Starting a side business is an attractive option for aspiring entrepreneurs. It involves less risk, since you can continue to cover your living expenses with income from your primary job. This means you are not dependent on income from your new business. In addition, you have the opportunity to observe and get to know the market over a longer period of time.
What counts as part-time self-employment in Switzerland?
A side job is defined as gainful employment performed in addition to one’s primary job as an employee. A side job can be either self-employed or employed. It is important that the income from the side job be significantly lower than that from the primary occupation. In addition, the side job should take place outside the working hours of the primary occupation and be in a different field.
Who is suited for part-time self-employment?
Generally speaking, there is no rule of thumb that determines who is suited for part-time self-employment. However, there are certain factors you should be aware of before deciding to become a part-time self-employed person.
The first requirement that must be met is having a stable primary source of income. Especially at the beginning of your part-time self-employment, your primary source of income will be responsible for covering your living expenses. Therefore, you need a primary source of income that can guarantee a sufficient income.
Another important factor is a person’s individual capacity to handle stress. Working as a self-employed person on the side brings additional challenges. Combined with one’s primary job, this results in a double workload.
Important Legal Considerations Regarding Secondary Employment
The Duty of Loyalty
Anyone who wants to become self-employed on a part-time basis must keep certain legal aspects in mind. Among other things, part-time self-employment must be consistent with the duty of loyalty. Specifically, this means that the activity must not compete with that of the employer in one’s primary job. Furthermore, you must not damage the company’s reputation. It is also important to note that your performance in your primary job must not be impaired by your side business. The federal government’s website provides more detailed information on the duty of loyalty.
Registration with the AHV
Another legal consideration that must be taken into account is registration with the AHV. If your annual income from a side job exceeds 2,500 CHF, you are required to register with the compensation office. You can find more general information on registering as self-employed in Switzerland in our article on the topic.
Tax Liability for Secondary Employment
As with primary employment, income from part-time self-employment must be reported on your tax return. If you run a sole proprietorship as a side business, the business income is taxed together with your personal income. For a GmbH or AG, the so-called “double taxation” applies. In this case, both salary and profits are taxed in the form of income tax and corporate income tax.
Advantages and Disadvantages of Part-Time Self-Employment
Anyone considering starting a side business should carefully weigh the pros and cons. We’ve put together an overview to help with this.
Benefits of Part-Time Self-Employment
- Lower Risk and Financial Security
Generally speaking, part-time self-employment is less risky than starting a business as your primary source of income. By continuing to work at your main job, you can continue to cover your living expenses during the startup process. This gives you a safety net in case the new business doesn’t turn a profit.
- More Time to Build Your Business
Since you can continue to support yourself with your primary source of income, you’re under less time pressure to establish your business. You’re not under intense pressure to turn a profit. Furthermore, this allows you to monitor the market over a longer period of time.
- More Income
If you successfully start a business as a side hustle, you’ll have more income afterward in addition to your main job’s earnings.
Disadvantages of Part-Time Self-Employment
- The Double Burden
The biggest drawback of running a side business is the heavy workload. You have to juggle two jobs: your main job and your side business. This leaves less free time and, consequently, less time for family and hobbies. Your work-life balance could be disrupted.
- Longer Start-up Phase
It generally takes longer to build a side business. This is because having a full-time job leaves only a limited amount of time for a side business.
- Restrictions Due to One’s Primary Employment
If you start a business as a side hustle, you are still required to continue working at your primary job as usual. This entails certain restrictions. Among other things, you are constrained by the regular working hours of your primary employment. In addition, you must structure your self-employment in such a way that it does not negatively impact your primary employment.
FAQs on Part-Time Self-Employment in Switzerland
Is it possible to be both an employee and self-employed at the same time?
Yes, you can be employed full-time and work as a self-employed person on the side. It is important to fulfill your duty of loyalty to your primary employer.
When is someone considered to be self-employed on a part-time basis?
Part-time self-employment is defined as engaging in self-employment in addition to one’s primary, full-time employment as a wage earner. In this case, the income from the primary employment must be significantly greater than that from the secondary employment.
What do I need to start a side business?
Essentially, the requirements for part-time self-employment are the same as those for full-time self-employment. These include elements such as a business idea and a business plan. You can find more information on becoming self-employed in our article.
How much can I earn from a side job?
In principle, there is no income limit for earnings from a secondary occupation. However, it is important to note that if your annual income exceeds 2,500 CHF, you must register your self-employment with the compensation office.
How is freelance work done as a side job taxed?
How income from freelance side work is taxed depends on the legal form of the business. If you operate as a sole proprietorship as a side business, the income from that business is taxed together with your personal income. For a public corporation (AG) or a limited liability company (GmbH), double taxation applies. In this case, wages and profits are taxed separately.
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