Legal structures · Details

The questions that shape your legal structure.

Social insurance, salary vs. dividend, and the path from sole proprietorship to a capital company. These aren't details for later – they move more money than the choice itself, and belong on the table before you decide.

Still unsure which legal structure fits you? Five short questions – a clear recommendation.

Go to the legal structure check

Part 1 · Social insurance

The factor that helps decide.

Whether you're self-employed or an employee of your own company depends on the legal structure – and determines pension provision, coverage and monthly cash flow. Knowing these differences lets you decide more consciously.

The 3-pillar principle

AHV / IV / EO

State basic provision – mandatory for everyone.

BVG

Occupational pension – mandatory only for employees.

3a / 3b

Private provision – voluntary, tax-privileged.

Sole proprietorship / partnership

Self-employed

AHV/IV/EO

5.371 – 10% (progressive)

Self-financed

BVG (2nd pillar)

Voluntary

No obligation – arrange yourself

UVG (accident)

Voluntary

Include via health insurer

ALV (unemployment)

Not possible

No unemployment benefits

GmbH / AG

Employee of your own company

AHV/IV/EO

10.6% (split evenly)

Employer + employee

BVG (2nd pillar)

Mandatory from CHF 22,680

Building retirement assets

UVG (accident)

Mandatory

Occupational & non-occupational accidents

ALV (unemployment)

2.2% up to 148,200

Entitlement upon termination*

*In case of employer-like status (majority shareholder), ALV entitlement is restricted.

Example · Sara, 34, marketing consultancy

CHF 120,000 annual profit – two worlds:

As a sole proprietorship

AHV/IV/EO: ~CHF 11,700
BVG: CHF 0 (none)
No unemployment protection
→ Net before tax: ~108,300

As a GmbH (salary 100k)

AHV/ALV/UVG employer: ~CHF 8,000
BVG (employer share): ~CHF 5,000
Full pension buildup
→ Left for dividend/reserves: ~7,000

Simplified calculation excluding taxes. The GmbH costs more in social contributions – but builds pension and coverage you'd otherwise have to finance privately.

Part 2 · Distribution

Salary or dividend?

With GmbH and AG you have a choice self-employed people don't: how much to withdraw as salary, how much as dividend. Both routes have pros and cons – and the answer is rarely "all or nothing".

Salary

Counts as expense → lowers company profit and tax

Builds up AHV pension and 2nd pillar

Entitles you to ALV/UVG benefits

Social contributions ~13% (employer+employee share)

Fully subject to income tax

No cash-flow buffer in the company

Dividend

No social contributions (AHV/ALV/BVG)

Partial taxation from 10% stake (federal: 70%, cantons: 50–70%)

Flexible – only distribute on profit

Double taxation: first company, then privately

No pension provision & no ALV

If salary too low: risk of AHV reclassification

Example · Marc, GmbH owner

Company profit before salary CHF 200,000 · Zurich · single · 40 y.

Salary only (CHF 180,000)

Full AHV/BVG coverage, highest social contributions

~ CHF 115,000

Dividend only (salary 0)

AHV reclassification risk, no pension provision

~ CHF 140,000

Mix: 100,000 salary + rest dividend

Pension secured, taxes optimised

~ CHF 147,000

Simplified model calculation – net to you. Canton, municipality, marital status, pension situation and stake size shift the result.

Warning: "zero salary" gets flagged

Anyone who pays themselves no salary at all as a GmbH/AG shareholder and only takes dividends risks reclassification by the compensation office. AHV rule of thumb: the salary must be industry-standard. As a rough guide: dividends shouldn't exceed 10x the share capital and a maximum of 50% of total withdrawals (salary + dividend).

Part 3 · Conversion

From sole proprietorship to GmbH or AG.

Many start as a sole proprietorship and grow into a capital company. The switch can be tax-neutral – but only if you follow the rules of the Merger Act.

When to convert?

Liability risk increases (employees, larger contracts, loans)
Profit regularly exceeds CHF 150,000 → tax optimisation possible
External investors or partners are joining
Pension provision (2nd pillar) & a professional structure become important
Sale / succession planned (capital company easier to transfer)

Sole proprietorship → GmbH/AG

Legally: a contribution-in-kind formation under the Merger Act. Assets and liabilities of the sole proprietorship are transferred into the new company and cover (fully or partially) the capital.

Process · approx. 4–8 weeks

The 5 steps

Schritt 1
Interim balance sheet
Value assets & liabilities at fair value as of the reference date.
›
Schritt 2
Contribution-in-kind agreement
Contract package + auditor confirmation of value where required.
›
Schritt 3
Notarised formation
Articles of association, contribution in kind, commercial register filing.
›
Schritt 4
Transfer
Transfer accounts, contracts, domain, staff, VAT number.
›
Schritt 5
Deregister sole proprietorship
Deregister from commercial register after transfer.

Warning: 5-year lock-up period

With a tax-neutral conversion (transfer at book values under the Merger Act), the shares of the new company may not be sold for 5 years. Otherwise the conversion is taxed retroactively – on all hidden reserves. Anyone planning to sell soon is better off not converting, or planning it well in advance.

Sources & further reading

Keep going

Next step

Taxes