Lesson 2: Business associations
1 Sole proprietorship
advantages
-very flexible
-the business can be sold or transferred to another party at any time
disadvantages
-the burden of bearing any losses or liabilities
-the lack of continuity
-assets consisting of personal funds and funds of those willing to make loans
legal requirements
number of owners: one natural person
minimum capital: none
entry in the Commercial Register: only mandatory for over CHF 100’000 yearly revenue
liability: unlimited liability with personal assets
management: owner
corporate bodies: none
sharing profits and losses: fully with the sole proprietor
taxation: personal income taxes on the business’s profits
2 Ordinary association
-consists of two or more natural persons who want to achieve a common goal
-limited period (e.g., construction consortiums, students organizing a party)
-no business name, no own legal personality
-equal rights in the management, sharing profits and losses
-not suited to run a commercial business
3 Partnership
general partnership
number of owners: two or more natural persons
minimum capital: none
entry in the Commercial Register: mandatory
Lesson 2 1/6
, liability: primary liability of the partnership’s assets, subsidiary unlimited joint, and several
liability of each partner with their personal assets
management: everyone
corporate bodies: partners
sharing profits and losses: shared equally
taxation: “pass-through” entity, only a partner’s profit from the partnership is taxed as
individual income to the partner
advantages
-taxes; pass-through entity, only a partner’s profit from the partnership is taxed as individual
income to the partner
-greater capital contributions
disadvantages
-the personal liability of partners for partnership obligations (joint, several and unlimited)
-the lack of continuity
limited partnership
special form of partnership consisting of one or more general partners and one or more
limited partners
4 Corporations
number of owners: one or more natural persons or legal entities
minimum capital: CHF 100’000
entry in the Commercial Register: mandatory
liability: limited to the amount of investment
management: the board of directors and executive board
corporate bodies: general assembly, board of directors, auditing body
sharing profits and losses: profits are passed on to shareholders or to retained earnings
taxation: double taxation, corporate profits and dividends paid to shareholders are taxed
establishment
1. share capital
-an auditor has to examine the founder’s report and confirms its completeness and accuracy
-capital fluctuation margin: authorizes the Board of Directors to increase or decrease the
corporation’s capital for a maximum of five years
Lesson 2 2/6
1 Sole proprietorship
advantages
-very flexible
-the business can be sold or transferred to another party at any time
disadvantages
-the burden of bearing any losses or liabilities
-the lack of continuity
-assets consisting of personal funds and funds of those willing to make loans
legal requirements
number of owners: one natural person
minimum capital: none
entry in the Commercial Register: only mandatory for over CHF 100’000 yearly revenue
liability: unlimited liability with personal assets
management: owner
corporate bodies: none
sharing profits and losses: fully with the sole proprietor
taxation: personal income taxes on the business’s profits
2 Ordinary association
-consists of two or more natural persons who want to achieve a common goal
-limited period (e.g., construction consortiums, students organizing a party)
-no business name, no own legal personality
-equal rights in the management, sharing profits and losses
-not suited to run a commercial business
3 Partnership
general partnership
number of owners: two or more natural persons
minimum capital: none
entry in the Commercial Register: mandatory
Lesson 2 1/6
, liability: primary liability of the partnership’s assets, subsidiary unlimited joint, and several
liability of each partner with their personal assets
management: everyone
corporate bodies: partners
sharing profits and losses: shared equally
taxation: “pass-through” entity, only a partner’s profit from the partnership is taxed as
individual income to the partner
advantages
-taxes; pass-through entity, only a partner’s profit from the partnership is taxed as individual
income to the partner
-greater capital contributions
disadvantages
-the personal liability of partners for partnership obligations (joint, several and unlimited)
-the lack of continuity
limited partnership
special form of partnership consisting of one or more general partners and one or more
limited partners
4 Corporations
number of owners: one or more natural persons or legal entities
minimum capital: CHF 100’000
entry in the Commercial Register: mandatory
liability: limited to the amount of investment
management: the board of directors and executive board
corporate bodies: general assembly, board of directors, auditing body
sharing profits and losses: profits are passed on to shareholders or to retained earnings
taxation: double taxation, corporate profits and dividends paid to shareholders are taxed
establishment
1. share capital
-an auditor has to examine the founder’s report and confirms its completeness and accuracy
-capital fluctuation margin: authorizes the Board of Directors to increase or decrease the
corporation’s capital for a maximum of five years
Lesson 2 2/6
