Self-employed in Switzerland: what you need to know before you start

The idea of working for yourself appeals to many people in Switzerland. More freedom, more autonomy, the chance to build your own client base. But there is an important difference between starting to provide a service and running a properly structured self-employed activity.

We often hear: "I already have clients and I issue invoices, so I am self-employed." Not necessarily.

For Swiss social security contributions, it is not the worker who unilaterally decides that they are self-employed. The classification is made by the relevant Ausgleichskasse, the compensation office. Official AHV/IV information states that the compensation office determines whether a person is considered self-employed.

Indicators of self-employed activity include, for example: acting in your own name towards third parties; issuing invoices in your own name; bearing your own economic risk; making investments and financing your own working tools; the risk that clients do not pay; freedom in organising the work; and having several clients.

Having several clients is particularly relevant. According to AHV/IV, working for several clients is normally an indicator of independence; working for only one client tends, by contrast, to point to a dependent employment relationship.

This means that having registered an activity, created a logo or started issuing invoices does not automatically settle the question of your social security status.

As an employee, the employer normally deducts social security contributions from the salary and pays them to the compensation office together with its own share. For a self-employed person it works differently: you must register with the competent compensation office yourself and you are responsible for paying your contributions.

People carrying out self-employed activity in Switzerland are subject to AHV/IV/EO contributions. In 2026, the maximum combined rate applicable to income from self-employment is 10%. For annual income below CHF 60,500 a declining contribution scale applies. Administrative contributions and other applicable contributions may also arise.

This is one reason we recommend that a self-employed person does not confuse turnover, profit and money available to spend. Part of the result of the activity will have to fund taxes, social contributions and other obligations.

A GmbH is not required. A person can carry out the activity through a sole proprietorship — Einzelfirma — one of the simplest ways to start a business in Switzerland.

But simplicity has an important consequence: in a sole proprietorship there is no complete legal separation between the person and the business. The Confederation's SME Portal points out that, legally, the sole trader cannot separate private assets from business assets in the way a capital company can. This matters a great deal when assessing the risks of the activity.

A sole proprietorship can be perfectly suitable for many professional activities, but that does not make it automatically the ideal structure for all of them. As the business grows, it may make sense to revisit the legal form.

On the commercial register there is also some confusion. For a sole proprietorship, entry in the Handelsregister is not necessarily mandatory from the first franc invoiced. According to the Confederation's SME Portal, a sole proprietorship with annual turnover below CHF 100,000 is in principle not required to register, although it may choose to do so.

Voluntary registration can bring advantages in commercial presentation, name protection and credibility towards third parties, but it also produces legal and administrative consequences that must be considered. The question is therefore not simply "can I register?" but also "does it make sense at this stage of my activity?".

Starting small does not mean working without accounting organisation. The business owner must be able to see: how much did I invoice, how much did I spend, how much did I actually earn, how much should I set aside for taxes and contributions, who still owes me money, and which expenses genuinely belong to the activity.

The Confederation's SME Portal indicates that, up to a certain turnover level, self-employed people can benefit from simplified accounting covering in particular assets and liabilities, income and expenditure, and private withdrawals. Above CHF 500,000 of turnover, full accounting under the applicable rules becomes necessary. Relevant business documents must generally be kept for at least ten years.

Our advice? Do not wait until CHF 500,000 to organise your accounting. Good organisation should exist from the first invoice.

Even in a sole proprietorship, where owner and business are closely linked in law, we recommend a clear separation in day-to-day management: an account used for the activity, organised professional documentation, numbered invoices, filed receipts, identified private withdrawals and properly documented business expenses.

Imagine trying to reconstruct hundreds of bank movements at year-end to work out: "was this CHF 186 payment private or professional?" That is unnecessary work which good organisation avoids. Accounting does not start with the tax return — it starts the moment you receive or spend the first franc of the activity.

This is one of the most important questions for a growing activity.

In general, a business reaching the relevant legal threshold of CHF 100,000 in turnover from the services counted for that purpose becomes subject to VAT, subject to the exceptions provided by law. If it is already foreseeable at the start of the activity that the relevant threshold will be exceeded, a registration obligation may exist from the outset. The Federal Tax Administration currently confirms this general threshold of CHF 100,000, although exceptions and specific rules apply depending on the activity.

This means we should not simply wait to see CHF 100,000 arrive in the account and only then start thinking about VAT. Growth must be monitored. If a business has already invoiced CHF 70,000 by June and keeps growing quickly, the VAT question deserves immediate attention.

This mistake is very common among new business owners. From an annual turnover of CHF 100,000 there may still come: business expenses, rent, equipment, software, telephone, vehicle and travel where applicable, insurance, advertising, external services, social contributions and taxes.

The amount arriving in the account is not automatically income available for private consumption. A sustainable activity should therefore track at least three indicators — turnover, costs and result — and ideally liquidity too. A business can show a profit and still face cash-flow difficulties if clients are slow to pay.

In a sole proprietorship, the result of the activity has consequences for the owner's personal taxation. That is why it is important to keep organised accounts that allow income and expenses related to the activity to be determined properly.

One of the most dangerous mistakes is to use all the available money during the year and forget that taxes and social contribution adjustments may arrive later. Good management includes reserving liquidity for these obligations.

This point deserves particular attention. According to AHV/IV, self-employed people are subject to AHV/IV/EO but are not compulsorily insured against unemployment or accident in the same way as an employee, and are not subject to the mandatory occupational pension regime.

This raises an important question: if you cannot work, who replaces your income?

For a self-employed person, a prolonged illness can have two simultaneous consequences: you stop working and you stop invoicing. But private expenses continue, and some business expenses do too.

A protection analysis for a self-employed person may therefore include, depending on the situation: accident, incapacity for work, loss of earnings through illness, professional and business liability, legal protection, pension provision, and protection in the event of disability or death.

This does not mean everyone needs the same cover. It means precisely the opposite: risks must be analysed individually.

This is usually where the activity takes an administrative leap. There is no longer just a business owner: there is an employer.

With employees, additional obligations may arise relating to salaries, AHV/IV/EO, accident insurance, occupational pension where applicable, withholding tax where applicable, salary certificates, holidays and absences, personnel administration and other employment obligations.

Hiring someone should therefore not be seen simply as "I will pay CHF X in salary". The cost of an employee is not only the agreed salary. Before hiring, it is advisable to calculate the total cost to the business.