When are you considered self-employed under social security law?
You are not automatically considered self-employed just because you have a sole proprietorship or write invoices. The decisive factor is whether you actually work on your own account, under your own name and with your own economic risk.
The AHV distinguishes between self-employed and non-self-employed gainful activity. Income from self-employed gainful activity is any earned income that is not wage from non-self-employed work (Art. 9 Abs. 1 AHVG). The compensation office checks on a case-by-case basis whether your activity is truly self-employed. In doing so, it is not primarily what is written in the contract that counts, but how the work is actually organized.
The Federal Supreme Court states that the civil law designation of the contract is not decisive, but rather the economic circumstances. It is examined which characteristics predominate (BGE 149 V 57 E. 6.2). Indicative of self-employment are typically significant investments, own business premises, own staff, several clients and real entrepreneurial risk (BGE 149 V 57 E. 6.4).
It is also important to note: A commercial register entry as a sole proprietorship does not in itself prove that you are self-employed under social security law. The Federal Supreme Court has expressly stated that the entry as a sole proprietorship is in principle not decisive for the distinction between self-employed and non-self-employed gainful activity (BGE 149 V 57 E. 4.2).
In practice, this means: If you work almost exclusively for one client whose prices, processes, working methods and customer access you can hardly influence, the compensation office may, despite you having a sole proprietorship, conclude that you are non-self-employed under social security law. If, on the other hand, you visibly appear on the market, have several customers, acquire business yourself, bear your own costs and freely organize your work, this speaks more in favor of self-employment.
Which AHV contributions do you have to pay as a sole proprietor?
As a sole proprietor, you generally have to pay AHV, IV and EO contributions yourself. There is no employer who covers half of the cost.
In the AHV, natural persons residing in Switzerland and persons who carry out a gainful activity in Switzerland are obligatorily insured (Art. 1a Abs. 1 AHVG). An AHV contribution of 8.1 percent is levied on income from self-employed gainful activity (Art. 8 Abs. 1 AHVG). In addition, there are IV contributions of 1.4 percent (Art. 3 Abs. 1 IVG) and EO contributions, which are levied as surcharges to the AHV and may not exceed 0.5 percent of the earned income (Art. 27 Abs. 2 EOG).
Together, self-employed persons with corresponding income face a burden of 10 percent for AHV, IV and EO. For lower incomes, a sliding scale applies. The law provides that the AHV contribution rate is reduced if the income is less than CHF 60'500, but at least CHF 10'100 per year (Art. 8 Abs. 1 AHVG). In the case of very low income, a minimum contribution is generally owed (Art. 8 Abs. 2 AHVG).
The calculation is not based on your turnover. The decisive factor is the income from self-employed gainful activity. From the raw income, among other things, acquisition costs, commercially justified depreciation and provisions, business losses, certain pension contributions and the interest on the equity used in the business are deducted (Art. 9 Abs. 2 AHVG). The cantonal tax authorities report the income and the equity capital used to the compensation office (Art. 9 Abs. 3 AHVG).
Practically, this means: Your AHV contributions are closely linked to your bookkeeping and your tax assessment. Accurate numbers are therefore not only important for tax purposes, but also for the social security of the sole proprietorship.
How do you register with the AHV?
You register your self-employed gainful activity with the competent compensation office. Only when the compensation office recognizes your activity will you be registered as self-employed for this activity.
In practice, the compensation office often requests evidence. This may include invoices, contracts, a website, quotes, a commercial register entry, lease agreements for business premises, receipts for investments or proof of multiple clients. The decisive factor is that your activity has actually started. A purely planned self-employment can usually not yet be conclusively assessed under social security law.
This registration is particularly important if you change from employment to self-employment. As long as your status is unclear, backlog demands or corrections can happen later. Social security contributions are not a pure formality. They are linked to your actual employment model.
Are you subject to obligatory BVG as a sole proprietor?
No, as a sole proprietor, you are generally not obligatorily insured in occupational pension schemes. However, you can choose to join a pension fund voluntarily.
The BVG does acknowledge the possibility of obligatorily subjecting certain occupational groups of self-employed persons at the request of their professional associations (Art. 3 BVG). For most sole proprietorships, however, occupational pension is voluntary. Self-employed persons who are not obligatorily insured can insure themselves voluntarily under BVG (Art. 4 Abs. 1 BVG).
The provisions on obligatory insurance generally apply analogously, in particular the income limits (Art. 4 Abs. 2 BVG). In obligatory BVG, the part of the annual salary from CHF 26'460 up to and including CHF 90'720, which is called the coordinated salary, is to be insured (Art. 8 Abs. 1 BVG). With voluntary solutions, different arrangements may play a role depending on the affiliation and pension plan.
Self-employed persons can register with the pension scheme of their profession or their employees. Those who do not have such an option can register with the substitute occupational benefit institution (Art. 44 BVG). In addition, the law allows self-employed persons to insure themselves exclusively in the area of supplementary pension schemes (Art. 4 Abs. 3 BVG). However, contributions and deposits must permanently serve the occupational pension scheme (Art. 4 Abs. 4 BVG).
For social security in a sole proprietorship, the BVG question is therefore primarily a pension question. If you do not have a pension fund, you do not build up retirement capital via the second pillar and also lack corresponding disability or death protection from occupational pension schemes. Depending on the income, family situation and risk profile, this can be a major gap.
Is accident insurance mandatory for self-employed persons?
No, as a self-employed owner of a sole proprietorship, you are not automatically obligatorily insured against accidents under UVG. However, you can register for voluntary insurance.
The UVG obligation generally applies to employees employed in Switzerland, including apprentices, interns and other employee-like persons (Art. 1a Abs. 1 UVG). Self-employed persons do not automatically fall under this. However, the law gives them the opportunity to voluntarily insure themselves under UVG. Self-employed persons residing in Switzerland and their non-obligatorily insured family members working in the business can voluntarily insure themselves (Art. 4 Abs. 1 UVG).
This is legally very important. An accident can also happen during office work. In manual, gastronomic, medical, athletic or mobile activities, the risk is often even more obvious. Without appropriate accident insurance, you have to check what coverage is provided by your health insurance and what losses of income are not covered. The health insurance covers medical costs but does not automatically replace your earned income.
Voluntary UVG insurance can therefore make perfect sense if your income heavily depends on your own capacity to work. The regulation also states that voluntary insurance can also be taken out by those who are partially active as employees (Art. 134 Abs. 1 UVV). This is relevant if, for example, you are still employed alongside your sole proprietorship.
What applies if you employ staff?
As soon as your sole proprietorship employs staff, the situation changes significantly. Then you are not only self-employed, but also an employer.
For your employees, you must settle the social security accounts like an employer. This includes in particular AHV, IV, EO, unemployment insurance, family allowances, accident insurance and, depending on the wage level, occupational pension schemes. While you yourself are not obligatorily UVG and BVG insured, your employees may have to be obligatorily insured.
This is a common stumbling block. Many founders only think of themselves when it comes to social security in a sole proprietorship. However, as soon as the first person is hired, additional duties arise. In this case, you should clarify early on which compensation office, accident insurance and pension fund are responsible and how the payroll is set up correctly.
What typical mistakes should you avoid?
A common mistake is registering your self-employment with the compensation office too late. This can create uncertainties, especially if you have already issued invoices and it is not yet clear whether you will be recognized as self-employed.
A second mistake is confusing turnover and income. AHV contributions are not calculated on total turnover, but on the contribution-liable income from self-employed gainful activity. Nevertheless, you must plan for liquidity because the contributions can be definitively determined later on the basis of tax data.
A third mistake is ignoring BVG and UVG because they are often voluntary for self-employed persons. Voluntary does not mean unimportant. Especially those who live from their own work commitment should consciously decide whether and how old age, disability, death and accidents are secured.
A fourth mistake is the assumption that a sole proprietorship is always self-employed under social security law. As case law shows, the actual economic situation counts. If you are highly integrated into the organization of a client, do not acquire your own customers and carry virtually no entrepreneurial risk, the qualification can turn out differently (BGE 149 V 57 E. 6.3).
If you need support regarding the topic of Gründung, Jurata is happy to help you at any time.
Conclusion
Social security in a sole proprietorship works differently than in employment. AHV, IV and EO are mandatory for self-employed persons and are fully borne by themselves. BVG and UVG are generally voluntary for the owner of a sole proprietorship, but can be very important depending on the risk and pension requirements.
The most important first step is the recognition of your self-employed gainful activity by the compensation office. After that, you should consciously plan your contributions, your pension and your accident insurance. Because self-employment does not only mean freedom, but also responsibility for your own social security.
Frequently asked questions about social security in a sole proprietorship
Do I have to pay AHV as a sole proprietor?
Yes. If you carry out self-employed gainful activity in Switzerland, you must generally pay AHV, IV and EO contributions. The AHV contribution on income from self-employed gainful activity is 8.1 percent (Art. 8 Abs. 1 AHVG). Added to this are IV and EO.
Am I automatically self-employed with a sole proprietorship?
No. A sole proprietorship or a commercial register entry alone is not enough. The compensation office checks the actual economic circumstances. Crucial factors are in particular one's own entrepreneurial risk, several clients, market presence and organizational independence (BGE 149 V 57 E. 4.2).
Do I have to pay into a pension fund as a sole proprietor?
Usually, no. Self-employed persons are generally not obligatorily BVG-insured. However, they can register for voluntary insurance (Art. 4 Abs. 1 BVG).
Am I automatically insured against accidents as a self-employed person?
No. The UVG obligation generally applies to employees (Art. 1a Abs. 1 UVG). Self-employed persons can voluntarily insure themselves under UVG (Art. 4 Abs. 1 UVG).
