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I recently went through the process of creating an LLC for the blog. Since this entails many steps and there are several ways to do it, I wanted to write about this entire process.
Creating an LLC is not very difficult nowadays, but it can be expensive. And there are ways to save money, especially with new modern services. So, this explains how we can create an LLC from scratch in Switzerland.
LLC in Switzerland
A Limited Liability Company (LLC) is an official legal entity in Switzerland. It means that the company itself is a different entity than its founders.
The company itself is liable for legal disputes and debts. This is an essential difference with a sole proprietorship, where the company and the owner are tightly tied together. Of course, this also means more complexity since everything is simpler with a sole proprietorship, especially creation, and taxes.
All LLCs must be declared at the registry of commerce. There is one Registry of Commerce per canton, but they are linked together. A company name must be unique within Switzerland and not violate any existing trademark. The company name must include the LLC acronym in the Swiss language (Sàrl in French).
It is also essential to know that all partners appear in the registry of commerce. So, if you want to hide your name, you should not use an LLC company.
This company form is often used for Small and Medium Enterprises (SMEs) and family businesses.
Creating an LLC
To create an LLC, you must bring some money into the company.
These funds need to be at least 20’000 CHF. This means you must secure these funds before creating the company. The process is much easier if these funds are in cash, but they can also be in kind. For instance, you could transfer your car to your company, and the car’s value would count towards 20’000 CHF.
Creating the LLC also requires going through a notary for the official creation. The notary fees represent many of the costs of creating an LLC. This is what we will need to optimize.
Creating an LLC is almost the same as creating a limited company (anonymous company). The main difference is that creating a limited company requires 50’000 CHF of capital.
There are two ways of creating an LLC in Switzerland:
- You do everything yourself by going to the notary and sending all the necessary documents to the Registry of Commerce.
- You use an intermediary company that will do most of the work for a fee.
While the second option should be more expensive (there are extra fees, after all), it can be significantly cheaper.
Indeed, these companies have special deals with notaries that will decrease costs. For instance, a notary could charge between 1000 CHF and 2500 CHF to create a company. The prices can vary highly from one canton to another. On the other hand, you can find a company that will make a company below 1000 CHF, notary included.
In the beginning, we were thinking of doing everything ourselves to learn, but seeing how much we could save in fees; we decided to use a service to help us.
After looking around at these companies, I found two interesting services:
- They will create an LLC for 490 CHF (VAT not included).
- Everything is included, and there are no complex options.
- They will create an LLC for 449 CHF (VAT not included).
- They have many packages to add extra services, which can quickly add up.
I also got a quote from VZ, but it was much more expensive (3 times more), so I was not very interested. Ultimately, we decided to go with entreprendre.ch because it looked more professional, and I did not like the packaging system of startups.ch. But you could save 41 CHF by using startups.ch without any extra.
I have looked at both services’ reviews, which seem well-liked by their users.
Choose a name for the company
Your company’s name is very important because it cannot easily be changed after the fact. You could change the company’s name, but this means doing many administrative tasks and modifying the registry of commerce, which is not cheap. Therefore, I recommend you think thoroughly about the company name.
There are many rules for company names, so you have to be careful about that. For instance, you cannot use a protected name or a trademark. You cannot use a name that would induce the client’s error. For example, since my company is about personal finance, I could not call it Personal Agriculture LLC.
Another important rule is that some activities need authorization, like banks. So I cannot create “The Poor Swiss Bank” company.
If you are unsure about your company, you should ask the experts from entreprendre.ch, and they will help you.
Once you have a good name, you should ensure it is not already taken because no two companies can have the same name. To find out, you can use zefix.ch, which provides a searchable registry of company names.
Choose a bank for the capital account
In any case, you must choose a bank account for your company.
At first, your capital will be locked in a particular bank account to hold the capital until the company is officially created. After that, you can create a business bank account and transfer the locked funds.
Just as there are many banks for individuals, there are many for businesses. So, it is essential to choose well. While it’s easy to switch bank accounts for an individual, it may be complicated to change for businesses.
We looked at many options but ultimately decided to go with Migros Bank. They offer cheap bank accounts, and the fees on the locked capital accounts are also affordable (even though they are not cheap). Ideally, I would have wanted to steer away from Migros Bank because of their horrible apps, but in the end, I could not find any other good bank with decent fees.
Migros Bank will charge you a 0.5% fee for the locked capital, with a minimum of 300 CHF and a maximum of 2000 CHF. So, for an LLC, this would cost 300 CHF. This is not cheap, but still better than many other services. After that, it will only cost 3 CHF per month. However, as you will see later in the article, the processes are very much antiquated and painful to go through. So, you may have a better experience in another place.
Once you have chosen the bank for the capital account, you will need to open that account, giving them the name of the company and extra information about the company. Then, they will create the account and, once available, will provide you with the necessary information to wire the 20’000 CHF to the account. Once they have received the money, they will provide you with the necessary papers to prove it so the process can go further.
Unfortunately, the process of Migros is ancient and slow. You must download a form online (here), fill it out, and then mail it. I wish they would modernize their antiquated processes. After a few days, you should get the confirmation papers.
Start the process
The process of entreprendre.ch is pretty much old school. You register your interest online, and then they will call you to continue the process. Once they have contacted you and verified a few points, you will receive additional questions by email to fill up the initial documents for the Registry of Commerce. Once they have everything, they will give you plenty of papers to sign.
Among these documents are two essential documents:
- The company creation form will be sent to the Registry of Commerce. Make sure all information on that form is accurate before signing.
- The power of attorney declaration gives the power to entreprendre.ch to create the document but then will lose any control they have once the LLC is formed.
These two documents will allow them to start the process. You will have to fill some holes in these documents and sign them. With these documents, they will ask further things:
- The declaration from the bank that the capital has been consigned.
- The notarized signed copy of the form for the Registry of Commerce.
Even though the main process only involves the notary of entreprendre.ch, you will still have to notarize the signatures in front of a notary, but this is very cheap.
Once you all have these papers signed and the information from the bank, you can send everything to entreprendre.ch, which will take the necessary steps to ensure the company’s creation. Once they have submitted your application to the registry of Commerce, they will send you a bill for their services.
Wait for the Registry of Commerce
At this point, you have nothing to do but wait. It will take at least a few days for the company to be created, possibly up to 10 days for a simple LLC. At some point, you will receive the information that the company has been created and is available in Zefix (the directory of companies).
Soon after, you will receive the bill from the Registry of Commerce. You will also receive the content of the registry for your own company. Once this is received, you only have to pay that bill, and you should be done with creating your LLC.
Beware of scams
Sadly, entering a company in the Registry of Commerce also opens the door to scammers. The same day we received the letter from the registry of commerce, we had already received a scam letter to add our company to a directory of companies.
That scam letter was all in German and was full of small notes. Since we had been warned, we did not pay too much attention to it. But it is disappointing that we would get attempts of scams so early on. I do not understand why these companies are allowed to exist.
Wait for the bank account
Once your company is created, you can start creating your bank account.
Once again, the Migros Bank process is old, very slow, and manual. Your locked capital account will not be converted automatically, and they will not communicate anything.
Therefore, you must fill out a form again (here) and mail it to Migros with several documents. You will then have to wait for them to process the form. And unfortunately, this is not the end of it. After that, you will receive another set of forms to fill out and send them again by mail to them. You will need again to authenticate your identity.
Then, you will receive information about your bank account little by little. All in all, it took almost two weeks to be able to start using the business bank account.
Each step takes a long time. So, you should not expect to get your account quickly. I wish Migros would do better. This process is antiquated and has probably never been updated in 50 years.
Start business with your new company
Once your bank account is ready, you can start making money with your company.
If you already have a business like me, you must direct your current customers to your new entity. This may mean new contracts and sending new invoices. But this should not be too complicated unless you already have a complex business.
It is now up to you to run the business by this point.
The total costs of creating an LLC
Here are all the costs together to see what creating our LLC cost us in total:
- 527.30 CHF to entreprendre.ch
- 50 CHF to get the signatures notarized
- 581.80 CHF for the Registry of Commerce
- 300 CHF for the bank account
So, in total, we paid 1458.40 CHF to create our LLC. Even though it is still significant, I believe this is a relatively fair price going through this path. We did not have much to worry about during the process, thanks to entreprendre.ch.
Creating an LLC in Switzerland through the help of a business service is not a huge deal. However, it is essential to compare different offers to avoid paying too much. And it is also necessary to be careful about details.
Thanks to these services helping us create companies in Switzerland, it is relatively easy and affordable. Going through the notary ourselves would have been more time-consuming and costly.
Interestingly, the worst part of this process was creating our business bank account. The processes from Migros Bank are antiquated and not straightforward.
We have started operating under the new company and are redirecting our business to the new entity. We have not done that yet, but this should be concluded shortly.
If you are running a side business, you have to be careful about how to run a side hustle legally in Switzerland.
Have you ever created an LLC in Switzerland? How was the process for you?
I would also be interested to know which business bank you use. I wonder whether all banks are as anchored in the past as Migros Bank.
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