Being self-employed sounds tempting. You can work the way you want, when you want and where you want. You are your own boss. It is undisputable: self-employment brings many advantages. However, it takes discipline, self-responsibility and, especially when it comes to finance, a certain vision. If you meet these requirements and you are thinking about taking the step into self-employment, you will find this summary useful and interesting:
What does “self-employment” really mean?
Being self-employed is not to be confused with being one of the employees in your own limited liability company or a stock company: a person who is self-employed works alone. The approval of self-employment status is to be obtained from AHV/IV, no matter if it is a main income or just a supplementary one. You must have at least three to five different customers and none of the customers should contribute to more than 50% of the total annual turnover. Otherwise, this is considered as a disguised employment relationship.
Insurance coverage of self-employed person
To be self-employed means to run business at your own risk and to generate profit. Compared to other types of employment, you as a self-employed person do not enjoy the same level of protection by social services – you are obliged to contribute to AHV only. All other insurance and pension options are voluntary for you.
Additional insurance coverage for self-employed person
A person who is self-employed can opt out for various additional insurance and preventive measures on a voluntary basis. These include an accident insurance or a daily sickness allowance insurance. A life insurance policy covers the risks of disability (accident, illness) and death and there is an option to add the saving components as well additionally. When it comes to tax-privileged 3a pillar, you can contribute up to 20% of your annual AHV liable income or maximum of 33840 Swiss francs. A connection to a second column (pension) is also possible.
What’s my income and how do I pay tax on this?
Your income is the difference between the revenue you generate and all expenses related to your self-employment. Since you are self-employed, you do not submit a separate tax return for your business, as in case of a GmbH or an AG. You are obliged to submit only your personal tax return, declaring your self-employment related data.
Important: You have to identify business scope and to declare your income, expenses and write-offs in your tax return. To a limited extent, private costs (mixed private /business cost) can be declared in your personal tax return as well.
The step into self-employment should not be taken lightly. It therefore makes sense to get informed well and to seek professional advice. Thus, you can prevent unpleasant surprises that might happen in the future. We can offer you professional advice and support in set up process as well as startup phase of your self-employment. Moreover, you can authorize us to act on your behalf in the process of foundation (with optional entry in the commercial register) and AHV-registration, to do accounting and taxes for you, as well as all other administrative jobs. While we take care of the administrative jobs instead of you, you can concentrate fully on your business and thus on your strengths.