Which Legal Form is Right for an Architecture Office?
The appropriate legal form depends primarily on whether you are starting alone, how high your liability risk is, and whether you want to take on employees, partners, or investors later on.
Many architects start as a Sole Proprietorship because this legal form is simple and inexpensive. A sole proprietorship de facto comes into existence when self-employed business activities begin. Entry in the commercial register is generally compulsory for sole proprietorships if a sales revenue of at least CHF 100,000 was achieved in the last financial year. Members of liberal professions are exempt from this, provided they do not run a business conducted in a commercial manner (Art. 931 Abs. 1 OR). Voluntary registration is possible (Art. 931 Abs. 3 OR).
The disadvantage of a sole proprietorship is personal liability. There is no legal separation between you as a private person and your business. If a high claim for damages arises from an architectural mandate, your private assets can therefore in principle also be affected.
The LLC is the obvious alternative for many small and medium-sized architecture offices. It is a capital company in which, in principle, only the company's assets are liable for company debts (Art. 772 Abs. 1 OR, Art. 794 OR). The share capital is at least CHF 20,000 (Art. 773 Abs. 1 OR). The LLC only comes into existence with entry in the commercial register (Art. 779 Abs. 1 OR).
The stock corporation is more suitable for larger offices, growth plans, participation models, or if the external impact of an Aktiengesellschaft is important. The share capital is at least CHF 100,000 (Art. 621 Abs. 1 OR). The stock corporation also only obtains its legal personality through entry in the commercial register (Art. 643 Abs. 1 OR). As with the LLC, liability is in principle limited to the company's assets. However, this does not protect against all personal responsibility, for example in the case of breach of duty by governing bodies.
If you want to found your architecture office, the LLC is often a good compromise between a professional external image, limitation of liability, and manageable capital requirements. The sole proprietorship is simpler, but more liability-intensive. The stock corporation is structurally stronger, but more complex and capital-intensive.
What Do You Need to Keep in Mind Regarding the Company Name?
The company name must be true, must not be misleading, and must not contradict any public interest (Art. 944 Abs. 1 OR). In the case of a sole proprietorship, the surname of the owner must be part of the company name (Art. 945 Abs. 1 OR). Furthermore, a sole proprietorship must not contain any addition suggesting an association (Art. 945 Abs. 3 OR).
With the LLC and stock corporation, the name can in principle be chosen more freely. However, the legal form must be indicated in the company name (Art. 950 Abs. 1 OR). In addition, the name of a commercial company must differ clearly from all names of commercial companies and cooperatives already registered in Switzerland (Art. 951 OR).
In practical terms, this means: before founding, check whether your desired name already exists in a similar form in the commercial register. In the case of an architecture office, a trademark and domain check is also worthwhile, especially if you want to appear under a strong studio or office brand.
How is an Architecture Office Liable to Building Clients?
An architecture office is not liable simply because a construction project becomes more expensive, more complicated, or more conflict-ridden. Liability typically arises when a contractual duty is breached, damage occurs, a causal connection exists, and there is fault. In the case of contractual liability, fault is in principle presumed unless the debtor proves that there is no fault (Art. 97 Abs. 1 OR).
Architectural services are not always treated uniformly in legal terms. A so-called overall architectural contract can be mixed. According to case law, planning services in which a verifiable result is owed can be assessed under a contract for work and services. In contrast, construction management, supervision, and coordination often follow agency law (BGer 4A_514/2016 E. 3.1.1). If the breach of duty only concerns plans, design errors, or the choice of materials, liability can therefore be assessed under the law governing contracts for work and services (BGer 4A_514/2016 E. 3.1.2).
This is important because in construction management, diligent execution is what counts most. According to agency law, the agent is liable for the faithful and diligent execution of the business entrusted to them (Art. 398 Abs. 2 OR). Professionals acting in a professional capacity must inform, advise, and warn their clients if recognizable risks arise from the mandate.
A Federal Supreme Court decision clearly shows this: An architect was commissioned with the construction management. During the construction work, foundation walls were demolished, although they should have been preserved. The Federal Supreme Court stated that construction management tasks were to be assessed under agency law (BGer 4A_258/2020 E. 3.2.1). In the specific situation, the construction manager should have intervened against the premature demolition, informed the client, and worked out decision-making principles with them. The failure to do so was assessed as a breach of the duty of care (BGer 4A_258/2020 E. 3.2.2). In the case of omissions, it must then be examined whether the damage would have been prevented with predominant probability if the omitted act had been performed (BGer 4A_258/2020 E. 3.4.2).
For founders, this means: Anyone who wants to found an architecture office needs not only good design, but also clean processes. Clear descriptions of services, comprehensible minutes, documented decisions, cost control, and written warnings in case of risks are crucial.
What Role Does the Limitation of Liability of the LLC or stock corporation Play?
An LLC or stock corporation reduces personal business risk because, in principle, the company is liable for its liabilities. In the case of the LLC, only the company's assets are liable for company debts (Art. 794 OR). In the case of the stock corporation, a separate legal entity is also created with entry in the commercial register (Art. 643 Abs. 1 OR).
However, this limitation of liability is not a free pass. Firstly, the company itself continues to remain fully liable with its assets. Secondly, members of governing bodies can become personally liable in the event of breaches of duty. Members of the board of directors and persons concerned with management or liquidation are liable for damages they cause through intentional or negligent breach of duty (Art. 754 Abs. 1 OR). For the LLC, the rules of liability under company law apply accordingly (Art. 827 OR).
Thirdly, the legal form does not automatically protect against professional liability claims in the economic sense. If your architecture office causes a serious planning or construction management error, the claim against the company can threaten its existence. This is precisely why the combination of a suitable legal form, good contracts, and professional indemnity insurance is so important.
What Contracts Does an Architecture Office Need?
An architecture office should regulate mandates in writing. The contract should state as clearly as possible what services are owed. These include, for example, preliminary project, construction project, approval procedures, tendering, cost planning, construction management, scheduling, and acceptance support.
The division of responsibilities is particularly important. If specialist planners, engineers, construction managers, or contractors are involved, the contract should show who is responsible for what. This reduces misunderstandings and helps to neatly assign roles in the event of a dispute.
Cost details should also be formulated precisely. Anyone estimating costs must inform the client about the accuracy of the estimate and monitor the costs on an ongoing basis. If potential overruns become apparent, the client must be informed in good time. These duties follow from the agent's duty of care under agency law (Art. 398 Abs. 2 OR).
In addition, the limitation period is important for defects in work. Claims of the customer due to defects in an immovable work expire against contractors as well as against architects or engineers who have rendered services for the purpose of construction, after five years from the acceptance (Art. 371 Abs. 2 OR). For new offices, this is an important hint: liability risks do not end with project completion.
What Insurances are Important for an Architecture Office?
The most important insurance for an architecture office is usually the Professional Indemnity Insurance. It is designed to cover damages that may arise from professional errors, such as planning errors, construction management errors, faulty advice, or failure to warn. In construction projects in particular, even small errors can trigger major costs.
It is important that the policy really fits the activity. An office that only does competitions and designs has different risks than an office with execution planning and construction management. Anyone who undertakes construction management should pay particular attention to coverage for damage to heritage, financial loss, sub-planners, and project-specific features. Insurance sums should be selected not only according to the annual premium, but according to realistic project risk.
In addition, Public Liability Insurance can be useful. It relates more to classic personal injury and property damage from business operations, for example if a client has an accident in the office or if third-party property is damaged during a viewing.
If you employ staff, social security contributions are added. Employees must be insured against occupational and non-occupational accidents, provided the statutory requirements are met. Self-employed persons can insure themselves voluntarily under UVG (Art. 4 Abs. 1 UVG). In addition, self-employed persons pay AHV contributions on income from self-employment (Art. 8 Abs. 1 AHVG). For professional pension provision, self-employed persons can voluntarily join a pension institution (Art. 44 Abs. 1 BVG).
Depending on the situation, further insurances come into question, such as daily sickness benefits, legal protection, cyber insurance, commercial property insurance for office inventory, or directors and officers liability insurance for LLC and stock corporation.
What Should You Specifically Prepare Before Founding?
Before you found your architecture office, you should first decide whether you are starting alone or with others. If there are several founders, a capital company is usually cleaner than a loose cooperation because shareholdings, signing rights, profit distribution, and exit can be regulated.
After that, you should choose the legal form, check the name, formulate the purpose, and prepare the founding documents. In the case of an LLC and stock corporation, a public deed is required. The LLC is established by public deed, with the founders establishing the articles of association and appointing the governing bodies (Art. 777 Abs. 1 OR). The stock corporation is also established by public deed (Art. 629 Abs. 1 OR).
If you need support with the topic of founding, Jurata is happy to help you at any time: Prepare foundation online.
In parallel, you should clarify your template contracts, fee structure, general terms and conditions, and insurances. In the case of architectural services in particular, it is risky to only talk about responsibilities, cost control, or liability when the first conflict arises.
Conclusion: Starting Professionally and Legally Clean is Worth It
Founding an architecture office is easily feasible in Switzerland. However, you should make the most important legal decisions early on. The sole proprietorship is simple, but brings personal liability with it. The LLC often offers a good mix of seriousness, structure, and limitation of liability. The stock corporation is more suitable for larger or growth-oriented offices.
Regardless of the legal form, professional liability remains central. Architectural services can trigger high financial risks, especially in planning, construction management, cost control, and duties to warn. Good contracts, clear documentation, and suitable professional indemnity insurance are therefore not formalities, but part of your entrepreneurial foundation.
Frequently Asked Questions About Founding an Architecture Office
Do I absolutely need an LLC if I want to found an architecture office?
No. You can basically also start as a sole proprietorship. However, an LLC is often sensible if you want to reduce private liability risk, present a more professional image, or involve other people later on.
Is professional indemnity insurance mandatory for architecture offices?
Whether professional indemnity is mandatory depends on the specific context, such as professional rules, project specifications, or client requirements. In practice, it is almost always important for architecture offices because planning and construction management errors can trigger high claims for damages.
When do I have to register my sole proprietorship in the commercial register?
A sole proprietorship must generally be registered if sales revenue of at least CHF 100,000 was achieved in the last financial year. An exception applies to members of liberal professions, provided they do not run a business conducted in a commercial manner (Art. 931 Abs. 1 OR).
Is an LLC never personally liable?
For liabilities of the LLC, in principle only the company's assets are liable (Art. 794 OR). However, personal responsibility can arise, for example, in the event of breaches of duty by governing bodies, and the company itself remains liable for professional errors.
