Why the Legal Form Is So Important

One of the first and most important decisions when you want to set up a daycare, start a playgroup or work as a childminder: What legal form do you choose? The answer has far-reaching consequences — for your personal liability, your taxes, your financing options and for the administrative effort in daily operations.

This guide explains the five relevant legal forms for childcare in Switzerland: sole proprietorship, GmbH (Ltd), association, AG (corporation) and foundation. You will learn the advantages and disadvantages of each form, what it costs, how the establishment process works and which legal form is right for your project.

Why the Legal Form Is So Important

The legal form determines three central areas of your business:

• Liability: Are you liable with your personal assets or only with the company capital?
• Taxes: Is your income taxed as personal income or as company income?
• Financing: Can you access subsidies, donations or bring investors on board?

Especially in childcare — where children are cared for, accidents can happen and public funds often flow — the right choice is crucial. The wrong legal form can, in the worst case, personally ruin you financially or block your access to urgently needed subsidies.

The Sole Proprietorship

What Is It?

The simplest and most informal legal form in Switzerland. You operate under your own name (e.g. "Anna Mueller, Childminder Sunshine"). There is no separation between you as a person and your business.

Establishment

The sole proprietorship is the only legal form that requires no formal establishment. You register with the AHV compensation office as self-employed — that is all. As soon as you work regularly and on your own account, your sole proprietorship exists.

A commercial register entry is only mandatory from an annual turnover of CHF 100,000. Below that, it is voluntary but can be useful for a more professional appearance.

Advantages

• No establishment costs: You need neither a notary nor minimum capital
• No minimum capital required — you start with what you have
• Minimal administrative effort: Simple bookkeeping (income/expense accounting) is sufficient
• Full decision-making freedom: You decide alone, quickly and without consultations
• Quick start: Decide today, start tomorrow

Disadvantages

• Unlimited personal liability: This is the biggest disadvantage. You are liable with your entire personal assets — savings, house, car. If a child in your care has an accident and the liability insurance does not cover everything, you are personally on the hook
• Income is taxed as personal income: The more you earn, the higher the tax progression
• More difficult access to subsidies: Many municipalities preferentially award subsidised places to GmbH or associations
• No access to investor capital: You cannot sell shares
• Succession planning difficult: The company is inseparably linked to you

Suitable For

• Solo childminders who care for a few children
• Small playgroups with one leader and no employees
• Childcare offerings as a side activity

Important: As soon as you employ staff or build a larger operation, the sole proprietorship is not recommended. The liability risk is simply too great.

The GmbH (Limited Liability Company)

What Is It?

An independent legal entity that is separate from the founder(s). The GmbH has its own assets, its own debts and its own tax return. The key word is "limited": your liability is limited to the company capital.

Establishment

Establishing a GmbH requires a notary appointment (public deed) and entry in the commercial register. You need:

1. Articles of association (company agreement) to be drafted
2. Share capital of at least CHF 20,000 to be deposited into an escrow account
3. Founding meeting to be held at the notary
4. Commercial register entry to be applied for
5. AHV compensation office, tax administration and VAT registration

The total establishment costs (notary, commercial register, advice) amount to CHF 2,000–4,000. Allow approximately 2–4 weeks.

Advantages

• Limited liability: You are only liable with the company assets, not with your personal assets. If the GmbH has debts, you are personally protected
• Professional appearance: A GmbH signals seriousness to municipalities, banks and parents
• Multiple shareholders possible: You can set up the daycare together with a partner and clearly regulate the shares
• Good access to subsidies: Municipalities preferentially enter into service agreements with GmbH
• Clear separation: Company funds and private funds are cleanly separated
• Succession and sale capability: Shares can be transferred or sold

Disadvantages

• Establishment costs: CHF 3,000–5,000 (notary, commercial register, advice)
• Minimum capital: CHF 20,000 must be paid in (but is then available as working capital)
• Double taxation: The GmbH pays profit tax, and you additionally pay income tax on your salary and any dividends
• More administration: Annual accounts (balance sheet + income statement), proper bookkeeping, shareholders' meeting
• Audit obligation: Limited audit when exceeding certain thresholds (10 full-time positions)

Suitable For

• Professional daycare centres with employees
• Larger playgroups with multiple locations
• Childcare offerings that work with municipal subsidies
• Founding teams of two or more people

The GmbH is the most popular legal form for professional daycare centres in Switzerland. It offers the best compromise of liability protection, flexibility and access to public funds.

-> Guide: Setting up a daycare in Switzerland

The Association

What Is It?

An association is a group of at least two persons with a common, non-commercial purpose. In childcare, the association is often chosen when the offering is non-profit oriented and the community takes centre stage — not profit.

Establishment

Establishing an association is surprisingly simple and inexpensive:

1. At least 2 founding members to be found
2. Articles of association to be drafted (purpose, organisation, membership, voting rights)
3. Founding meeting to be held and minutes taken
4. Board to be elected (president, treasurer, secretary)

A commercial register entry is only necessary if the association operates a commercial business — which is generally the case when a daycare with employees is operated. Costs: CHF 200–500 total.

Advantages

• No minimum capital required
• Low establishment costs: CHF 200–500
• Limited liability of members (with correct organisation)
• Non-profit status possible: The association can apply to the canton for tax exemption if it pursues exclusively non-profit purposes
• Tax-deductible donations: If the association is recognised as non-profit, donors can deduct their contributions from taxes — this makes fundraising much easier
• Access to subsidies and foundation funds: Many funding foundations and municipalities preferentially support associations
• Community spirit: Parents can become members and have a say — this strengthens bonds and engagement

Disadvantages

• Democratic structure: The general assembly is the highest body. This means: all important decisions must be approved by the members. This can slow down processes
• Voluntary board work: The association board often works unpaid. This not infrequently leads to overload and volunteer burnout
• Profit distribution prohibited: A non-profit association may not distribute profits to members. This limits flexibility
• Dependence on committed individuals: If key people leave the board, the entire organisation can become unstable
• Accountability: With non-profit status, regular reporting to tax authorities

Suitable For

• Non-profit, neighbourhood-based daycare centres with strong parental involvement
• Parent initiatives that jointly establish a childcare offering
• Non-profit projects where the social purpose takes priority
• Organisations that rely on donations and foundation funds

Good to know: Many of the best-known daycare operators in Switzerland are associations — including large organisations with dozens of locations. The association is therefore by no means only suitable for small projects.

The AG (Corporation)

What Is It?

The corporation is the "big sister" of the GmbH. It is suitable for larger companies with high capital requirements and is rather the exception in childcare.

Establishment

• Minimum capital: CHF 100,000, of which at least CHF 50,000 must be paid in at establishment
• Notarial certification required
• Establishment costs: CHF 5,000–10,000
• Commercial register entry mandatory

Advantages

• Limited liability to the share capital
• Anonymous participation possible (bearer shares have been abolished, but registered shares can be flexibly transferred)
• Capital market access: Shares can be sold to investors
• Highest professionalism: Banks and large institutions take a corporation particularly seriously

Disadvantages

• High minimum capital: CHF 100,000 — oversized for most daycare establishments
• High establishment and administrative costs
• Audit obligation: Ordinary or limited audit required
• Double taxation as with the GmbH

Suitable For

• Large daycare chains with multiple locations
• Companies with institutional investors
• Organisations with high capital requirements (e.g. building own properties)

For the vast majority of daycare establishments, the AG is oversized. It only pays off from a certain company size with multiple locations and considerable investment needs.

The Foundation

What Is It?

A foundation is a body of assets dedicated to a specific purpose. Once established, the assets belong to the foundation itself — the founder no longer has access to them.

Establishment

• Minimum capital: CHF 50,000 (earmarked)
• Notarial certification or testamentary disposition
• Entry in the commercial register
• Foundation supervision: Every foundation is subject to a cantonal or federal supervisory authority

Advantages

• Long-term earmarking: The assets cannot be diverted from their purpose
• Tax exemption with non-profit status
• High trust among donors
• Independence from individual persons

Disadvantages

• Very rigid: Once defined, the foundation purpose can hardly be changed
• Loss of control: The founder can no longer intervene after establishment
• Ongoing supervision: Annual reporting to the foundation supervisory authority
• High organisational requirements (foundation board, auditors)
• No access to equity increase through new shareholders

Suitable For

• Long-term social projects with a clear mission
• Legacies and inheritances intended to serve childcare permanently
• Institutions with large foundation assets and a clearly defined mandate

The foundation is rare in childcare. It mainly makes sense when someone wants to deploy a larger fortune for a social purpose over the long term.

Comparison Table: All Legal Forms at a Glance

Criterion	Sole Proprietorship	GmbH	Association	AG
Establishment costs	CHF 0–200	CHF 3,000–5,000	CHF 200–500	CHF 5,000–10,000
Minimum capital	CHF 0	CHF 20,000	CHF 0	CHF 100,000
Liability	Unlimited (personal)	Limited (company assets)	Limited (association assets)	Limited (share capital)
Taxation	Personal income	Double (profit + salary)	Potentially tax-exempt	Double (profit + dividend)
Subsidy access	Difficult	Good	Easiest	Good
Tax-deductible donations	No	No	Yes (with non-profit status)	No
Establishment effort	Minimal	Medium (notary)	Low	High (notary)
Bookkeeping	Simple	Proper	Simple to proper	Proper
Suitable for	Solo/Small	Professional daycare	Non-profit daycare	Daycare chains

Which Legal Form Suits Me? — Decision Guide

The right legal form depends on your situation. Here is a simple decision path:

You Work Alone, Without Employees

-> Sole Proprietorship

You are a childminder caring for a few children at your home, or you run a small playgroup alone. You want to start quickly, with as little bureaucracy as possible and no establishment costs.

-> Guide: Becoming a childminder

You Are Setting Up a Professional Daycare with Staff

-> GmbH

You are planning a daycare centre with employees, want to enter into service agreements with the municipality and need liability protection. You have (or can organise) CHF 20,000 in start-up capital and want a sustainable, professional structure.

-> Guide: Setting up a daycare in Switzerland

You Want a Non-Profit, Community-Based Offering

-> Association

A group of parents or committed individuals wants to jointly establish a daycare or playgroup. The social purpose takes priority, not profit. You want to use subsidies, foundation funds and donations.

You Are Planning Big — Multiple Locations, Investors

-> AG

You are building a daycare group with multiple locations, need external capital and want to be able to sell shares to investors. This is (still) the exception in Switzerland but does occur with larger operators.

You Want to Create a Legacy

-> Foundation

You have a larger fortune and want to dedicate it permanently and irrevocably to a social purpose in childcare. The foundation is the right choice — but it cannot be reversed.

Practical Steps: How to Establish Concretely

Establishing a Sole Proprietorship

1. Start your activity (no formal founding act required)
2. AHV compensation office: Register as self-employed
3. Tax administration: Declaration as self-employed
4. Liability insurance (strongly recommended)
5. Optional: Commercial register entry (mandatory from CHF 100,000 turnover)
6. Set up bookkeeping: An income/expense journal is sufficient

Time required: 1–2 days Costs: CHF 0–200

Establishing a GmbH

1. Company name check (availability in the commercial register)
2. Articles of association drafting (with a lawyer or template)
3. Share capital (CHF 20,000) deposit into escrow account
4. Founding meeting at the notary (public deed)
5. Commercial register entry application
6. AHV, tax administration, VAT registration
7. Bank account opening, escrow account release
8. Insurance (liability, accident insurance)

Time required: 2–4 weeks Costs: CHF 3,000–5,000

Establishing an Association

1. At least 2 founding members to bring together
2. Articles of association drafting (formulate the purpose clause particularly carefully!)
3. Founding meeting holding, minutes taking
4. Board election
5. Commercial register entry (if commercial business)
6. Non-profit status application to the canton (optional but recommended)
7. AHV, tax administration registration (once you have employees)
8. Bank account opening in the association's name

Time required: 1–2 weeks Costs: CHF 200–500

-> Guide: Business plan for a daycare

Tax Differences in Detail

The legal form significantly determines how much tax you pay. Here are the key differences:

Sole Proprietorship

Your entire business income is taxed as personal income. This means: the more the business earns, the higher your personal tax progression. Your business assets also count as personal assets and are subject to wealth tax.

Advantage: No double taxation, no minimum profit tax. Disadvantage: With high income, the tax burden can rise significantly due to progression.

GmbH

The GmbH pays its own profit tax (varies by canton, approx. 12–22% effective) and capital tax. Additionally, you personally pay income tax on your salary and dividends. Dividends are taxed at preferential rates in many cantons (partial taxation).

Advantage: Through clever allocation of salary and dividends, the overall tax burden can be optimised. Disadvantage: Double taxation — the company pays profit tax, you pay income tax.

Association

A non-profit association can apply to the canton for tax exemption. If granted, the association pays neither profit nor capital tax. Requirements: exclusively non-profit purpose, no profit distribution to members, irrevocable earmarking of assets.

Advantage: Potential complete tax exemption. Disadvantage: Strict conditions, regular monitoring by tax authorities.

AG

Tax-wise like the GmbH: double taxation at the company level (profit and capital tax) and at the shareholder level (income and wealth tax on dividends and shares).

Tax tip: Get advice from a fiduciary before establishing. The choice of legal form influences your tax burden for years — professional advice (CHF 500–1,000) pays for itself quickly.

Frequently Asked Questions

Can I change the legal form later? Yes, but it is complex. A sole proprietorship can be converted into a GmbH (contribution in kind or asset transfer under the Merger Act). An association cannot simply be converted into a GmbH — this requires a new establishment and asset transfer. Therefore, plan the legal form with foresight from the outset.

Do I need a fiduciary or lawyer for the establishment? Not for the sole proprietorship. For the GmbH, you mandatorily need a notary for the certification. For the association, well-drafted articles of association are generally sufficient. A fiduciary can help with all forms to correctly set up bookkeeping, tax planning and AHV registration. Investment: CHF 500–2,000 — usually well invested.

Can a single person establish an association? No. At least two persons are required for establishment. In ongoing operations, it is theoretically possible for the association to shrink to one member — but this is risky and not recommended.

What if I grow as a childminder and suddenly care for more children? This is a typical moment to think about changing legal form. As soon as you have employees or regularly care for more than five children, you should seriously consider a GmbH or association — especially because of liability and the licensing requirement.

Conclusion: The Legal Form as the Foundation

The choice of legal form is not a side matter — it is the foundation of your childcare offering. Take the time to examine the different options and get advice if in doubt. The right decision today saves you a lot of trouble, money and stress tomorrow.

In summary:

• Childminder, small playgroup (solo): Sole proprietorship — simple, inexpensive, immediately ready to start
• Professional daycare with employees: GmbH — liability protection, professional, eligible for subsidies
• Non-profit, community-supported offering: Association — tax-exempt, donation-friendly, democratic
• Large daycare group with investors: AG — only if truly necessary
• Long-term legacy: Foundation — irrevocable, supervised, rare

-> Guide: Setting up a daycare in Switzerland -> Guide: Starting a playgroup -> Guide: Becoming a childminder -> Guide: Business plan for a daycare -> Guide: Insurance for childcare providers

Are you ready to start your childcare offering? Create your profile on kizi.ch now and be found by parents in your region.

Sources: Swiss Code of Obligations (OR), Swiss Civil Code (ZGB), SECO, Federal Commercial Registry Office, cantonal tax administrations, kibesuisse. Last updated: February 2026.