Start a company and hire your first employee in Switzerland

Starting a business in Switzerland is quick and straightforward — between 2 and 4 weeks for an LLC. The real complexity comes when hiring the first employee: social insurance registration, pension fund, accident insurance, withholding tax… All these steps must be completed before the first salary payment.

This guide walks you through every step, from incorporating your company to issuing the first payslip.

1. Choose the legal structure

The choice of legal structure determines the required capital, degree of personal liability, and formation formalities. Three forms dominate in Switzerland:

Sole proprietorship

• No minimum capital, no notary required
• Commercial register entry only mandatory if turnover exceeds CHF 100,000
• Unlimited personal liability
• Entrepreneur pays AHV contributions as self-employed (rate of 10% of income)

Limited liability company (LLC / GmbH / Sàrl)

The most popular legal form in Switzerland (44% of new formations). Minimum capital of CHF 20,000, fully paid up at incorporation. A notary appointment is mandatory. Liability is limited to the share capital.

Approximate total cost of formation: CHF 1,700 to 2,500 (notary, commercial register, escrow account).

Corporation (AG / SA)

Minimum capital of CHF 100,000, of which CHF 50,000 paid up at incorporation. Notary appointment mandatory. Suitable for companies seeking external investors.

2. Register with the commercial register

For an LLC or corporation, registration with the commercial register is mandatory. The steps:

1. Draft the articles of association with the notary
2. Open an escrow bank account and deposit the capital
3. Sign the public deed at the notary's office
4. Submit the dossier to the commercial register (notarial deed, articles, bank certificate, declaration of beneficial owners)
5. Publication in the Swiss Official Gazette of Commerce (SOGC)

Timeline: approximately 10 business days after receipt of the complete dossier. The company receives a UID number (format CHE-XXX.XXX.XXX) used for all administrative dealings.

3. Register with a compensation office (AHV/IV/EO/ALV)

Every employer must register with a compensation office before paying the first salary. There are cantonal compensation offices and industry-specific inter-professional offices.

First pillar contributions total 12.80% of gross salary, split equally between employer and employee:

• AHV (old-age and survivors' insurance): 8.70% (4.35% employer + 4.35% employee)
• IV (disability insurance): 1.40% (0.70% + 0.70%)
• EO (income compensation allowances): 0.50% (0.25% + 0.25%)
• ALV (unemployment insurance): 2.20% (1.10% + 1.10%) — up to CHF 148,200/year

4. Mandatory insurance

Accident insurance (UVG/LAA)

Accident insurance is mandatory from the first employee. It covers occupational accidents (premium paid by the employer) and non-occupational accidents (premium paid by the employee, if working more than 8 hours per week). The maximum insured salary is CHF 148,200/year.

The insurer is SUVA for industry, construction and many sectors, or a private insurer for other sectors.

Occupational pension (BVG/LPP — 2nd pillar)

Pension fund affiliation is mandatory for every employee with an annual salary above CHF 22,680. Retirement credits vary by age: 7% (25-34), 10% (35-44), 15% (45-54) and 18% (55+) of the coordinated salary. The employer's share must be at least equal to the employee's share.

Daily sickness benefits insurance (KTG/IJM)

Although not legally mandatory, this insurance is strongly recommended. Without it, the employer must continue paying the salary during illness according to the Bern Scale (duration increases with years of service). The market standard is 80% of gross salary coverage for 720 days, with premiums typically split 50/50.

5. Hire your first employee

A written employment contract is not legally required (an oral agreement is valid), but is strongly recommended. Article 330b CO requires written information on the essential terms.

Key contract elements:

• Identity of the parties and start date
• Role and job description
• Gross salary and supplements (13th month salary, bonuses)
• Weekly working hours
• Holidays (legal minimum: 4 weeks/year; 5 weeks for employees under 20)
• Notice period and reference to any applicable CLA

The probation period is 1 month by default, extendable to 3 months by written agreement.

Steps when hiring

1. Verify residence/work permit (foreign nationals)
2. Obtain the employee's AHV number (AHVN13)
3. Register the employee with the AHV compensation office
4. Affiliate the employee with the pension fund (BVG) if salary > CHF 22,680/year
5. Register the employee with the accident insurer (UVG)
6. If no C permit: register with the cantonal tax authority for withholding tax

6. Withholding tax

Foreign employees without a C permit (B, L, G permits) are subject to withholding tax. The employer must:

1. Report each affected employee to the cantonal tax authority
2. Calculate the tax monthly according to the applicable tariff (A, B, C, H depending on marital status and number of children)
3. Deduct the amount from the employee's salary
4. Remit monthly to the tax authority (generally before the 15th or 20th of the following month)

The employer receives a collection commission of 1 to 2% of the tax withheld. Using Swissdec-certified software is strongly recommended.

7. VAT

VAT registration is mandatory once annual turnover exceeds CHF 100,000. Below this threshold, registration is voluntary.

Current rates since January 1, 2024:

• 8.1% — standard rate (most goods and services)
• 2.6% — reduced rate (food, medicine, books)
• 3.8% — accommodation (hotel overnight stays)

Registration is done through the FTA ePortal, within 30 days of exceeding the threshold. Since January 1, 2025, declarations must be filed online.

8. Family allowances

Family allowances are funded exclusively by the employer (rate of approximately 2.25% of the payroll in the Canton of Fribourg). Registration with a family compensation fund (CAF) is mandatory from the first employee, even if none have children.

Federal minimum amounts 2025:

• Child allowance (0–15 years): CHF 215/month
• Education allowance (15–25 years): CHF 268/month

Some cantons, like Fribourg, pay higher amounts (CHF 265/month for children, CHF 325/month for education).

9. Creating payslips

Each month, the employer must issue a payslip detailing the gross salary, deductions, and net salary. Elements of a typical payslip:

• Gross salary: base salary + supplements (13th month, bonuses)
• AHV/IV/EO: 5.30% of gross salary (employee share)
• ALV: 1.10% of gross salary
• BVG: variable depending on age and chosen plan
• UVG-NBU: variable depending on insurer (approx. 0.80%)
• KTG: variable (approx. 0.50 to 1.00%)
• Withholding tax: per tariff (if applicable)
• Family allowances: added to net pay if entitled

At year-end, the employer must provide each employee with an annual salary certificate (end of January) and submit it to the tax authority (February 28).

Summary checklist

Here is a summary of all required steps in chronological order:

Before incorporation

• Choose the legal structure (sole proprietorship, LLC or corporation)
• Check company name availability (zefix.ch)
• Draft articles of association with a notary (LLC/corporation)
• Open an escrow account and deposit the capital
• Sign the deed of incorporation and submit to the commercial register

After commercial register entry

• Register with an AHV compensation office
• Register with a family compensation fund (CAF)
• Sign a contract with a pension fund (BVG)
• Take out accident insurance (UVG) — SUVA or private insurer
• Take out daily sickness benefits insurance (KTG)
• Check if turnover reaches the VAT threshold (CHF 100,000)

Before the first working day

• Draft and sign the employment contract
• Verify work permit (foreign nationals)
• Obtain the employee's AHV number (AHVN13)
• Register the employee with AHV, pension fund and UVG
• Register for withholding tax with the tax authority (if applicable)
• Set up payslip software

Ongoing obligations

• Every month: payslips, AHV/ALV installments, withholding tax
• Before January 30: annual salary declaration to the AHV fund
• End of January: salary certificates to employees
• February 28: salary certificates to the tax authority
• Annually: payroll to UVG insurer and pension fund