Opening a business in Switzerland: the steps, in the order that matters

1. Check that the activity is allowed at that address

Every Swiss municipality has a land-use plan dividing its territory into zones: residential, mixed, centre, business, industrial. A purely residential zone may prohibit a business, or allow it subject to conditions on floor area, opening hours or nuisance. A bar in a residential zone will run into noise rules before it even opens.

This check is free and is made at the municipal planning office, often over the phone. It takes half an hour and it is the only one that can cancel the project at that address outright. Making it after signing the lease is the costliest mistake on the whole path.

Changing the use of a unit (for example office to catering) often requires a building permit, even without works. The lead time is counted in months.

2. Measure the market at the address, not at the municipality

A municipality of 12,000 inhabitants is not a customer base of 12,000 people. What counts is the population actually reachable from the door: on foot in a town centre, by car on the outskirts, and increased by the flows that do not live there — inbound commuters, station travellers, tourists.

That is exactly what address analysis does: counting residents and competing establishments per hectare around a point, rather than dividing a municipal total by an area.

3. Work out the break-even point before looking for premises

The break-even point — the turnover below which the business loses money — is computed before the viewing, not after. It sets the maximum bearable rent, and therefore the category of location within reach. Without that figure, every viewing is an exercise in enthusiasm.

The order of magnitude is built in three lines: expected gross margin as a percentage of turnover, monthly fixed costs (rent, staff, energy, insurance), and the turnover that covers the second exactly with the first.

4. Choose the legal form

Three forms cover almost all business openings: the sole proprietorship, the limited liability company and the public limited company. The sole proprietorship requires no capital but commits your private assets. The LLC requires 20,000 francs fully paid in and separates the estates. The public limited company requires 100,000 francs, of which at least 50,000 paid in.

For a first business, the question often comes down to this: can your private assets absorb failure? If not, the LLC is the reasonable entry threshold, and its incorporation cost pays for itself at the first incident.

5. Register: OASI, commercial register, VAT

Three separate registrations, often confused. Affiliation to an OASI compensation fund recognises self-employed status: it is assessed on documents and may be refused if the activity resembles disguised employment. Entry in the commercial register is compulsory for a sole proprietorship from 100,000 francs of annual turnover, and immediate for an LLC or a public limited company, which only exist from that entry onwards.

VAT liability is triggered at the same threshold of 100,000 francs of annual turnover. The standard rate is 8.1%, the reduced rate 2.6% for foodstuffs and medicines, the special rate 3.8% for accommodation. Eating in falls under the standard rate, takeaway under the reduced rate: that distinction shapes the till of a mixed establishment.

Voluntary VAT registration below the threshold is sometimes advantageous: it allows input tax to be recovered on a heavy fit-out undertaken in the first year.

6. Negotiate the lease

The commercial lease is governed by the Code of Obligations, which leaves ample room for freedom of contract: almost everything is negotiable, and almost nothing can be put right afterwards. The heaviest points are the initial term and the renewal options, the exact definition of service charges, rent indexation, who bears the fit-out works, and the assignment clause.

That last one is the most underestimated: without the right to assign the lease, a profitable business becomes unsaleable, since the buyer does not inherit the premises.

7. Obtain the permits specific to the activity

They are cantonal and sometimes municipal. A hospitality business serves as an example: operating licence, certificate of competence for the person in charge, licence to serve alcoholic drinks, notification to the cantonal chemist, food safety self-monitoring plan. A pharmacy needs a health authority licence; a hairdressing salon, lighter hygiene rules.

• Catering and drinks service: operating licence + cantonal certificate.
• Foodstuffs: notification to the consumer affairs office, documented self-monitoring.
• Opening hours and Sunday work: cantonal regime, federal authorisation for Sundays.
• Signage and shop window: municipal permit for advertising installations.

8. Plan the cash flow of the first twelve months

A business almost never dies of a negative result: it dies of an empty till on the 25th of the month. Between the rent deposit, the fit-out, the first stock, wages paid before the first takings and the VAT to be remitted quarterly, the initial working capital requirement regularly exceeds the cost of the fit-out.