Creating Your Own Start-up: From Idea to Reality

Creating Your Own Start-up: This case study demonstrates that the stock corporation is the most suitable legal structure for enterprises with high growth potential.

Two entrepreneurs founded a company specialising in passenger flow management.

Business sector

The startup company develops and sells a sensor system that measures people and tracks their movements in order to use this information as a foundation for directing passenger flows. The objective is to reduce wait times so that aircraft can depart on time and passengers do not miss connecting flights.

Selected legal structure/Finance

The entrepreneurs established a stock corporation because this legal structure is optimal for a business with robust growth prospects. This is the second time the company has been able to finance its growth externally through venture capital firms. In a subsequent phase, financial partners are sought for production and sales.

Entrepreneurs need to devote special attention to the following:

Intellectual property

The innovative project was conceived and patented by the business owners. The patent includes the right to prohibit the commercialization and financial exploitation of the invention. The holder of the patent may market the invention themselves or licence the right to third parties. In Switzerland, the Swiss Federal Institute of Intellectual Property is responsible for patent examination.

Legal structure

The company is developing an expensive technological product with backing from a venture capital firm. The entrepreneurs chose the legal form of a stock corporation for this purpose.

Since multiple parties are engaged in the business, a shareholder agreement should establish clear conditions. This contract regulates the shareholders’ relationship outside of the Articles of Association, so it is not required by law.VAT

The startup corporation anticipates initial annual sales of CHF 400,000. Therefore, entrepreneurs are required to register with the Federal Tax Administration in writing within 30 days of the beginning of their tax liability.

Steer

Stamp duty is due when a new company is formed.

Only if the share capital exceeds CHF 1 million is the company founded. The two entrepreneurs invest CHF 1.5 million in capital. Therefore, you must pay a 1% stamp duty in excess of CHF 500,000.

Employment Law

The two business owners wish to hire foreign computer scientists. Before employing them, you must submit an application for work permits to the cantonal administration:

Employees from EU/EFTA countries must obtain a work permit for stays of three months or longer. This isn’t required for brief stays.

Employees from non-EU/EFTA countries are only eligible for a first-time work permit if they are qualified and special circumstances justify the exception.

Entrepreneurs launching a new business can receive assistance from their canton’s economic development agency. She is able to assist them with general advice and beneficial contacts, such as for cooperatives or innovation parks.

Since the two entrepreneurs developed a new technology, the Swiss Agency for innovation promotion in no Switzerland provided them with a development grant.