SARL vs Self-Employed: Which Business Structure Saves You More?

Starting a business in Switzerland comes down to one critical decision: Should you register as self-employed or form a SARL? This choice impacts everything—your personal liability, tax bill, startup costs, and even your retirement benefits.

Choose Wrong, Pay the Price

The wrong business structure can cost you thousands in unnecessary taxes, expose your personal assets to unlimited liability, or lock you into expensive administrative overhead you don't need. This guide gives you the framework to decide with confidence—backed by real 2026 costs and tax calculations.

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Setup CostsCHF 0-1,000 vs CHF 4,000-6,000

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Personal LiabilityUnlimited vs Limited Protection

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Tax ComplexitySingle vs Double Taxation

Quick Comparison: Self-Employed vs SARL

Factor	Self-Employed (Sole Proprietorship)	SARL (Limited Liability Company)
Setup cost	CHF 120-1,000	CHF 4,000-6,000
Minimum capital	CHF 0	CHF 20,000
Setup time	2-4 weeks	2-3 weeks
Personal liability	Unlimited (personal assets at risk)	Limited to capital invested
Taxation	Single (personal income tax)	Double (corporate + dividend tax)
Accounting	Simple (under CHF 500K revenue)	Complex (full financial statements)
Social charges	5.4-10% of income	Employee contributions on salary
Best for	Freelancers, consultants, small operations	Growing businesses, higher risk activities

Self-Employed Status

What Is Self-Employed Status in Switzerland?

Self-employed status (Einzelfirma in German, raison individuelle in French) is Switzerland's simplest and most popular business structure. You're not creating a separate legal entity—you and your business are one.

How It Works

Start Invoicing, You're in Business

Your business starts the moment you invoice two or more clients. No complicated paperwork, no notary visits, no minimum capital requirement.

Register with AVS once you earn over CHF 2,300 annually
Commercial register only required if revenue exceeds CHF 100,000 (costs CHF 120)
No mandatory business bank account (though highly recommended)
You can start today with virtually zero upfront investment

Self-Employed Professional in Switzerland

Self-Employed Costs

Real Costs of Going Self-Employed (2026)

Here's exactly what you'll pay to start and maintain self-employed status in Switzerland.

Initial Setup

CHF 0-1,000 total to get started

Commercial register registration: CHF 120 (only if needed)
Optional advisory services: CHF 0-700
Banking setup: CHF 100-200
No minimum capital requirement

Ongoing Annual Costs

Predictable yearly expenses for self-employed professionals

AVS contributions: 10% on income above CHF 60,500
Minimum annual AVS: CHF 530
Accounting software: CHF 200-600
Professional liability insurance: CHF 500-2,000 (optional)

Key Advantages

Why self-employed status works for many Swiss entrepreneurs

Low barrier to entry—start today
Simple accounting (Excel works for most)
Single taxation on business profits
Complete control, no shareholder meetings

Disadvantages of Self-Employed Status

Unlimited Personal Liability

This is the critical risk. If your business faces debts or legal claims, creditors can go after your personal assets—your home, savings, car, everything. There's no separation between business and personal finances.

Real scenario: A self-employed graphic designer's client claims a logo infringed on their competitor's trademark. The lawsuit seeks CHF 50,000 in damages. Without professional liability insurance, the designer's personal assets are exposed.

Other Limitations

Limited growth potential - Investors rarely fund sole proprietorships because they can't buy equity
Less credibility - Some B2B clients prefer working with registered companies
No unemployment benefits - You're responsible for your own employment security
Pension gaps - Second-pillar pension (LPP) isn't mandatory, creating retirement savings gaps

Who Should Choose Self-Employed Status?

Self-employed status works best for professionals with low overhead, minimal liability risk, and business activities closely linked to personal skills.

✅ Testing Business Ideas

✅ Part-Time Ventures

✅ Low Liability Risk

✅ Personal Skills Focus

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Freelance Consultants

Low overhead, skill-based services

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Creative Professionals

Designers, writers, photographers

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Digital Services

Developers, marketers, coaches

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Local Services

Cleaning, maintenance, tutoring

SARL Structure

What Is a SARL in Switzerland?

A SARL (Société à Responsabilité Limitée)—called GmbH in German—is a limited liability company. It's a separate legal entity, distinct from you personally. This company can own assets, sign contracts, employ people, and be sued—all independently of you.

CHF 20,000 Capital

Minimum share capital, fully paid in cash

Notarized Formation

Authenticated formation documents required

Commercial Register

Mandatory entry in commercial register

Swiss Office

Registered Swiss office address needed

SARL Costs

Real Costs of Forming a SARL (2026)

Here's the complete breakdown of what you'll invest to establish and maintain a Swiss limited liability company.

Initial Formation

CHF 4,000-6,000 total plus CHF 20,000 capital

Share capital: CHF 20,000 (your investment)
Legal/advisory services: CHF 1,500-2,500
Notary fees: CHF 700-2,000 (varies by canton)
Commercial register: CHF 600
Stamp duty: CHF 200 (1% of capital)

Ongoing Annual Costs

Budget CHF 6,000-15,000+ yearly for compliance

Accounting/bookkeeping: CHF 2,000-8,000
Tax preparation: CHF 1,000-3,000
Annual audit (if required): CHF 3,000-10,000
Board protocols and compliance: CHF 500-1,500

Key Advantages

Why SARL structure protects and enables growth

Limited personal liability—assets protected
Professional credibility with B2B clients
Easier to raise capital and bring partners
Better pension protection through LPP

Disadvantages of SARL Structure

High Startup Costs

You need CHF 20,000 capital plus CHF 4,000-6,000 in formation expenses—a significant barrier compared to CHF 0 for self-employed.

Double Taxation

Your SARL pays corporate income tax on profits. When you distribute those profits as dividends, you pay personal income tax again (though with partial relief if you own over 10%). This can result in effective tax rates of 35-45% depending on your canton.

Complex Requirements

Detailed financial records - Full double-entry bookkeeping and annual statements required
Administrative overhead - Shareholders' meetings, board protocols, annual publications
Less privacy - Your name, address, and company details are publicly searchable
Harder to dissolve - Formal liquidation can cost CHF 2,000-5,000 and take months

Who Should Choose SARL Structure?

SARL makes sense for businesses with significant liability risk, capital requirements, growth ambitions, or need for formal company credibility.

✅ Protect Personal Assets

✅ Major Investments

✅ CHF 100K+ Revenue

✅ Corporate Clients

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High Liability Risk

Manufacturing, construction, products

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Capital Intensive

Equipment, inventory, real estate

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Growth Focus

Hiring employees, seeking investors

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Multi-Partner

Clear ownership structure needed

Liability Protection

Understanding Your Personal Risk

The liability difference between these structures can't be overstated—it's often the deciding factor. Let's look at real scenarios.

Self-Employed Liability Reality

As a sole proprietor, you and your business are legally inseparable. If a client sues you, a supplier claims unpaid invoices, or you face tax debts, they can seize:

Your personal bank accounts
Your home and other real estate
Your vehicle
Your personal investment accounts
Even future inheritance

SARL Liability Protection

Your SARL is responsible for its own debts—up to its assets. Creditors cannot go after your personal property (with rare exceptions like fraud or criminal activity).

Your maximum personal loss is the CHF 20,000 share capital you invested.

Same scenario with SARL: The limited liability company faces the CHF 50,000 claim. If the company loses and can't pay, it may declare bankruptcy. The shareholders lose their CHF 20,000 investment, but personal assets remain untouched.

When Liability Protection Matters Most

High-risk activities that strongly favor SARL:

Selling physical products (product liability claims)
Construction or renovation services
Event planning or hospitality
Medical or health services
Business consulting with contractual obligations
Any activity involving employees

Lower-risk activities where self-employed may suffice:

Digital services with clear contracts
Writing, design, or creative work
Small-scale coaching or training
Home-based crafts or artistic work
Most knowledge-based consulting

Important: Even low-risk businesses should consider professional liability insurance (CHF 500-2,000 annually) if operating as self-employed.

Tax Comparison

Taxation: The Real Cost Comparison

Let's break down how each structure affects your tax bill with real 2026 numbers. The answer might surprise you.

Self-Employed Taxation: Simple Single Tax

You're taxed once on your business profit as personal income. That's it.

Example calculation:

Annual revenue: CHF 120,000
Business expenses: CHF 40,000
Net profit: CHF 80,000

Taxes on CHF 80,000:

Federal income tax: ~CHF 3,200
Cantonal/municipal tax (Zurich example): ~CHF 8,800
AVS social contributions (10%): CHF 8,000
Total tax burden: CHF 20,000 (25%)

Your take-home: CHF 60,000

SARL Taxation: Double Tax Explained

Your company pays corporate tax on profits. Then you pay personal tax when taking dividends.

Same example with SARL:

Company level:

Annual revenue: CHF 120,000
Business expenses: CHF 40,000
Your salary: CHF 60,000 (normal market rate)
Net profit: CHF 20,000

Corporate taxes on CHF 20,000 profit:

Corporate income tax (Zurich): ~CHF 3,000 (15%)
Profit after tax: CHF 17,000

Personal level:

Salary: CHF 60,000
Dividend received: CHF 17,000
Total personal income: CHF 77,000

Personal taxes on CHF 77,000:

Federal income tax: ~CHF 2,800
Cantonal/municipal tax: ~CHF 8,200
AVS on salary (5.3%): CHF 3,180
Partial tax relief on dividend: ~CHF 500 reduction
Total personal tax: CHF 13,680

Combined tax burden:

Corporate tax: CHF 3,000
Personal tax: CHF 13,680
Total: CHF 16,680 (21.6%)

Your take-home: CHF 60,320

When Does SARL Become Tax-Efficient?

In this example, SARL saves about CHF 3,300 annually. But remember:

You paid CHF 4,000-6,000 to form the SARL
You pay CHF 3,000-5,000 more annually for accounting
Break-even takes 2-3 years

SARL tax advantages grow with higher profits. Once your business generates CHF 150,000+ in profit, the gap widens. You can retain profits in the company, deferring personal taxation while building capital for growth.

Important: Consult a tax advisor before choosing based on tax optimization alone. Cantonal rates vary significantly, and your personal situation (marital status, deductions) dramatically affects calculations.

Side-by-Side

Social Security and Retirement

Both structures require social security contributions, but they work differently and impact your retirement income significantly.

Factor	Self-Employed	SARL Employee
AVS Rate	5.4-10% of income	5.3% (company matches 5.3%)
Minimum Annual	CHF 530	Based on salary
LPP Pension	✗ Not mandatory	✓ 7-18% contributions
Unemployment	✗ No coverage	✓ 1.1% on salary
Retirement Income	CHF 1,225-2,450/month (AVS only)	60-70% final salary (AVS + LPP)

You pay AVS (Old-age and Survivors' Insurance) contributions based on your net income:

2026 AVS rates:

Income above CHF 60,500: 10% flat rate
Income CHF 10,000-60,500: degressive scale 5.4-10%
Minimum annual contribution: CHF 530

What you get:

First-pillar pension (AVS/AHV) in retirement
Disability insurance (AI/IV)
Income compensation insurance (APG)

What you don't get:

No mandatory second-pillar pension (LPP/BVG)
No unemployment insurance
You can voluntarily join pillar 3a (tax-deductible retirement savings up to CHF 7,056 in 2026)

Retirement reality: AVS alone provides basic coverage—roughly CHF 1,225-2,450 monthly. Most self-employed need supplemental savings.

SARL Employee Benefits

As a salaried director, you're treated like any employee:

Mandatory contributions:

AVS/IV/APG: 5.3% (employee share; company pays matching 5.3%)
Unemployment insurance: 1.1% on salary up to CHF 148,200
Accident insurance: ~1-3% (company paid)
LPP pension fund: ~7-18% depending on age (once salary exceeds CHF 22,680)

What you get:

First-pillar AVS pension
Second-pillar LPP pension (significantly higher retirement income)
Unemployment benefits (with restrictions for majority shareholders)
Disability and death benefits through LPP

Retirement reality: Combined AVS + LPP typically provides 60-70% of your final salary in retirement—much stronger than AVS alone.

Trade-off: Higher mandatory contributions (15-25% of salary) versus better long-term security.

Decision Framework

Making the Right Choice

Use this framework to determine which structure fits your specific situation best.

Choose Self-Employed If:

✅ Revenue under CHF 100K first 2-3 years
✅ Testing business idea
✅ Low liability risk
✅ Minimize startup costs
✅ Freelancer/consultant/service provider
✅ No employees planned soon

Choose SARL If:

✅ Significant liability risk
✅ Capital investments over CHF 50K
✅ Hiring employees within 2 years
✅ Seeking investors/partners
✅ Profits exceeding CHF 150K annually
✅ Corporate client credibility matters

Still Unsure?

Consider revenue projections, upfront budget, liability risk level, 5-year vision, and Switzerland long-term plans before deciding.

Key Decision Questions

1. What's your revenue projection for year 1-3?

Under CHF 75,000: Self-employed
CHF 75,000-150,000: Either (depends on other factors)
Over CHF 150,000: Consider SARL

2. Can you afford CHF 25,000-30,000 upfront?

No: Start self-employed
Yes: SARL is viable

3. How much liability risk does your business have?

Low (digital services, consulting): Self-employed works
High (products, physical services): SARL recommended

4. What's your 5-year vision?

Stay solo, stay small: Self-employed
Grow team, scale significantly: SARL

5. Are you based in Switzerland long-term?

Short-term (<3 years): Self-employed simpler
Long-term: SARL's pension benefits matter more

Transitioning

From Self-Employed to SARL

You don't have to get it perfect on day one. Many entrepreneurs start self-employed and transition to SARL later when it makes financial sense.

When to Transition

Typical Triggers for Converting

Common situations that signal it's time to move from self-employed to SARL structure.

Revenue consistently exceeds CHF 150,000
You're hiring your first employees
A major contract requires limited liability protection
You're bringing on business partners
Tax optimization becomes worthwhile

The Process

How Transition Works

Step-by-step process to convert from self-employed to SARL with minimal disruption.

Form your SARL (2-3 weeks, CHF 20,000 capital + formation costs)
Transfer business assets using LFUS procedure for tax-neutral transfer
Close sole proprietorship with final accounting and deregistration
Begin operating as SARL with proper salary and accounting

Transition Costs and Timeline

Total costs: CHF 5,000-8,000 including formation, legal advice, and asset transfer documentation

Timeline: 4-8 weeks total

Tax implications: Using LFUS (Merger Act) provisions allows tax-neutral transfer at book value, avoiding capital gains tax. Consult a tax advisor to structure properly.

Registration

Step-by-Step: How to Register

Detailed registration processes for both business structures with exact steps, timelines, and costs.

How to Register as Self-Employed (2-4 Weeks)

Step 1: Start Your Activity

Begin invoicing clients. Your business officially starts when you have professional income.

Step 2: Register with AVS (Within 30 Days)

Contact your cantonal AVS office (Caisse de compensation)
Submit Form 318.707 (Application for registration)
Provide your AHV number and activity description
They'll assign you a self-employed AVS number

Documents needed:

ID or passport
Residence permit (if non-Swiss)
Business plan or activity description
Projected income estimates

Cost: Free registration; contributions start based on income

Step 3: Open a Business Bank Account (Recommended)

Not legally required but highly recommended for clean accounting
Most banks offer dedicated business accounts
Typical cost: CHF 100-300 annually

Step 4: Register for VAT (If Required)

Once you exceed or expect to exceed CHF 100,000 revenue
Register via Federal Tax Administration online portal
You'll receive a VAT number (CHE number)

Step 5: Commercial Register (If Revenue > CHF 100,000)

Submit application to cantonal commercial register
Provide business name, address, activity description
Cost: CHF 120
Takes 1-2 weeks

Total timeline: 2-4 weeks depending on canton responsiveness

Total cost: CHF 0-500 for basic setup

How to Form a SARL (2-3 Weeks)

Step 1: Prepare Foundation Documents (1 Week)

Draft statutes (company rules)
Define share capital distribution
Choose company name and verify availability
Prepare shareholders' agreement (if multiple founders)

Consider hiring a company formation service (CHF 1,500-2,500) to handle this.

Step 2: Open Capital Deposit Account

Visit a Swiss bank with your company statutes
Deposit CHF 20,000 into blocked account
Bank issues capital deposit confirmation

Step 3: Notarize Formation (1-2 Hours)

Schedule appointment with Swiss notary
All shareholders must attend (or provide power of attorney)
Notary authenticates founding documents
Cost: CHF 700-2,000 depending on canton

Documents to bring:

Valid ID/passport
Residence permit (non-Swiss)
Bank capital deposit confirmation
Drafted statutes

Step 4: Commercial Register Entry (1-2 Weeks)

Notary or you submit registration to cantonal commercial register
Includes company statutes, shareholder list, authorized signatories
Register reviews and approves
Cost: CHF 600

Step 5: Obtain Business Numbers

Register for VAT (if applicable)
Register with AVS as employer
Obtain accident insurance for employees
Setup salary system (even for yourself)

Once commercial register entry is complete, bank releases the CHF 20,000
Transfer to company operating account

Total timeline: 2-3 weeks from start to operational

Total cost: CHF 4,000-6,000 including all fees

Foreign Entrepreneurs: Special Considerations

Non-Swiss citizens can operate both business structures, but with additional permit requirements and banking considerations.

🇪🇺 EU/EFTA Citizens

🌍 Non-EU Citizens

📄 Professional Licenses

✅ Permit Verification

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Residence Permits

Valid B, C, G, or L permit required

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SARL Requirements

One Swiss-resident director needed

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Banking

Expect more documentation

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Regulated Professions

Verify qualification requirements

Required Permits

For Self-Employed:

Valid residence permit (B, C, G, or L)
EU/EFTA citizens: Can operate up to 90 days without residence permit
Non-EU citizens: Must prove professional qualifications for certain regulated professions
Apply through cantonal migration office

For SARL:

Same residence permit requirements
At least one director must be Swiss resident with unlimited signature rights
Foreign majority ownership may trigger additional reviews

Regulated Professions

Some activities require specific qualifications or licenses regardless of structure:

Healthcare services
Legal services
Financial advisory
Real estate brokerage
Construction trades

Verify your profession's requirements with cantonal economic affairs office before starting.

Banking Challenges

Swiss banks can be cautious with foreign entrepreneurs:

Expect more documentation requirements
Some banks require minimum deposits
Digital banks (Neon, Zak) often more accessible
Budget 2-4 weeks for account opening

Common Mistakes

Expensive Errors to Avoid

Learn from others' costly mistakes when choosing and setting up your Swiss business structure.

Choosing SARL Too Early

Paying CHF 5,000+ formation plus ongoing accounting for minimal revenue business. Start self-employed, transition later.

Ignoring Liability Risk

Self-employed in high-risk industries realize too late personal assets are exposed. Choose SARL or buy insurance.

Missing AVS Deadline

Failing to register within 30 days results in retroactive demands plus penalties. Register immediately.

Mixing Finances

Blurring personal and business finances makes accounting nightmarish. Use separate accounts and software.

Excessive SARL Salary

Paying yourself too much to avoid double taxation triggers tax scrutiny. Pay market rate, consult advisors.

Underestimating Costs

SARL owners shocked by CHF 5-10K annual accounting they didn't budget. Get quotes before forming.

Magic Heidi

How Magic Heidi Supports Both Structures

Whether you choose self-employed status or SARL, Magic Heidi simplifies your financial management—from simple invoicing to full double-entry accounting.

For Both Structures

Built for Swiss Entrepreneurs

Magic Heidi grows with your business—start with basic invoicing as self-employed, scale to full accounting when you transition to SARL.

For Self-Employed

Simple tools to stay compliant and tax-ready

Swiss QR-code invoicing in 30 seconds
Expense tracking that separates business from personal
Income vs. expenses reporting for simplified accounting
VAT calculations when you cross CHF 100,000
Bank statement import with AI categorization
AVS contribution tracking for year-end tax prep

For SARL

Professional accounting that satisfies Swiss requirements

Full double-entry bookkeeping compliance
Multi-currency support for international clients
Employee expense management for your team
Financial reporting (balance sheet, P&L) for shareholders
Integration with accountants for year-end
Professional invoicing with company branding

Common Benefits

Features that work for every Swiss entrepreneur

AI-powered expense scanning from receipts
Mobile app for iOS and Android
Automatic VAT management and reporting
Secure Swiss data hosting
Multi-language support (EN, DE, FR, IT)
Real-time financial dashboards

Launch Your Swiss Business with Confidence

Whether you choose self-employed or SARL, Magic Heidi handles your invoicing, expenses, and accounting—so you can focus on growing your business. Try free for 30 days, no credit card required.

Start Free Trial See Pricing

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FAQ

Frequently Asked Questions

Can I convert from self-employed to SARL later?

Yes, absolutely. Many entrepreneurs start self-employed and transition to SARL once revenue justifies the investment. The process takes 4-8 weeks and costs CHF 5,000-8,000 using tax-neutral transfer provisions under LFUS.

Do I need CHF 20,000 in cash to start a SARL?

Yes, you must deposit CHF 20,000 in a blocked bank account during formation. This becomes your company's working capital once registered. You can't borrow this amount—it must be your own funds.

Can I be employed elsewhere and operate a self-employed business?

Yes, Switzerland allows side businesses. However, check your employment contract for non-compete clauses, and remember you'll pay AVS contributions on both employment income and self-employed profits.

What happens to my AVS contributions if I switch from self-employed to SARL?

Your contribution history transfers seamlessly. As a SARL employee, you'll pay employee AVS rates (5.3%) instead of self-employed rates (5.4-10%), but your retirement benefits calculation includes all contributions from both periods.

Is SARL more expensive every year or just at formation?

Both. Formation costs CHF 4,000-6,000 one-time, but ongoing costs are also higher: professional accounting (CHF 3,000-8,000 annually), more complex tax preparation (CHF 1,000-3,000), and administrative overhead. Budget CHF 5,000-12,000 additional annual expenses versus self-employed.

Can two people start a business together as self-employed?

Not technically. Self-employed status is individual. Two people would need separate sole proprietorships (each invoicing clients independently) or form a partnership structure like SARL, société simple, or société en nom collectif.

Do I pay less tax with SARL than self-employed?

It depends. At lower profit levels (under CHF 100,000), self-employed often pays less due to single taxation. At higher profits (CHF 150,000+), SARL can be more tax-efficient through salary-dividend optimization. The break-even point varies by canton and personal situation—consult a tax advisor.

Can non-Swiss citizens open a SARL?

Yes, but you need a valid residence permit (B, C, G, or L), and at least one director must be Swiss-resident with unlimited signature authority. Non-EU citizens face additional scrutiny for certain activities.

When must I start paying myself a salary from my SARL?

Immediately. You must pay yourself a market-rate salary as soon as the SARL becomes operational. This salary must be reasonable for your role and industry—tax authorities will challenge artificially low salaries designed to avoid social contributions.

What if my self-employed business fails—can I claim unemployment?

No. Self-employed individuals cannot access unemployment insurance. You'd need to find new employment or start a different business. This is one reason many keep part-time employment alongside their self-employed activity initially.

Last updated: January 2026 with current AVS rates, capital requirements, and tax regulations.

Need personalized advice? Consider consulting a Swiss tax advisor or fiduciary to review your specific situation, projected income, and canton-specific regulations before making your final decision.