What is a sole proprietorship / individual companies
Sole proprietorships are unincorporated businesses. Many new entrepreneurs who start a micro or small company choose to start with this legal form.
The principal use of this legal form is for one-person businesses (i.e. Painting shops, hairdressers, artists, etc.).
The advantages of a sole proprietorship are that it allows for easy informal activity and does not demand strict adherence to rigid company law provisions. Additionally there is no minimum capital that is required.
However, there are some disadvantages. Namely, there is unlimited liability of the owner for personal assets, no partners may be involved in the enterprise, there are no unemployment benefits, and additionally, depending on the canton, there child and educational allowances may not be available.
As far as start-up costs and formation expenses, one can expect to pay between CHF 700 - 1,200. These costs cover the entry into the commercial registry.
There are several considerations one must make in setting up a sole proprietorship. A company name is necessary and must be visible, for example, Müller Painting Company or Müller Basement Installations. Next, the sole proprietorship should be entered into the commercial register. The entry in the commercial register is strictly voluntary for businesses with a turnover up to but not exceeding CHF 100'000. Nevertheless, it is advisable in any case, to enter the commercial register. The trade register extract is often required, and is a great benefit: e.g. for opening a bank account, opening a mailbox or locker, moving in international trade, obtaining a company telephone line, etc.
About Sole Proprietorship and your Pension Fund
At the start of the pension a few important points should be noted:
You must be able to prove to the satisfaction of the competent compensation fund that you are self-employed . You must fill out the enclosed form and provide the AHV with appropriate evidence such as:
• At least three quotations to potential customers • At least three prepapre invoices to customers • Business Stationery with Logo • A dedicated website • A short description / business plan about your project • Already signed leases etc.
It is advisable to create a professional dossier with all these forms and documents. It is additionally recommended that - if possible - to make an appointment with the competent authority and to drop off the dossier personally and introduce yourself to the compensation office in person. This leads to a personal experience means that the authorities have more confidence in your project and your application has a greater chance of success.