The most important points at a glance

• As a sole proprietor, you are personally responsible for your retirement planning, taxes, and insurance.

• Your work must be recognized as self-employment under social security law—this is not automatically the case.

• You are personally and fully liable with your private assets.

• Self-employment as a primary occupation and as a secondary occupation are subject to different rules
  

What does self-employment mean legally?

As a self-employed person, you work on your own account and at your own risk. You act as an entrepreneur in the market and operate independently in this capacity. Self-employment applies in particular if you:

• Offer and bill for services yourself.

• Bear the financial risk yourself (e.g., in the event of a lack of orders or non-payment).

• Are not integrated into a client’s organization and are not bound by instructions in the performance of your work.
  

Whether an activity is recognized as self-employment is assessed by the compensation office on a case-by-case basis based on the actual economic circumstances. What matters is not the chosen designation, but how the activity is actually structured.

What changes compared to being an employee?

As an employee, your employer covers a large portion of your social insurance contributions and arranges your work-related insurance. As a self-employed person, you are fully responsible for this yourself.

Social Insurance

You must register yourself with the SVA Zurich or, if you are a member of a start-up association, with the relevant association compensation fund, and pay the contributions to the Old Age and Survivors’ Insurance (AHV), the Disability Insurance (IV), and the Income Compensation Scheme (EO) entirely on your own. There is no employer contribution.

Taxes

As a self-employed person, your business income and your private assets are taxed together. You must file your own tax return and, as a rule, make advance payments. Bookkeeping and consulting a tax advisor are therefore recommended.

The final tax assessment forms the basis for the definitive calculation of your AHV contributions as a self-employed person. The compensation office initially collects contributions on a provisional basis. However, you are required to notify the compensation office of any significant changes in your income in a timely manner so that the estimated contributions can be adjusted.

Value-Added Tax

VAT liability applies to annual turnover of 100,000 Swiss francs or more. You must then register with the Federal Tax Administration (FTA) within 30 days. Below this threshold, you are exempt from VAT but may register voluntarily.

Occupational Pension

The pension fund (2nd pillar) is voluntary for self-employed individuals. You can join the Swiss Pension Fund, the pension fund of your professional association, the pension fund of your employees if you have staff, or the Substitute Occupational Pension Fund. Without a pension fund, you have less coverage in the event of old age, disability, or death than you did previously as an employee.

Insurance

You should consider the following types of insurance:

• Daily sickness benefit insurance: Protects you against loss of income in the event of illness. Not required by law, but recommended.

• Accident insurance: Mandatory as soon as you hire employees. Voluntary for yourself.

• Liability insurance: Necessary or required depending on your field of work.

Related Topics

Would you like to start a sole proprietorship or become self-employed as a side business? Here you’ll find the right information for your path.

Note:
The information on this page is for guidance only and is not exhaustive. Details should be clarified with experts or the relevant authorities as early as possible.

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