Sole proprietorship (Einzelunternehmen, raison individuelle)

How a sole proprietorship works under Swiss law

A sole proprietorship is the legal form of one natural person who runs a business alone. The business has no legal personality of its own: its contracts and debts belong to the owner, and its profit is taxed as the owner's income. No minimum capital and no founding deed are required, which makes it the usual starting form for tradespeople and freelance consultants.

The owner is liable for the business's debts with all personal assets, savings and a family home included. An owner entered in the commercial register is subject to bankruptcy proceedings (Art. 39 SchKG) and remains so for six months after the deletion is published (Art. 40 SchKG). Debt collection against an unregistered self-employed person proceeds by seizure of assets.

When registration is mandatory

Under Art. 931 CO, a sole proprietorship must be entered in the commercial register where it is established once it has earned at least CHF 100,000 of revenue in the previous financial year. Members of the liberal professions and farmers are exempt unless they run their business on commercial lines. Below the threshold registration is voluntary (Art. 931 para. 3 CO), and some owners register anyway to protect their business name or to reassure banks and clients. Each entry receives a UID in the form CHE-123.456.789, which you can look up in the Swiss UID register.

The business name must contain the owner's surname, with or without first name (Art. 945 CO). An activity or a fantasy element can be added if it is truthful (Art. 944 CO) and does not suggest a partnership or a company. Schreinerei Muster and Anna Muster Design are accepted; Muster & Partner suggests several owners and is refused for a sole proprietor.

In the commercial register and the SHAB

The entry lists the business name, the registered office, the address, the purpose and the owner, usually recorded as Inhaber or Inhaberin with sole signature. The owner can give employees signing powers, for example a Prokura, and those people then appear in the entry with their own type of signature. Every registration, change and deletion is published in the Swiss Official Gazette of Commerce (SHAB, FOSC in French, FUSC in Italian).

A sole proprietorship ends when the owner stops the activity, dies or transfers the business to a company. Owners of a growing business often move its assets and liabilities into a new GmbH to limit their liability; the sole proprietorship is then removed from the register and a deletion notice appears in the SHAB. When a second person joins as co-owner, the business becomes a general partnership with an entry of its own.

What to check when dealing with one

• The contract partner: you contract with the owner personally, the person named in the entry.
• Size: the entry shows no revenue. Registration becomes compulsory at CHF 100,000, but smaller businesses may register voluntarily, so an entry alone says little about size.
• Accounts: with revenue below CHF 500,000 the owner may keep simplified accounts of income, expenditure and assets (Art. 957 CO). Swiss register entries carry no financial statements for any legal form.
• Recent notices: a new address, a new proxy or a deletion in the SHAB tells you more about the current state of the business than its founding date. The guide to checking a Swiss company walks through the steps.