Swiss Entity Types Compared: AG vs GmbH vs Sole Proprietorship

Choosing the right legal entity is the most consequential decision when forming a Swiss company. The structure you pick determines your liability exposure, tax treatment, capital requirements, and operational flexibility. Switzerland offers nine principal entity types, each suited to different business models, ownership preferences, and risk profiles.

For a full overview of company formation options, see our company formation guide.

Choosing the Right Swiss Entity

Swiss law provides a broad range of legal forms under the Code of Obligations (CO) and the Civil Code (ZGB). The choice is not purely academic — it affects everything from how you raise capital to what happens if the business fails.

The most common entities for commercial activity are the AG (Aktiengesellschaft) and the GmbH. Together they account for over 80% of Swiss commercial register entries. But other structures — sole proprietorships, cooperatives, foundations, and partnerships — each fill specific niches that these two standard forms cannot.

Comparison Matrix: All Swiss Legal Forms

Feature	AG	GmbH	Sole Prop.	Cooperative	Foundation	Verein	Ltd Partnership
Min. capital	CHF 100,000	CHF 20,000	None	None	Purpose-dependent	None	None
Liability	Limited to capital	Limited to capital	Unlimited personal	Limited to capital	No owners	Members liable per statutes	General partner unlimited
Shareholders visible	No (register)	Yes (register)	N/A	Members not public	No owners	Members not public	Partners in register
Audit required	Size-dependent	Size-dependent	No	Size-dependent	Supervisory authority	No	No
Formation time	2–4 weeks	2–4 weeks	1 day	3–6 weeks	4–8 weeks	1 day	2–4 weeks
Notarisation	Yes	Yes	No	Yes	Yes	No	Yes
Best for	Large businesses, holdings	SMEs, startups	Freelancers	Member organisations	Charitable purposes	Clubs, NGOs	Family businesses

AG (Aktiengesellschaft)

The AG is Switzerland’s premier corporate form. It requires CHF 100,000 in share capital (CHF 50,000 paid in at formation) and is governed by a board of directors with at least one Swiss-resident member.

Key advantages include shareholder anonymity (shares are registered but not publicly disclosed below the 25% beneficial ownership threshold), ease of share transfer, and a well-established legal framework. The AG is the default choice for holding structures, public offerings, and businesses planning to scale internationally.

The AG carries higher formation and maintenance costs compared to the GmbH. Annual accounting, board minutes, and potential audit obligations add to the administrative burden.

GmbH (Gesellschaft mit beschränkter Haftung)

The GmbH is the most popular entity for SMEs and startups. Minimum capital is CHF 20,000, fully paid up at formation. Each quota holder (Gesellschafter) is listed by name in the commercial register — there is no anonymity.

Transfer of quotas requires written form and, unless the articles state otherwise, approval by a shareholders’ meeting with a two-thirds majority. This makes the GmbH less flexible than the AG for investor entry and exit, but it also provides built-in protection against unwanted ownership changes.

For most small to mid-sized commercial ventures in Switzerland, the GmbH offers the best balance of limited liability, manageable capital requirements, and straightforward governance.

Sole Proprietorship (Einzelunternehmen)

A sole proprietorship is the simplest form. No minimum capital, no notarisation, no articles of association. Registration in the commercial register becomes mandatory only when annual revenue exceeds CHF 100,000.

The critical trade-off is unlimited personal liability. The owner’s private assets — home, savings, personal property — are fully exposed to business creditors. This makes sole proprietorships appropriate for low-risk service businesses, freelance consultants, and early-stage ventures that plan to incorporate once revenue justifies it.

Tax treatment is also different: business income flows directly to the owner’s personal tax return. There is no separate corporate tax. Depending on income levels and canton, this can be advantageous or disadvantageous compared to a GmbH.

Cooperative (Genossenschaft)

The Swiss cooperative is a democratic entity where each member holds one vote regardless of capital contribution. It requires at least seven members (or three if the articles allow) and is governed by a general meeting.

Cooperatives are well-suited to agricultural organisations, housing associations, retail groups (Migros is a cooperative), and professional collaborations. They are not ideal for attracting outside investment because the one-member-one-vote structure limits investor control.

Capital structure is flexible — members contribute through membership certificates, and no minimum capital is prescribed by law. However, the cooperative must maintain adequate reserves.

Foundations and Associations

Foundations (Stiftungen)

A Swiss foundation is not a company in the commercial sense. It is a legally independent pool of assets dedicated to a specific purpose. Once established, the founder loses control over the assets — they belong to the foundation irrevocably.

Foundations are subject to supervisory authority oversight (federal or cantonal, depending on scope). They are appropriate for charitable, educational, cultural, or family purposes. A Swiss foundation cannot distribute profits to founders or beneficiaries in the commercial sense.

Associations (Verein)

The Verein is governed by ZGB Art. 60ff and is remarkably easy to form — two or more persons adopt written statutes, and the association exists. No registration is required unless the Verein conducts commercial activities.

Associations are standard for sports clubs, industry bodies, charitable organisations, and political parties. They can hold assets, employ staff, and enter contracts. However, members may be personally liable for obligations unless the statutes explicitly limit liability.

Partnership Structures

Limited Partnership (Kommanditgesellschaft)

A limited partnership combines at least one general partner (unlimited liability) with one or more limited partners (liability restricted to their contribution). This structure is used in family businesses, real estate ventures, and private equity fund arrangements.

The general partner manages the business; limited partners are passive investors. This separation of management and investment makes the KmG useful when one party provides expertise and another provides capital.

Joint Ventures

A joint venture is not a distinct legal form under Swiss law. Instead, joint ventures are structured as contractual arrangements (simple partnerships under CO Art. 530ff) or through a jointly-owned AG or GmbH. The structure depends on the parties’ needs for liability separation, tax efficiency, and exit mechanisms.

Decision Framework

Choose an AG if: you need shareholder privacy, plan to raise capital from multiple investors, want to create a holding structure, or anticipate an IPO.

Choose a GmbH if: you are starting a small or medium business, want limited liability at lower cost, and are comfortable with public quota holder disclosure.

Choose a sole proprietorship if: you are a freelancer or consultant with low liability risk and want the simplest possible structure.

Choose a cooperative if: your venture is member-driven, democratic governance matters, and profit maximisation is not the primary goal.

Choose a foundation if: you want to dedicate assets irrevocably to a charitable, cultural, or family purpose.

Choose a Verein if: you are forming a club, industry body, or non-profit and need a flexible, low-cost structure.

Choose a limited partnership if: you need to combine active management by one partner with passive investment from others.

The right entity depends on your specific circumstances — capital available, number of founders, liability tolerance, privacy needs, and long-term growth plans. Getting this decision right at the outset saves significant restructuring costs later.

Frequently Asked Questions