,500: rate of 10.0%
CHF 10,100-60,500: declining scale (5.4%-9.7%)
Minimum CHF 530/year regardless of income
Plus cantonal family allowances (0.3-3%)

Tax deductions

Self-employed individuals can deduct a wide range of business expenses to reduce their taxable base.

Office rent or home office proportion
Computer equipment and software
Business travel expenses
Pillar 3a contributions (up to CHF 36,288 without BVG)

Practical example: taxation of a self-employed person

Scenario: Clara, a marketing consultant in Lausanne, with CHF 95,000 in annual turnover.

Item	Amount
Annual turnover	CHF 95,000
Deductible business expenses	- CHF 15,000
Net business income	CHF 80,000
AHV/IV/EO contributions (~10%)	- CHF 8,000
Pillar 3a contribution	- CHF 7,258
Taxable income (before other deductions)	~CHF 64,742

Estimated tax burden (Canton of Vaud): approximately CHF 10,000-13,000 in taxes, depending on the municipality and personal situation.

Key advantage: No double taxation. With a GmbH, Clara would first pay corporate tax on profits, then personal tax on her salary and dividends.

Accounting

Accounting obligations

Maintaining proper accounting records is the foundation of tax compliance. The requirements depend on your turnover.

Below CHF 500,000

Simplified accounting: a record of income and expenses, plus an inventory of assets and liabilities. No formal balance sheet required.

Above CHF 500,000

Double-entry bookkeeping mandatory: balance sheet, income statement, and notes in accordance with the Swiss Code of Obligations.

10-year retention

All accounting documents, invoices, contracts, and bank statements must be retained for 10 years.

Loss carry-forward

Operating losses can be carried forward and offset against profits for the following 7 years.

Simplify your accounting

Magic Heidi automates simplified accounting for Swiss sole proprietorships. Invoices, expenses, VAT — all in one place.

Try for free See features

Comparison

Sole proprietorship vs. GmbH

Here is a detailed comparison to help you choose the right structure for your situation.

Criterion	Sole proprietorship	GmbH
Minimum capital	✓ CHF 0	CHF 20,000
Liability	Unlimited (personal assets)	✓ Limited to capital
Setup time	✓ 1-4 weeks	4-8 weeks
Setup cost	✓ CHF 0-500	CHF 2,000-5,000
Accounting	✓ Simplified (under 500k)	Double-entry mandatory
Taxation	✓ Single (income)	Double (corporate + dividends)
Partners	✗ Not possible	✓ Possible
Investors	✗ No	✓ Share capital
Unemployment insurance	✗ No	✗ No (director)
Admin burden	✓ Low	Medium

When should you switch from a sole proprietorship to a GmbH?

Transitioning to a GmbH becomes worthwhile when:

Your turnover exceeds CHF 100,000-150,000 and salary/dividend tax optimization becomes advantageous
You take on significant risks (large contracts, inventory, liability) and want to protect your personal assets
You plan to hire employees and want a clear separation between the business and yourself
You want to bring in a partner or seek investors
Your corporate clients require it for credibility or compliance reasons

How to convert your sole proprietorship into a GmbH

A direct "conversion" is not possible. The process involves:

Creating a new GmbH (articles of incorporation, notary, CHF 20,000 capital)
Transferring the assets and liabilities from the sole proprietorship to the GmbH (contribution in kind or acquisition)
Deregistering the sole proprietorship from the commercial register
Verifying the conditions for tax deferral (tax postponement if book values are maintained)

Estimated timeline: 3-6 months. Tip: carry out the transition at the beginning of a financial year to simplify documentation. See our guide on business structures for more details.

Common mistakes
to avoid

Thousands of self-employed professionals make these mistakes every year. Here is how to avoid them and start on the right foot.

✅ Best practice

💡 Pro tip

⚖️ Compliance

🛡️ Protection

⚠️

Underestimating liability

A dispute or unpaid debt can consume your personal assets. Take out professional liability insurance.

📊

Not separating finances

Mixing personal and business accounts complicates accounting and tax audits.

⏰

Missing the VAT threshold

You have 30 days to register once you reach CHF 100,000 in turnover. Late registration incurs penalties.

📝

Neglecting documentation

Keep all receipts from day one. Tax audits can cover up to 10 years.

🔄

Waiting too long to transition

Staying as a sole proprietorship too long exposes your assets. Plan the GmbH transition ahead of time.

💰

Forgetting retirement planning

With no mandatory 2nd pillar, build your retirement through pillar 3a (up to CHF 36,288/year).

Use case

Sole proprietorship and side business

Many people in Switzerland combine salaried employment with a self-employed activity through a sole proprietorship. This is perfectly legal and very common.

Dual status: employed and self-employed

You can absolutely keep a salaried job while running a sole proprietorship:

How it works:

Your employer handles AHV contributions on your salary (50/50 split)
You register separately with AHV for your self-employment income
At tax time, both incomes are combined

Example: Marc, an engineer in Zurich (salary CHF 80,000), runs an IT consulting side business in the evenings (CHF 25,000/year from 4 clients).

AHV on salary: handled by the employer
AHV on self-employment: ~6% on CHF 25,000 = ~CHF 1,500/year
Total taxable income: CHF 105,000
Professional expenses from consulting (equipment, software, travel) are deductible

Points to watch:

Do not directly compete with your employer
Check the clauses in your employment contract
The side activity should not compromise your salaried performance

Learn more in our guide on registering as self-employed.

Simplified management

How Magic Heidi simplifies life for the self-employed

Set up your sole proprietorship and focus on your work. Magic Heidi handles the accounting paperwork for you.

🧾
Swiss QR invoices
Create compliant invoices with QR-IBAN in 30 seconds. Automatic sending, tracking, and reminders.
📸
AI-powered expenses
Photograph your receipts — AI extracts the date, amount, VAT, and category automatically.
📊
Simplified accounting
Income/expense dashboard tailored to the simplified accounting requirements of sole proprietorships.
🏦
Bank statement import
Connect your bank and reconcile your transactions in a few clicks.

Invoices

Invoice #3
Magic Heidi
CHF 500
Jan 29
Invoice #2
Webbiger LTD
CHF 2000
Jan 24
Invoice #1
John Doe
CHF 600
Jan 20

FAQ

Frequently asked questions

Can I hire employees with a sole proprietorship?

Yes, absolutely. Despite the term 'sole' proprietorship, you can employ staff. You will then need to register as an employer with AHV, take out accident insurance (UVG), and manage payroll statements.

Do I need to register in the commercial register?

This is mandatory only if your annual turnover exceeds CHF 100,000. Below that, registration is voluntary but recommended for credibility. More details in our guide on the Swiss commercial register.

Can I use a brand name without my surname?

No, for commercial register registration, the business name must contain your surname. However, you can use a trade name (brand name) alongside it for your marketing and communication.

How can I protect my personal assets with a sole proprietorship?

Unlimited liability cannot be eliminated in a sole proprietorship. You can mitigate the risk with professional liability insurance, prudent debt management, and, if risks increase, transitioning to a GmbH.

Do I need to charge VAT?

Only if your annual turnover reaches or exceeds CHF 100,000. Below that, VAT registration is voluntary. See our guide on Swiss VAT for more details.

Which accounting software should I use?

For sole proprietorships, simple software suited to simplified accounting is sufficient. Magic Heidi is designed specifically for Swiss freelancers: QR invoicing, AI expenses, automatic VAT.

What happens if I exceed CHF 100,000 during the year?

You have 30 days to register for VAT. Registration in the commercial register must also be completed. Plan for these steps in advance if you are approaching the threshold.

Can I convert my sole proprietorship into a GmbH?

Yes, but it is not a direct conversion. You need to create a GmbH, transfer the assets, then deregister the sole proprietorship. The process takes 3-6 months. A tax deferral may avoid taxation of unrealized capital gains.

How much are social security contributions?

Approximately 10% of your net self-employment income (AHV/IV/EO), with a declining scale for incomes below CHF 60,500. The minimum is CHF 530/year. Cantonal family allowances (0.3-3%) are added on top.

Am I eligible for pillar 3a?

Yes. Without a 2nd pillar (BVG), you can contribute up to 20% of your net income, capped at CHF 36,288/year. With a 2nd pillar, the maximum is CHF 7,258/year. These contributions are tax-deductible.

Launch your sole proprietorship with confidence

Thousands of Swiss freelancers trust Magic Heidi to handle invoicing, accounting, and VAT. Start for free and focus on what you do best.

Start for free See pricing

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Key takeaways

The sole proprietorship (Einzelfirma / raison individuelle) is the ideal choice for starting a self-employed activity in Switzerland:

✅ Simple setup: no minimum capital, no notary, quick start ✅ Favorable taxation: single taxation at the personal rate, no double taxation ✅ Lightweight accounting: simplified accounting below CHF 500,000 ✅ Full autonomy: decision-making freedom without governance constraints

⚠️ Points to watch:

Unlimited personal liability
AHV registration mandatory from CHF 2,500 income
Commercial register and VAT mandatory from CHF 100,000
Plan the transition to a GmbH if your business grows

Last updated: March 2026. Swiss regulations change regularly. Verify current thresholds and requirements with your cantonal compensation office or at ch.ch.

Swiss Sole Proprietorship:The Complete Guide (2026)