Where can I find a tax calculator for an LLC scenario ?
Say I open up an LLC via an umbrella company here in Switzerland.
I am in talks with a customer that is offering a day rate and also wants me to travel to a site in Spain some 20% of the time ( not sure if any tax implication because of working outside Switzerland ) . ( 12 month fixed term contract )
I want to compare this with my current annual rate.
From what I understand, from the money they pay me I need to cover what in a regular employment contract would be Employee and Employer costs - is this correct ?
this is not as easy. The main advantage of having a LLC is that you have more freedoms (of course in the frame of a legal framework) what to do with the profits.
Mostly, it allows you to separate profits of the company on which you pay corporate taxes at a lower rate and your personal salary which you will deduct from your company profits and on which you will have to pay social charges (employee + employer as you correctly state) and personal taxes.
So from a tax point of view, it mostly makes sense if you want to keep money in the company for future investments. (Also, your personal wealth and your companies LLC wealth is separated). If all the profits will be paid out to you as a salary and a dividend (there must be an acceptable ratio, since the dividend will be on an advantageous tax regime as you already paid corporate taxes), the difference is not as high, since yes, you do not pay social charges, but the social charges are also deducted from your taxable income.
Basically you will have to go to excel and calculate different scenarios in combination with a personal tax simulator (corporate taxes on profits are not super difficult as far as I know)
However, the main advantage of the LLC is to separate the limit your financial risk to the wealth inside the company, leaving your personal (and of your eventual spouse) wealth off limits (compared to a sole propriorship).
In my understanding no, because the company itself would have no profit (since you pay out the whole profit out as a salary and dividends out to yourself). Only if at the end of the year there is some profit left in the company, the company will have to pay taxes.
In an LLC you really have to look at the company and your person as two totally different entities.
Roughly, on the salary you pay out to yourself, you will have 11-12% social contributions (AHV/ALV) and on the dividends it is taxed at 50-70% of your marginal tax rate (but you will have to pay corporate taxes on that part). Furthermore, do not forget you will have second pillar as an employee (so min 50% contribution match of the employer). I am not sure how mandatory it is to have a second pillar as a owner of a LLC. It could be that you have the possibility to contribute up to around 30k in your 3a instead.
Disclaimer : I am just a guy who reads too much about that stuff. For final decision, see an expert.
There is no such calculator because you have too many variables. I assume you want to find out if it makes sense to create an umbrella company for your potential project.
There are many factors which have to be looked at: AHV/ALV/EO, insurances, Pillar 2, UVG and KTG. All those are costs you have to add on top of your expected daily rate. As a LLC, you also have to cover employer costs for AHV like FAK and VK as well.
Your calculation of 138k gross billed to the customer is not enough, from my personal experiences. The whole tax topic (salary vs dividends) is another big topic and really depends on your individual case.
If you are an employee of your own LLC, P2 is mandatory. You can choose to get a minimum plan though.
This. I learned a lot of stuff myself, but for several topics I also had to pay a tax advisor. I think I have a very good overview now about the whole LLC and tax topics, but I learned it over several years (plus I set up three LLCs from scratch).
PS: I spent a decent 5 figure amount on tax advisors plus countless non-billed hours on those topics. That’s why I doubt you will find an easy solution like an online calculator for this.
Your LLC would bill indeed (at least) 138k to the customer in this scenario.
Simplified, on a high level, there are 2 ways how to get out the money out from the LLC:
You basically pay yourself the maximal salary the LLC can afford and you end up with a take home of 98.5k. The LLC ends up with 0 profit.
You basically pay yourself 0 salary and maximize the LLC’s profit. In this scenario you pay a corporate tax on the profit (Gewinnsteuer, used the be the lowest in Nidwalden), pay yourself the net amount as a dividiend, and since this is a “qualifizierte Beteiligung”, you pay 50% of the income tax rate on this dividend (in Zurich at least).
Since 2. is super tax efficient, I’ve heard that the tax autorities in CH won’t let you do that and will force you to pay yourself some reasonble salary. So you’ll end up with a mix of 1. and 2.
You’ll also want to maximize business expenses (the LLC would buy the computer you’ll using), since expenses are paid from pre-tax money in the LLC. They’ll reduce both the profit and your salary and thus taxes.
P.S. My experience is from a country different from CH, so I might not have gotten all the CH specific details right.
As I said before: 138k is not enough compared with an employee salary of 120k gross.
As you said correctly: number 2. is not possible. You have to pay yourself an appropriate salary before you are able to pay out dividends from your company. Appropriate depends on the individual case (age, region, Swiss or not Swiss, business type, others). Some years ago, you could pay yourself 10k per month (=120k per year) to be eligible to pay out the rest of your profit as dividends. But they changed it around 5 years ago.
The bigger problem for @Dunkoff is the part about 20% work onsite in Spain.