Becoming self-employed in Switzerland

I couldn't help but wonder: Is becoming self-employed like being newly single...?

When it no longer fits, a break-up can feel really liberating. Suddenly we are independent again and we can design our lives the way we want to. This doesn't just apply when a relationship comes to an end: starting self-employment also means more freedom. Becoming self-employed in Switzerland is pretty easy. However, being and remaining successful is not a given - just like being happy as a newly single person.

We help you to ensure that nothing is overlooked on your path to self-employment: from tax and insurance to the risk of bogus self-employment.

Becoming self-employed - with just an idea?

A separation rarely comes out of nowhere. The desire often grows within, like a good idea. Many people feel the same way about self-employment - and then everything suddenly happens very quickly. You don't need a trade licence to become self-employed in Switzerland. And a permit is only required for regulated professions, such as e.g. doctors or notaries.

Most people can just get up in the morning and decide: I am self-employed and free.

Many only realise what it really means afterwards: Then - even if it was a good decision - you might end up sitting on the couch with ice cream, potato chips and wine to watch Bridget Jones. Because despite all the independence, there is suddenly a lot to consider and decide.

After a break-up, hopefully your best friend will be there to support you. When it comes to your self-employment, we are the BFF. Let's take the first steps together.

The most important steps to self-employment

Suddenly alone - that is exciting and new. Some love it, others find it scary. But everyone faces the same challenges. While there is no right or wrong for singles, the self-employed have an advantage: there are clear guidelines they should stick to.

The following 5 steps are particularly important at the beginning.

1. Being truly self-employed

Sounds like a given, but it's not: to be self-employed, you really need to become self-employed. Maybe you're not really single if you spend every day with your ex? If you're just pretending it's over and done with, you may find yourself in bogus self-employment. 

To avoid this, the following criteria are important:

• Self-employed people operate under their own name. After all, we don't present ourselves as our ex's ex, but as ourselves.

• Self-employed people have several customers and clients. They are not dependent on one company. What this means for singles is left to the imagination.

• Self-employed people bear the economic risk themselves - so they also acquire their customers independently. Just like your ex doesn't organise the date with your new partner. 

• Self-employed people often have their own office, rent a workshop or employ staff. This shows how freely they organise their (professional) life.

  
  

So being self-employed means being truly independent. And that's one of the best things about it. Nevertheless, someone is keeping an eye on you, because a little security is always a good thing.

2. Insuring yourself as a self-employed person

It is not enough to affirm yourself in front of the mirror: I am self-employed and free. You have to make it official. The most important thing is social insurance. Self-employed people must register with the compensation office (“Ausgleichskasse”) of their respective canton. They are also like a good friend, because they look out for you in two ways.

The compensation office checks whether you really fulfil the criteria for self-employment. This is for your protection, as it is intended to prevent you from being forced into bogus self-employment. For example, as a ‘freelance’ graphic designer who works 50 hours a week for a company or as a dance teacher who only teaches in one studio - without having own clients.

Once you have become self-employed, you register with the compensation office using a form. The first invoices or orders from several clients, for example, are important to prove your self-employment. If the application is approved, you will receive regular prepayment invoices for your insurance contributions. A final invoice is then issued annually once your annual income has been determined.

By the way: You can also register with the compensation office if you are self-employed as a secondary occupation. This is mandatory if you earn CHF 2,500 or more.

3. Thinking about the future

In addition to compulsory social insurance, there are other types of insurance that can be useful for self-employed people. This applies above all to pension planning. Because no matter how long you remain (professionally) alone: You should always make arrangements for old age.

There are some pension funds that specialize in SMEs and the self-employed. Alternatively, the self-employed can pay up to five times more into pillar 3a, depending on their situation. In addition, accident insurance, daily sickness benefits insurance, liability insurance and legal expenses insurance, for example, may be important. It all depends on your situation and your need for security.

Pension planning in particular is a topic where many people would like a shoulder to lean on - because self-employed people have to make a lot more decisions in this area. At taxum AG are happy to help you with planning your insurances. Because the big questions in life are best not asked alone.

4. Talking about self-employment

As newly single people, our glow-up shows the world that we are solo again. We want to shout from the rooftops of Zurich that we're making a fresh start. You can also tell people about it when you become self-employed - in some cases this is actually mandatory.

Self-employed persons can be entered in the Swiss commercial register. This is mandatory above certain turnover limits and under other conditions. However, registration is always possible and can contribute to a good reputation, for example.

The situation is similar with VAT: everyone can and some must register for VAT. In any case, you are liable for VAT if you have an annual turnover of CHF 100,000 or more for services in Switzerland. Particularly important:If you put VAT on your invoices and claim it from your customers, you must of course also pay it!

5. Taking taxes into your own hands

You are only completely free and independent until the tax authorities come knocking. So we'd better get in touch with them proactively. Once you become self-employed, you have to fill in an additional form in your tax return. This is used to determine your taxable income.

Completing “Form A” is much easier if you keep it in mind throughout the year. Every self-employed person in Switzerland is allowed to keep commercial accounts. However, a chart of accounts, a balance sheet and an income statement are only required above certain turnover limits.

Most self-employed people are allowed to keep "simple accounts". Affectionately known as "Milchbüechli", simple bookkeeping consists of income and expenditure, without a lot of fuss. Nevertheless, it is important to think about this right from the start. After all, deductions are only made if there is a receipt.

Clean bookkeeping requires order and discipline, or you will end up with a box of receipts at the end of the year. Because self-employed people have other things to worry about, we are happy to help you keep your books and taxes in order at all times After all, your tax is our business.

Becoming self-employed - or founding a company?

Be single and enjoy the freedom. That can be nice, but it's not the right path for everyone. If you would prefer something more permanent, you could consider starting your own business instead. Because it's like a new relationship - on your terms.

There is no general answer as to when starting a corporation makes sense. Operating as a legal entity can have advantages and disadvantages. Let's find out together whether you should be self-employed or set up your own company.

Self-employed, but not alone

A new beginning is all the more beautiful if you design it according to your needs. In love, this can mean letting go of old burdens and starting a new chapter on your own. In self-employment, it also means making many decisions. In addition to the initial idea, insurances, your pension planning and proper bookkeeping are also important for success. You may be travelling solo, but you are not alone. In all tax matters, and far beyond, taxum AG is at your side while you become and remain self-employed.

And just like that, self-employment is thrilling - in a good way.