What does LLC stand for?
LLC means Gesellschaft mit beschränkter Haftung (limited liability company).
The law describes the LLC as a person-related capital company in which one or more persons or commercial enterprises are involved. In principle, only the company assets are liable for its debts (Art. 772 Abs. 1 OR).
Simply put, the LLC is not just "you as a private individual", but a separate legal entity. The addition of "limited liability" means that, in principle, the shareholders are not liable with their private assets for ordinary debts of the LLC. The law also states that only the company's assets are liable for the company's liabilities (Art. 794 OR).
Why is the LLC popular with founders?
The LLC is a good middle ground for many founders.
It looks more professional than a sole proprietorship, but requires less capital than a stock corporation. The minimum share capital is CHF 20'000 (Art. 773 Abs. 1 OR). An LLC can also be founded by one or more persons (Art. 772 Abs. 1 OR).
The LLC is particularly suitable for:
Founders who want to separate business and private assets more clearly
small and medium-sized enterprises
Agencies, consultancies, craft businesses and online businesses
Founder teams with several participants
Individuals who want to appear professional right from the start
For founders, the importance of the LLC lies primarily in three points. It creates its own legal personality, a clear structure and fundamentally limited liability.
What does «limited liability» mean in concrete terms?
Limited liability does not mean that no one is liable.
It means that, in principle, the LLC itself is liable, i.e. with its own company assets. If your LLC cannot pay an invoice, the claim is generally directed against the LLC and not directly against you privately (Art. 794 OR).
However, it is important to note that the limitation of liability is not a free pass. Private risks can arise if you personally sign sureties or guarantees, violate statutory duties or if the articles of association provide for special additional financial or secondary contribution obligations (Art. 772 Abs. 2 OR). You should therefore not treat the articles of association as a mere formality.
How much capital does an LLC need?
For an LLC you need at least CHF 20'000 nominal capital.
This share capital is prescribed by law (Art. 773 Abs. 1 OR). The shareholders participate with share portions. Each shareholder holds at least one share portion (Art. 772 Abs. 2 OR). The share portions must have a nominal value greater than zero (Art. 774 Abs. 1 OR).
The share capital belongs to the LLC after it is founded. It is not simply a fee, but forms the financial foundation of the company. Nevertheless, you should also plan for sufficient liquidity for rent, wages, insurance, software, marketing and taxes.
How is an LLC formed?
An LLC is not created simply by choosing a name or paying money into an account.
The founders must declare in a public deed that they are founding an LLC. In doing so, the articles of association are established and the corporate bodies are appointed (Art. 777 Abs. 1 OR). Thereafter, the company is entered in the commercial register at its seat (Art. 778 OR).
In legal terms, the LLC only comes into existence upon entry in the commercial register. From this point in time, it has its own legal personality (Art. 779 Abs. 1 OR).
Typical process:
Clarify company name, purpose, seat and shareholdings.
Create articles of association.
Pay in the share capital.
Have the foundation publicly notarized.
Submit the application to the commercial register.
After entry, the LLC exists legally.
If you need support with the process of incorporation, Jurata will be happy to help you at any time: GmbH gründen mit Jurata.
What must be in the articles of association?
The articles of association are the basic rules of your LLC.
They must contain provisions on the company name and seat, the purpose, the amount of the share capital, the number and nominal value of the share portions as well as the form of communications to the shareholders (Art. 776 OR).
Particularly when there are several founders, it is worth setting up the articles of association and supplementary agreements carefully. Questions such as who holds how many share portions, who is allowed to make decisions and what happens if someone wants to leave are important.
Must «LLC» be in the name?
Yes, the legal form must be indicated in the company name.
Commercial enterprises are in principle free to choose their company name. However, the legal form must be included in the company name (Art. 950 Abs. 1 OR). The Commercial Register Ordinance specifies that the legal form must be indicated with the appropriate designation or abbreviation in an official national language (Art. 116a Abs. 1 HRegV).
A name like «Muster Consulting LLC» therefore shows not only the brand, but also the legal form.
Who manages and represents the LLC?
An LLC needs people who can act for it.
In principle, every managing director is authorized to represent the company (Art. 814 Abs. 1 OR). The articles of association may regulate representation differently. However, at least one managing director must be authorized to represent the company (Art. 814 Abs. 2 OR).
The Swiss residency requirement is also important. The LLC must be able to be represented by a person who is resident in Switzerland. This person must be a managing director or director (Art. 814 Abs. 3 OR).
Does an LLC have to keep accounts?
Yes. An LLC is obliged to keep accounts.
Legal entities are subject to the obligation to keep accounts and present financial statements (Art. 957 Abs. 1 Ziff. 2 OR). Because the LLC is a legal entity, it must properly document its business transactions and prepare annual financial statements.
For founders, this means that they should set up proper accounting right from the start. This helps with taxes, payroll, VAT issues and bank meetings.
Does an LLC need an auditor?
For the auditor of the LLC, the provisions of stock corporation law apply accordingly (Art. 818 Abs. 1 OR).
If an ordinary audit is not required, the annual financial statements must be subject to a limited statutory examination (Art. 727a Abs. 1 OR). Under certain conditions, the limited statutory examination can be waived. This requires the consent of all participants and the company must not have more than ten full-time positions on an annual average (Art. 727a Abs. 2 OR).
This waiver is often called "opting-out".
LLC or sole proprietorship?
The LLC is particularly interesting if you want to separate your business clearly from your private assets.
Question | LLC | Sole proprietorship |
|---|---|---|
Legal personality | Own legal entity | No separate legal entity |
Minimum capital | CHF 20'000 | No legal minimum capital |
Liability | In principle, company assets | Closer to the private assets of the owner |
Appearance | Professional and structured | Simple and personal |
Accounting | Obligation to keep accounts as a legal entity | Depending on turnover and situation |
If you start very small and have little risk, a sole proprietorship can be enough. If you are founding with partners, concluding larger contracts or want to appear more professional, the LLC is often more suitable.
LLC or stock corporation?
The LLC and the stock corporation are both capital companies with their own legal personality.
For many founders, however, the LLC is the simpler entry, because the minimum capital is CHF 20'000 (Art. 773 Abs. 1 OR). The stock corporation can be useful if you want to take on investors, structure shareholdings more flexibly or grow more strongly.
The LLC, on the other hand, is often ideal for local businesses, service providers, small teams and founders who want a clear, professional structure.
What advantages and disadvantages does an LLC have?
The most important advantages are:
In principle, limited liability to the company assets
Foundation alone or with several persons possible
Professional appearance
Clear participation structure via share portions
Minimum capital lower than with a stock corporation
The most important disadvantages are:
At least CHF 20'000 share capital needed
Public notarization and entry in the commercial register required
Obligation to keep accounts
Depending on the situation, an auditor or opting-out is necessary
More formalities than with a sole proprietorship
Conclusion: What does LLC mean for your foundation?
The meaning of the LLC can be easily summarized. You found a separate legal entity with fundamentally limited liability.
The LLC stands for "Gesellschaft mit beschränkter Haftung", requires at least CHF 20'000 share capital and only comes into existence when it is entered in the commercial register. In principle, only the assets of the LLC are liable for company debts (Art. 772 Abs. 1 OR, Art. 794 OR).
For many founders, it is therefore a good middle ground. It is more professional than a sole proprietorship, simpler than a stock corporation and still offers a clear structure.
Frequently asked questions about the meaning of LLC
Can I found an LLC alone?
Yes. An LLC can be founded by one or more persons (Art. 772 Abs. 1 OR).
Am I never privately liable with an LLC?
In principle, only the company assets are liable (Art. 794 OR). However, private risks can arise if you provide personal collateral, violate statutory duties or if special duties are set out in the articles of association.
From when does the LLC exist legally?
The LLC acquires its legal personality upon entry in the commercial register (Art. 779 Abs. 1 OR).
