Liability: the non-financial deal-breaker
As a sole trader, business and personal assets are legally identical. A lawsuit, supplier default or product liability claim reaches your savings, your apartment and your future earnings. For low-risk knowledge work (consulting, design, software development for stable clients) this is manageable. For anything involving inventory, employees, physical products or large client contracts, the risk is asymmetric.
A GmbH (and AG) is a separate legal person. Creditors can only reach the company's assets, not yours — provided you respect the corporate form (don't mix personal and company accounts, don't underfund the company, document major decisions). Piercing the corporate veil is rare in Switzerland but possible in cases of clear fraud or undercapitalization.
The tax math: when GmbH actually wins
Sole trader profit is added to your other personal income and taxed at marginal rates that can hit 30–42% (federal + cantonal + communal) above CHF 200,000 in high-tax cantons. There's no way to defer or smooth — every franc of profit hits this year's return. AHV at 9.65% adds further drag.
GmbH profit is taxed at corporate rates (federal 8.5% + cantonal varies; total effective 11.8% in Zug, 14.7% in Zurich, 19.7% in Bern in 2026). The owner pays themselves a market salary (deductible from corporate profit) and can take remaining profit as a dividend, taxed personally at a 50–70% partial imputation rate (only that fraction of the dividend is added to taxable income). Combined effective rate on a CHF 200k profit is typically 25–32%, vs. 35–40% as a sole trader — a CHF 10,000–15,000/year saving.
Setup, credibility and switching later
Sole trader setup: optional Handelsregister entry (mandatory above CHF 100,000 turnover), AHV registration (1–2 weeks), business insurance. Total cost: under CHF 500. GmbH setup: bank capital deposit (CHF 20,000), notary public articles, Handelsregister entry, VAT registration if above threshold. Total cost: CHF 1,500–2,500 plus the capital (which remains yours, just locked into the company).
Credibility matters in B2B. Many enterprise customers and procurement systems won't sign a sole trader for contracts above ~CHF 50,000/year — they want a registered legal entity for risk and tax reasons. If your client list is heading enterprise, incorporate early. Converting an Einzelfirma to a GmbH later is possible (and tax-neutral if done correctly) but adds 4–8 weeks of friction at exactly the wrong time.
Compare your options side by side
Plug your expected profit, planned salary and canton into the EuroCalc sole trader vs GmbH calculator — see the total tax and social charges for both forms.
Open the comparison tool →Frequently asked questions
Can I start as a sole trader and convert to GmbH later?+
Yes. A tax-neutral 'Umwandlung' is possible under Art. 19 StHG provided the assets transfer at book value and the new GmbH continues the business. Typical cost: CHF 2,500–4,000 plus the CHF 20,000 capital.
Do I need a GmbH to invoice clients?+
No. A sole trader can issue VAT-compliant invoices and is fully recognized by Swiss law. Above CHF 100,000 annual turnover, both forms require Handelsregister entry and VAT registration.
What about the CHF 20,000 capital — is it really tied up?+
Yes, but as working capital — you can use it for business expenses, equipment, salaries, even your own salary. The legal requirement is that the company's net assets don't drop below 50% of nominal capital without triggering board obligations. It's not money sitting unused.
Which form is better for raising investment?+
GmbH or (more commonly) AG. Investors expect equity instruments, share certificates and a cap table — none of which exist in a sole trader. If you plan to raise outside capital within 24 months, incorporate from day one.
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