Sole proprietorship or GmbH? The most important differences
Sole proprietorship or GmbH?
In Switzerland, founders are usually faced with the question: Sole proprietorship or GmbH? Both legal forms are popular — but differ greatly in terms of liability, costs, growth opportunities and reputation.
What is a sole proprietorship?
One sole proprietorship Belongs to a single person. She is to set up quickly and cheaply. The legal form is ideal for freelancers, consultants or small retail businesses — especially if you offer the work as a part-time job.
✅ Benefits
- Very low start-up costs
- Easy administration
- Ideal for testing a local market
- Test your business model
⚠️ Disadvantages
- Unlimited personal liability
- More unprofessional public image
- Finding investors more difficult or impossible
What is a GmbH?
A limited liability company is a legal entity and requires a minimum share capital of CHF 20,000. It is suitable for growing companies or teams.
✅ Benefits
- Limited liability to company assets
- Looks professional
- Easier to issue investments
⚠️ Disadvantages
- Higher start-up costs
- More formalities
- Transfer of shares more complex than with the AG
Example
A small trading company starts as a sole proprietorship — quickly and without major costs. As it grows, it wants to attract investors and reduce personal risks → Transformation into a GmbH becomes useful.
Which shape suits me?
- Sole proprietorshipif you want to get started quickly and have small risks.
- Limited liability company (GmbH), if you want to appear professional, grow, or not risk your private assets.
Tip: The GmbH is often the better choice for long-term growth and security. Some companies do not hire sole proprietorships because they have the image of hobby businesses in certain circles.
Conclusion
Both legal forms have clear advantages and disadvantages. The choice depends on budget, liability, and growth plans.
