Legal Structure in Vaud

Key Legal Structures for Businesses in Vaud

1. Sole Proprietorship (Entreprise individuelle)

A sole proprietorship is the simplest form of business structure, ideal for individual entrepreneurs or freelancers. It is easy to set up and manage, and there is no need for a minimum capital requirement.

• Advantages:
  • Simple registration process.
  • Low setup costs.
  • Full control of the business by the owner.
• Disadvantages:
  • Unlimited liability, meaning the owner is personally liable for any business debts.
  • Limited ability to raise capital.

2. Limited Liability Company (Sàrl – Société à Responsabilité Limitée)

The Sàrl is one of the most common business structures in Switzerland. It is well-suited for small and medium-sized enterprises (SMEs). The Sàrl offers limited liability protection to its owners, meaning their personal assets are not at risk in case of business failure.

• Advantages:
  • Limited liability for owners.
  • Flexibility in management and operation.
  • The minimum share capital required is CHF 20,000.
• Disadvantages:
  • More formalities and administrative requirements compared to a sole proprietorship.
  • Can be more costly to set up and manage than a sole proprietorship.

3. Public Limited Company (SA – Société Anonyme)

The SA is a more complex business structure typically used by larger companies or those looking to raise capital from public or institutional investors. It is ideal for businesses intending to grow significantly or list their shares on the stock exchange.

• Advantages:

  • Limited liability for shareholders.
  • Ability to raise capital through the sale of shares.
  • Suitable for large businesses or those with international aspirations.

• Disadvantages:

  • High minimum capital requirement of CHF 100,000.
  • More complex governance and regulatory compliance requirements.
  • Costs for setting up and maintaining the company are higher.

4. Partnership (Société en nom collectif – SNC)

A partnership in Vaud involves two or more individuals or entities coming together to operate a business. Partners share responsibility for the business’s debts and obligations. This structure is often used by professionals, such as lawyers or consultants.

• Advantages:

  • Relatively simple to set up.
  • Shared responsibility and expertise among partners.

• Disadvantages:

  • Unlimited liability, where each partner is personally liable for the business’s debts.
  • Potential for disputes between partners.

5. Branch of a Foreign Company

If you’re an international business looking to operate in Switzerland, you can set up a branch in Vaud. A branch does not require a separate legal entity from the parent company but must adhere to Swiss regulations.

• Advantages:
  • Relatively easy to establish for foreign businesses.
  • No need to create a new company, just a branch office.
• Disadvantages:
  • The parent company is still responsible for the liabilities of the branch.
  • Limited flexibility compared to setting up a separate legal entity.

Choosing the Right Legal Structure in Vaud

Selecting the best legal structure for your business in Vaud depends on several factors, including:

• Size and Type of Business: Small businesses or freelance operations may prefer a sole proprietorship, while larger companies or those seeking to raise capital might opt for an SA.
• Liability Concerns: If limiting personal liability is important to you, consider the Sàrl or SA.
• Capital Requirements: The Sàrl has a minimum capital requirement of CHF 20,000, while the SA requires CHF 100,000.
• Tax Considerations: Different structures may be subject to different tax rates and regulations. A tax advisor can help you assess the best structure for minimizing your tax burden.

Additional Considerations

• Corporate Governance: Each legal structure comes with different requirements for governance. For example, an SA needs a board of directors, while a sole proprietorship only requires the owner to make decisions.
• Permits and Licensing: Depending on the type of business, you may need special permits or licenses to operate in Vaud. Ensure you are aware of these requirements during the setup process.