Starting a company as a side business: How to get started legally alongside your Job

Building your own business alongside an existing job is generally possible in Switzerland. It becomes sensitive, however, where your side business conflicts with your employment contract, competes with your employer, or your work performance suffers.

Anyone who wants to found a company as a side business should therefore not only think about the website, logo and customer acquisition. Also important are the employment contract, duty of loyalty, legal form, AHV, taxes, insurance, commercial register and value-added tax.

Am I even allowed to found a company alongside my job?

Yes. Swiss law does not automatically prohibit founding a side business. What matters, however, is that you respect the legitimate interests of your employer. This duty arises from the employment-law duty of loyalty under Art. 321a Abs. 1 OR.

The Federal Supreme Court has drawn an important line here. An employee may also prepare a future own activity while an employment relationship still exists. It becomes impermissible, however, if the preparation breaches good faith, for example because the employee is already competing during the employment relationship or poaches customers or employees (BGE 117 II 72 E. 4a). Even while still employed and without notice of termination, preparation may be permissible if the work performance is fully delivered and the employer's legitimate economic interests are not impaired (BGE 117 II 72 E. 4b).

In short: founding a company is not the problem. It becomes problematic if, in the meantime, you get in your employer's economic way.

The duty of loyalty is the most important boundary

The duty of loyalty is the central legal framework for any side-business start-up. Under Art. 321a Abs. 3 OR, an employee may not perform paid work for third parties during the employment relationship if this violates the duty of loyalty, especially if the employer is being competed with.

That does not mean that every paid side activity is prohibited. Side businesses are generally possible as long as they do not create competition, do not impair the employer's reputation and your performance in the main job does not suffer. These principles correspond to the official employment-law classification of side businesses (SECO, «Side business»).

Therefore, it is not enough to say: «I only do this in the evening.» If your side business affects your performance in your main job or targets the same customer market, it can become tricky under employment law.

When does a side company become prohibited competition?

Competition does not arise merely because you become entrepreneurial. According to case law, there must be a genuine competitive relationship. Such a relationship exists when like services are offered to a customer base that is wholly or partly the same (BGer 4A_50/2021 E. 3.6).

The Federal Supreme Court emphasizes that an employee may prepare a later activity. The boundary is crossed, however, if he or she starts competing while the employment relationship still exists or poaches customers or employees from the employer (BGer 4A_50/2021 E. 3.7).

In practical terms: if, as a marketing consultant employed during the week, you build an online shop for handmade ceramics on the weekend, that is usually less sensitive. But if you are simultaneously offering the same consulting services to the same target group as your employer, it quickly becomes critical.

Employer resources and trade secrets are off-limits

A common mistake when starting a side business is using the employer's resources. Work equipment, technical facilities, vehicles and materials belonging to the employer must be handled carefully (Art. 321a Abs. 2 OR).

You should therefore not use your employer's customer data, templates, software access, devices, email addresses or internal information for your own company. Business and manufacturing secrets are especially sensitive. You may not use or disclose such facts that must be kept secret during the employment relationship. The duty of confidentiality also remains in force after the employment relationship ends, insofar as this is necessary to safeguard the employer's legitimate interests (Art. 321a Abs. 4 OR).

For practical purposes, the distinction is simple: what you received, developed or learned for your employer does not automatically belong in your own business.

Do not underestimate working hours, rest periods and energy

Aside from the competition issue, there is a second practical limit: your side company may not impair your performance in the main job. If you are permanently overtired in your main job because of evening customer appointments, weekend work or late-night bookkeeping, an activity that is not competing in itself can also become problematic.

With multiple activities, labour-law protection provisions may also be relevant, especially maximum working hours and rest periods. This is particularly important if the side business is time-intensive or physically demanding. What matters is not only what is in the contract, but whether you can continue to fulfill your duties in the main job reliably (SECO, «Side business»).

Check the employment contract: reporting duty, authorisation and non-compete clause

Before starting a side business, you should read your employment contract carefully. Many employment contracts contain clauses on secondary activities. Such clauses can, for example, require that a side business be reported or authorised.

You should take such contractual clauses seriously. Even if a side activity is not automatically prohibited by law, a contractual reporting or authorisation obligation may exist. You should be especially cautious if your planned business operates in the same industry, with similar customers or similar services as your employer.

The focus is different for the post-contractual non-compete clause. Such a clause only takes effect after the employment relationship ends. Under Art. 340 Abs. 1 OR, an employee with legal capacity can undertake in writing not to carry out any competing activity after the end of the employment relationship. However, a non-compete clause is binding only if the employee had insight into the customer base or into manufacturing and business secrets and the use of that knowledge could significantly harm the employer (Art. 340 Abs. 2 OR).

For founders starting a side business, this means: during employment, the duty of loyalty is the key issue. After leaving, a valid non-compete clause may additionally become relevant.

Sole proprietorship, LLC or stock corporation: Which legal form suits a side business?

Many people start a side business as a sole proprietorship. It is simple, inexpensive and administratively lean. A natural person operating a business only has to register their sole proprietorship in the commercial register once turnover of at least CHF 100'000 was achieved in the last financial year (Art. 931 Abs. 1 OR). Voluntary registration is possible (Art. 931 Abs. 3 OR). The sole proprietorship is especially suitable for smaller, personal activities without major capital requirements (KMU.admin.ch, «Legal form: sole proprietorship»).

For a sole proprietorship, it is important: you are not separated from your business. That can be practical for small, low-risk activities. For greater liability risks, investments or several participants, an LLC or stock corporation may be more suitable.

The LLC is a company with personal characteristics. For its obligations, as a rule only the company assets are liable (Art. 772 Abs. 1 OR). The share capital is at least CHF 20'000 (Art. 773 Abs. 1 OR). The stock corporation is likewise a corporation, for whose obligations as a rule only the company assets are liable (Art. 620 Abs. 1 OR). The share capital is at least CHF 100'000 (Art. 621 Abs. 1 OR).

This limitation of liability is an important advantage of LLCs and stock corporations. But it does not mean that founders never bear personal risks. Personal guarantees, sureties, private contracts or breaches of duty as an organ can still have personal consequences. Especially in the case of bank loans, rental agreements or important supplier contracts, it is therefore worth taking a close look at the signatures and personal securities.

For practical purposes: the sole proprietorship is often suitable for a straightforward start. The LLC can be useful if you want to limit liability risks, appear more professional or later involve employees and partners. The stock corporation is usually more suitable for more capital-intensive or more growth-oriented projects.

Accounting: Even «on the side» you need order

Even if you are founding «only on the side,» you need proper accounting. Sole proprietorships and partnerships with less than CHF 500'000 turnover in the last financial year must keep at least records of income, expenses and financial position (Art. 957 Abs. 2 OR). From CHF 500'000 turnover onwards, sole proprietorships and partnerships are subject to the ordinary obligation to keep accounts and prepare financial statements (Art. 957 Abs. 1 Ziff. 1 OR).

Legal entities, in particular LLCs and stock corporations, are subject to the obligation to keep accounts and prepare financial statements regardless of turnover (Art. 957 Abs. 1 Ziff. 2 OR). These principles also correspond to the official classification for the legal form of the sole proprietorship (KMU.admin.ch, «Legal form: sole proprietorship»).

Especially when starting a side business, it is worth keeping private and business finances strictly separate from the outset. This makes AHV, taxes, insurance and, later on, a possible conversion or expansion easier.

AHV and social insurance: Employed and self-employed at the same time?

Yes, that is possible. Under Art. 12 Abs. 2 ATSG, self-employed persons can simultaneously also be employees if they earn corresponding income from work. That is exactly the case in many side-business start-ups.

A self-employed person is someone who earns income that does not represent remuneration for work performed as an employee (Art. 12 Abs. 1 ATSG). In practice, the decisive factors are above all entrepreneurial risk, an independent work organisation and a visible market presence. The assessment is not made generally for a person, but in relation to the specific activity. It is therefore possible to be an employee in your main job and at the same time be regarded as self-employed for another activity (AHV/IV factsheet 2.02, «Contributions of self-employed persons to AHV, IV and EO»).

For minor self-employed side income, there is a special AHV rule. Contributions on income from a self-employed activity carried out as a secondary occupation that does not exceed CHF 2'500 in the calendar year are levied only at the request of the insured person (Art. 19 AHVV). As of 2026, the official AHV/IV information confirms this threshold of CHF 2'500 (AHV/IV factsheet 2.02).

Note: the internet still sometimes shows older figures of CHF 2'300. As of 2026, according to the verified official sources, the threshold of CHF 2'500 applies.

Once your side business goes beyond that or the activity grows seriously, you should clarify the registration and recognition with the compensation office early on. For recognition as self-employed, documents such as invoices, contracts, quotations, business stationery or other evidence of the activity taken up are typically relevant (Federal SME portal, «Self-employment: a guide»).

Taxes, value-added tax and insurance belong on the checklist

Income from the side business is tax-relevant. For a sole proprietorship, the profit generally flows into your personal situation. For LLCs and stock corporations, the company is its own legal entity, which is structured differently for tax and social insurance purposes.

An important point is value-added tax. Companies domiciled in Switzerland can generally be liable for VAT if they are self-employed in a professional or commercial capacity, appear outwardly under their own name, and generate income sustainably from services. For most companies, the turnover threshold of CHF 100'000 from services in Switzerland and abroad is relevant, insofar as these are not exempt from tax (FTA, «VAT liability»).

This CHF 100'000 threshold is practically important because it also appears in the commercial register obligation for sole proprietorships. Still, these are two different issues. Commercial register entry concerns the registration of your sole proprietorship. VAT concerns whether you must account for VAT. If your side business grows toward CHF 100'000 in turnover, you should therefore check both issues separately.

You should not underestimate insurance either. Depending on the activity, professional liability insurance, general business liability insurance, accident insurance, daily sickness benefits insurance or additional pension solutions may be important. If you employ staff, additional social-insurance obligations arise. The specific setup depends strongly on the industry, legal form and risk profile.

For starting a side business, therefore: start lean, but not blindly. The more your project appears externally, the more revenue it generates and the higher the liability risk, the more important clean structures become.

Communication with the employer: openness can reduce risks

Not every start-up has to be reported to the employer automatically. But if your employment contract contains a reporting or authorisation obligation, you should comply with it. Even without an explicit clause, transparent communication can be sensible if the activity is close to your employer's business area or becomes time-intensive.

You do not necessarily have to disclose your entire business idea to your employer. A clear delineation is, however, sensible. You should be able to explain that you do not use working time, do not use employer resources, do not poach customers or employees, and no competition takes place.

Particular caution is required with activities in the same industry. What looks to you like 'harmless preparation' can appear to the employer as a threat to its economic interests.

The most important starting question: can you keep things separate cleanly?

The most important question before founding a company as a side business is not only: «Do I have time for it?» The better question is: «Can I separate my project from my job cleanly, legally and practically?»

If you continue to perform your work unchanged, do not use trade secrets, do not approach your employer's customers, do not use the employer's infrastructure, do not violate any contractual authorisation requirement and keep the labour-law rest periods in mind, then founding a side business is legally much less risky.

If, however, your project operates in the same market, concerns the same customers or builds on know-how from your job, you should check more carefully before starting whether employment-contract or statutory boundaries are being crossed.

Summary

Founding a company as a side business is generally permitted in Switzerland. The most important limits arise from the duty of loyalty toward the employer under Art. 321a OR. Preparatory acts are permissible as long as you do not compete with your employer, do not poach customers or employees, do not use business secrets and your work performance does not suffer (BGE 117 II 72 E. 4a, BGer 4A_50/2021 E. 3.7).

Before starting, you should check your employment contract, especially for side-activity clauses and non-compete clauses under Art. 340 OR. As for the legal form, the sole proprietorship is often the easiest entry, while LLCs and stock corporations become particularly interesting where there are liability risks, growth and a professional appearance.

For AHV and social insurance, it is important that you can be employed and self-employed at the same time (Art. 12 Abs. 2 ATSG). For minor self-employed side income of up to CHF 2'500 per calendar year, contributions are levied only upon request (Art. 19 AHVV). At higher amounts or when entering the market in earnest, you should clarify recognition with the compensation office early on.

Commercial register, accounting, taxes, value-added tax and insurance also belong on the checklist from the outset. The best principle is: founding alongside a job is possible. But the closer your side business is to your employer's business and the more your project grows, the more carefully you must draw the line.