The tradesperson in Switzerland: legal form and obligations

The tradesperson — electrician, carpenter, bricklayer, installer, hairdresser — is the backbone of the Swiss economy. Starting a trade business is simpler than setting up a structured company, but “simple” does not mean “without rules”. The legal form, social obligations and the way liability is managed decide whether the trade becomes a solid business or a personal risk. Here is what to know before putting your first van on the road.

Sole proprietorship: the natural start

Most tradespeople start out as a sole proprietorship. It requires no minimum capital, is set up without a notarial deed, and the owner is operational from day one. The business name must contain the owner’s surname.

The flip side is unlimited liability: the owner is liable for the business’s debts with their entire personal assets. For a tradesperson working on building sites, on third-party premises or with machinery, this is anything but a theoretical point. Entry in the commercial register becomes mandatory above CHF 100,000 in annual turnover.

When it pays to switch to a GmbH

The GmbH requires a minimum capital of CHF 20,000, fully paid in, but offers two decisive advantages for those who are growing:

• liability limited to the share capital, which protects personal assets;
• a more solid image towards clients, banks and suppliers.

The switch makes sense when the business generates significant volumes, employs staff or takes on contracts with high liability risks. Many tradespeople start out as a sole proprietorship and convert to a GmbH when turnover justifies it.

Social insurance: this is where everything changes

This is the area where the self-employed tradesperson makes the most mistakes. As a self-employed person, social cover is different and lighter than that of an employee:

• AVS/AI/IPG (state pension, disability and loss-of-earnings compensation): mandatory contributions as a self-employed person, calculated on business income. They must be declared and paid to the compensation fund.
• ALV (unemployment insurance): the self-employed person is not insured. In the event of a downturn, they are not entitled to unemployment benefits.
• LPP (occupational pension): for the self-employed it is optional. Without a second pillar, retirement provision remains uncovered beyond the AVS.
• LAINF (accident insurance): the self-employed person must arrange their own accident cover, as they are not mandatorily insured like an employee.

Note: recognition of self-employed status by the compensation fund is not automatic. You have to demonstrate organisational autonomy, a plurality of clients and the assumption of business risk. Anyone who in practice works for a single client risks being classified as an employee.

If you hire staff

The moment the tradesperson hires even a single employee, their role changes: they become an employer with all the ensuing obligations. For staff, AVS/AI/IPG, ALV, LPP and LAINF become mandatory, with the employer’s share to be borne by them. Many trade sectors are also covered by a collective labour agreement that sets minimum wages and conditions: it must be checked and complied with.

VAT and accounting

The threshold for VAT (MWST) liability is CHF 100,000 in turnover; the standard rate is 8.1% as of 2024. Many tradespeople exceed it quickly, especially when working with materials. Below the threshold, liability is optional and is sometimes worthwhile anyway, in order to recover input tax on purchases.

On the accounting side: above CHF 500,000 in turnover, full double-entry accounting is mandatory; below that, simplified accounting of income, expenditure and assets is allowed. In any case, keeping the books in order is essential for managing liquidity and cost estimates.

Trade authorisations

Some trade professions require specific authorisations or qualification requirements: electrical installations, for example, require an installation permit; other trades require professional certificates. The rules vary by sector and sometimes by canton: they must be checked before accepting your first contracts.

The mistake to avoid: underestimating personal cover

The typical risk for the self-employed tradesperson is not fiscal, it is insurance-related. Without LPP, without adequate accident cover and without a safety net in the event of prolonged illness, an unexpected event can wipe out years of work. Setting up the right pension and insurance from the outset costs little; rebuilding it after an accident is impossible.

How SIH ONE approaches the topic

SIH ONE helps the tradesperson choose between a sole proprietorship and a GmbH based on risk, volumes and prospects, handles the incorporation and register entry, sets up the correct contribution status and structures VAT, accounting and payroll when the first staff arrive. The goal is a business that holds up even when something goes wrong.

Do you want to start your trade business with the right structure? Let’s talk about your project: the AI assistant answers straight away, and a professional gets back to you within a day.