GmbH or AG – What Are The Differences?

If you want to start a business in the land of Switzerland, you are going to need to know about these two business types. The GmbH, or Gesellschaft mit beschränkter Haftung, is a limited liability company. While the AG, or Aktiengesellschaft, is a standard stock company.

There are several differences between the companies that highlight their differences, and depending on what you need from a company, you could go with either one. It’s best to have all the information before picking a company, and then you can make the best decision for your business.

One of the most significant differences is the amount of share capital needed. The GmbH only needs around 25,000 euros or 30,300 dollars to get started. An AG needs 50,000 euros or 60,600 dollars to get started. 

But don’t go running to the LLC company just because they are cheaper. The larger sum that you invest into the AG standard company gives investors a lot of confidence in your corporation, and then they invest more money into you. If your business relies on outside investments and business partners, spending more could be worth it.

The Structures Of The Two Companies

Both companies are structured very differently, especially when it comes to controlling the company. An LLC company relies heavily on its members and shareholders to manage the management. Shareholders have a lot of power in the GmbH world, even if they are limited to just the company’s investment. At the same time, things are different in the AG world.

For AG stock corporations, control is separated by the functions that the executives perform. The board of directors handles directing and big-picture overview, the management board works to manage the company, and the general assembly works with the shareholders.

Each part of the corporation plays its role, and there is a clear separation of power between the shareholders and the rest of the company.

Depending on how you foresee your company going, looking at the different management styles can help you choose.

Handling Liability

For an LLC company, the liability is minimal as the shareholders only need to risk their business investments. All of the personal assets and money outside of the business remain untouched and inaccessible for anyone trying to sue the company. However, that does mean that the GmbH company’s directors can be held accountable for the problem.

Since the directors are the ones in charge of payments, if inconsistencies start to arise, people look to the directors for answers. They are also personally responsible for any expenses that need to be made if the company becomes insolvent.

For AG companies, they don’t need to worry about it as much. The board of shareholders is not liable, and they don’t need to reimburse the company if something happens. If problems occur, the company takes the fall and not them. Only if it has been found that a member of the board hasn’t been diligent with looking over transactions can an investigation be opened into that member.

Which One Works The Best For You?

Each company has pros, cons, and differences. It’s all about your business and how you want it to work. For a GmbH company, it works the best with small business and family-owned companies. You have a lot of control over the company’s inner workings and can customize it to how you see fit. 

LLC companies are also much easier to start up and require less capital to get started. They are perfect for people who want to start a business in Switzerland. If you don’t have much, then you can still start and create something worthwhile. 

AG businesses are suitable for large companies that want a lot of business investors to take notice. It costs a lot more capital to start up, but once you get it going, the company can attract new business more efficiently. Setting up an AG also takes up a lot more time, and you will need to keep that in mind.

No matter what type of company you end up picking, Switzerland is a very lucrative place to be right now for business. No matter what, you will find some success. Get a clear picture of your business in your head, compare it to these two types and see which one works for you.