Convert Sole Proprietorship to GmbH: Process & Tips

‍Introduction: Why the transformation is worthwhile

Converting a sole proprietorship into a limited liability company in Switzerland is a sensible step if your company is growing or if you want to reduce your personal liability risk.

In contrast to a sole proprietorship, the GmbH offers:

• limited liability to company assets
• higher credibility with customers, banks and partners
• clear separation of private and business assets
• better structure for growth or new shareholders

For SMEs in particular, the GmbH is often the next logical stage of development.

Requirements for converting a Sole Proprietorship into a GmbH

Before you convert your sole proprietorship, a number of legal and financial requirements must be met.

Overview of important requirements

• Share capital: At least CHF 20,000, paid in full (cash or contribution in kind).
  
  
• Shareholder: At least one natural or legal person.
  
  
• Statutes: Must regulate the purpose, share capital, shareholders and organization of the GmbH.
  
  
• Transfer of assets: Assets and liabilities of the sole proprietorship can be contributed in kind or by transfer of assets.
  
  
• Commercial register entry: The GmbH must be entered in the cantonal commercial register.
  
  

Important: The sole proprietorship does not automatically expire legally. It must be deleted separately after registration of the GmbH.

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Common mistakes when converting Sole Proprietorship → GmbH

Many entrepreneurs underestimate the effort or make formal mistakes. Typical stumbling blocks include:

1. Incomplete or incorrect statutes
2. Underestimation of share capital (CHF 20,000 is mandatory)
3. Missing reports to AHV, tax office or value added tax
4. Incorrect or unclear transfer of assets
5. Non-adjusted contracts (rental agreement, customer contracts, etc.)
   
   

These errors could result in delays, additional costs, or tax issues.

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Step-by-step: This is how the transformation is successful

1. Create an opening balance sheet: You record the assets and liabilities of your sole proprietorship.
2. Valuation of assets: Depending on the case, by a trustee or auditor (particularly in the case of contributions in kind).
3. Create statutes & founding documents: Legally correct and tailored to your situation.
4. Deposit share capital: Cash or in kind, including bank or audit confirmation.
5. Notarial certification: The GmbH must be established by a notary.
6. Entry in the commercial register: The GmbH is only legally established upon entry.
7. Reports to authorities: AHV, tax office, VAT (if relevant).
8. Deletion of the sole proprietorship: After successful GmbH registration.
   
   

Practical example

An IT consultant transforms his sole proprietorship into ABC Consulting GmbH.

He brings in existing customer contracts and working capital as a contribution in kind, pays in CHF 20,000 share capital and has the GmbH entered in the commercial register.

The result: limitation of liability, professional market presence and improved scalability.

Conclusion

The transformation of a sole proprietorship into a limited liability company in Switzerland has clear advantages, but requires proper planning and correct implementation.

With complete documents, the correct structure and professional support, the process can be implemented efficiently and in a legally secure manner.

At MKY Group, the transformation is not only formally supported, but also viewed holistically - including taxes, accounting and long-term corporate structure.

If you structure correctly early on, you save time, money and risks later on.