Knowledge

Changing Your Business Structure in Switzerland

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Though not a common process, changing the legal entity structure of a business in Switzerland is possible. Entrepreneurs who have opened a company in Switzerland are allowed to change the legal structure of the company they formed in Switzerland if needed.
 Most of the businesses remain under the same structure they’ve established at the incorporation, therefore it is recommended to change the business structure when the current legal entity does not provide sufficient advantages or if that particular entity is no longer representing the interests of the company due to a change of activity domain.
The first most common change of business structure is from sole proprietorship to Limited Liability Company. Another business structure change is also from sole proprietorship to Public Limited Company (AG)
Sole proprietorship is established by a private individual engaging in commercial activity. No minimum capital is required at the registration of it. The name of the firm consists at least of the owner’s surname. The owner has unlimited liability, including private assets.
A limited liability company is a business with its own legal identity and can be formed by two or more people with nominal capital. In case of bankruptcy, those that own a limited liability company only risk the capital they invested and not their personal assets. If on a sole proprietorship the owner can be just one, on a limited liability company, additional people may have stakes in the company.
Unlike a sole proprietorship, the partners have complete freedom when deciding the company name. The initial capital needed to open a limited liability company is at least 20,000 CHF. 
The public limited company (AG) is the most frequently used business design and is the most commonly used business structure for financial companies, thus the change from sole proprietorship to AG. It is also a suitable design for small-to medium-sized businesses as well.
As with limited liability companies, the owners of a public limited company are not liable for its actions as the corporation has its own legal identity. A public limited company’s liabilities should be completely covered by its own assets.
This is why this kind of changes will expand the business, make available more funding options, provide legal protection to assets, better risk-manage liabilities, enjoy corporate tax incentives, attract investors and recruit quality talent.
The sole proprietorship owner can switch its business to LLC if the entity has at least tree clients at any time.
In order for the change to happen, some steps are required to be followed:
1.       The closure of the current legal entity will be needed. The company will have to be unregistered from the Commercial Registry.
2.       Registration under the new legal entity with all the documentation required by the institution, same as in the case of company formation process.
3.       After the share capital has been deposited in the newly created capital account and the documents have been prepared, executed and submitted to the Commercial Register, the registration of the company shall take 5 to 10 days.
Though the process is quite straight forward, the assistance of a company specialized in this kind of activities might turn out to be a fastest and easiest way for the business change to happen. 

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