Your accounts should tell you whether work is profitable, which invoices are unpaid and whether there is enough money for the next payroll. Here is how to keep the records Swiss law requires and use them between year-ends.
At a glance
- Swiss LLCs and companies limited by shares prepare full accounts regardless of turnover.
- For sole proprietorships and partnerships, turnover in the preceding financial year determines whether the CHF 500,000 threshold is met.
- Simplified bookkeeping still records income, expenditure and the business’s financial position.
- Regular bank reconciliations and supporting documents make the year-end close easier to check.
What is business accounting?
Accounting records business transactions so that owners, lenders and authorities can establish the company’s financial position. For an owner, it answers practical questions. Which activities are profitable? How much do customers owe? Which costs are growing?
The accounts record what has happened. A cash-flow budget projects what is likely to happen. Cost accounting helps you understand profitability by product, service or job.
Why a profitable business can run short of cash
Consider a business using accrual accounting. It starts the month with CHF 5,000 in the bank, completes and invoices CHF 10,000 of work and pays all CHF 7,000 of the month’s expenses. Customers pay only CHF 4,000. Ignoring VAT and other transactions, profit is CHF 3,000, but the closing bank balance is CHF 2,000. The remaining CHF 6,000 is an amount owed by customers. You cannot use it to pay a bill until it arrives.
Swiss bookkeeping requirements by legal structure
LLCs and companies limited by shares
Under Article 957 and following of the Swiss Code of Obligations (CO), legal entities such as a Sàrl/GmbH or SA/AG keep full accounts. Low sales or a quiet year do not give a small company an exemption. The annual financial statements include a balance sheet, income statement and notes. Opting out of a limited audit leaves the obligation to prepare accounts and the directors’ responsibilities in place.
Sole proprietorships and partnerships
Our guide to sole proprietorship and partnership accounting works through owner contributions, private drawings and profit allocation between partners.
If turnover in the preceding financial year was CHF 500,000 or more, full accounts are required. Exactly CHF 500,000 meets the threshold. Below it, eligible businesses may record receipts, expenditure and their financial position, including assets and liabilities. Keep evidence of owners’ contributions and drawings and distinguish them from sales and business expenses.
Commercial registration and Swiss VAT registration have their own tests. Crossing one threshold does not settle the other two.
Keeping Swiss accounts in English or a foreign currency
A Swiss business may keep its books in English or a Swiss national language. It may use Swiss francs or the currency most relevant to its operations. For example, an exporter whose sales and costs are mainly in euros may have a basis for using EUR. Keep a record of why the currency fits the business. Article 957a(4)–(5) CO.
The annual accounts may also be presented in English. If they are presented in a currency other than Swiss francs, show the amounts in CHF as well. Disclose the exchange rates used in the notes and explain them where necessary. This additional presentation applies to the financial statements. Article 958d(3)–(4) CO.
Bookkeeping basics: debit, credit and the financial statements
In double-entry bookkeeping, each transaction affects at least two accounts and total debits equal total credits. Take a CHF 1,000 sale on credit by a business that is not registered for VAT.
| Event | Debit | Credit |
|---|---|---|
| Invoice issued | Accounts receivable · CHF 1,000 | Sales revenue · CHF 1,000 |
| Customer pays | Bank · CHF 1,000 | Accounts receivable · CHF 1,000 |
The first entry records the sale and the customer’s debt. The second converts the receivable into cash. Crediting sales again when the payment arrives would count the revenue twice.
| Record | What it tells you |
|---|---|
| Journal | Transactions in date order, with supporting references. |
| General ledger | Entries grouped by account so you can check each balance. |
| Balance sheet | Assets, liabilities and equity at a particular date. |
| Income statement | Revenue and expenses over a period, and the resulting profit or loss. |
| Notes | Required disclosures and explanations that help the reader interpret the accounts. |
The rules of debit and credit also apply to entries with no immediate cash movement. Recording depreciation, for example, allocates part of an asset’s cost without making a payment that day.
How to organise your bookkeeping
Collect the evidence as you go
Keep invoices, receipts, expense claims, bank statements, contracts and payroll records together. Each entry should lead back to its supporting document. A bank line alone may show what you paid without explaining what you bought. Separate private spending and document the business share of mixed expenses.
Record and reconcile transactions
Set a rhythm that fits the volume of transactions. For example, file documents and allocate receipts weekly, then reconcile the accounts monthly. If CHF 1,200 arrives in the bank, match it to the customer’s invoice, mark the invoice paid and check the ledger balance against the bank statement at the same date. Check automated imports so a supplier invoice and the bank payment do not become two expenses.
Plan filing and payment dates
Keep a calendar for VAT, social insurance, tax instalments and year-end work. The applicable VAT reporting method must be checked separately from the bookkeeping regime.
Retain readable records
Under Article 958f CO, accounting records, supporting documents and the relevant reports generally have to be retained for ten years from the end of the financial year. Make sure records remain readable and their integrity can be checked. Tax or contractual reasons may justify longer retention for particular files. Arrange backups, access rights and a usable export before changing software. Corrections should leave an audit trail.
Use a consistent chart of accounts
A Swiss SME chart of accounts gives each type of asset, liability, income and expense a consistent place. Add subaccounts that tell you something about your business, then use them consistently. Assign an owner and a deputy for invoicing, payments, payroll and filing.
What to check at month-end
A complete-looking ledger can still be missing a supplier invoice or show a customer as overdue after payment. Run these checks before discussing the figures.
| Check | Question | Action |
|---|---|---|
| Bank | Does the ledger match the statement at the same date? | Identify the missing entry and its evidence. |
| Sales | Has completed work been invoiced or recognised in the correct period? | Issue the invoice or document the work in progress. |
| Costs | Are rent, payroll and significant purchases included? | Investigate missing documents before interpreting the margin. |
| Receivables | What is overdue, disputed or doubtful? | Assign follow-up and revise expected collection dates. |
| Upcoming bills | Can the business fund payroll, taxes and contributions? | Adjust the cash forecast or the timing of spending. |
In our example, the business earns CHF 3,000 but has CHF 2,000 in the bank. Knowing when the CHF 6,000 of receivables will clear can matter more than the month’s profit when deciding whether to buy equipment. Give each input an owner and set a monthly review date.
When must the annual meeting take place?
Hold the annual general meeting within six months of the financial year end. For a 31 December closing date, the deadline is 30 June. In a company limited by shares the board convenes the general meeting under Article 699 CO. In an LLC the managing directors convene the members’ general meeting under Article 805 CO. Allow time to prepare the accounts and obtain any required audit report before the meeting.
Does a Swiss company need an audit?
An LLC or company limited by shares normally has a limited audit unless an ordinary audit is required or it qualifies for an opt-out. A limited audit may be waived with the consent of all shareholders or members if the company has no more than ten full-time equivalent employees on annual average. For an existing company, an opt-out applies to future financial years and registration must be requested before the relevant year starts. An opt-out is also possible at incorporation.
An ordinary audit is required, among other cases, when a company exceeds two of three thresholds in two consecutive financial years. The thresholds are CHF 20 million in total assets, CHF 40 million in sales and 250 full-time equivalent employees. Other grounds can apply independently.
If an audit is required, check the auditor’s licence and independence before the appointment.
Does a small Swiss company need Swiss GAAP FER or IFRS?
For most privately held SMEs, statutory accounts under the Code of Obligations suffice. Article 962 CO requires additional statements under a recognised standard for listed companies when the exchange requires them, cooperatives with at least 2,000 members and foundations legally subject to an ordinary audit.
Members holding at least 20% of the basic capital can also request these statements. Separate rights apply to 10% of a cooperative’s members, 20% of an association’s members, and members bearing personal liability or a duty to contribute further capital. The separate reporting duty falls away if consolidated accounts are prepared under a recognised standard. Swiss GAAP FER and IFRS are examples of recognised standards.
In-house bookkeeping or an external accountant?
You can issue invoices and organise documents in-house while an accountant reviews entries, prepares VAT returns and closes the year. Hiring a bookkeeper becomes worthwhile when the volume and need for timely information justify it. Headcount alone offers little guidance.
Common bookkeeping mistakes
- Recording both a bill and its payment as expenses. Match the payment to the bill already entered.
- Charging a private withdrawal to operating expenses. Identify the recipient and why the money moved.
- Claiming input VAT on the basis of a bank statement alone. Retain the document supporting the claim.
- Missing open items at year-end. Match customer and supplier lists to the underlying invoices.
Put the accounts to work
Reliable accounts depend on a repeatable process, clear responsibilities and figures you can explain. A monthly review makes it easier to spot a missing document while the transaction is fresh. If you delegate the close, agree what you will supply and when you can expect reviewed figures. Our business accounting service explains how that division of work can look.
Frequently asked questions
Does a Swiss LLC with no sales need accounts?
Yes. Inactivity or a low volume of transactions does not remove the company’s duty to keep books and prepare annual accounts.
Do I need receipts if I use simplified bookkeeping?
Yes. Income, expenditure and information about the business’s financial position must remain documented and verifiable.
Does accounting software guarantee compliance?
No. Software can record entries and produce reports. Someone must still check the evidence, classifications, balances and year-end adjustments.
What accounting records must a small Swiss business keep?
An LLC or company limited by shares keeps full accounts from incorporation. A sole proprietorship or partnership below CHF 500,000 in turnover in the preceding year may keep simplified records of income, expenses and financial position. At or above the threshold, full accounts are required.
Should a Swiss SME use software or hire an accountant?
The two can work together. A small firm can enter invoices in software and engage an accountant for the close. Where payroll, VAT or several activities are involved, agree who reviews the entries and how often.
Sources and further reading
Romain Prieur is a Swiss Certified Public Accountant and the founder of Entreprendre.ch. He has more than ten years of experience in audit and business advisory in Switzerland and advises entrepreneurs on company formation, accounting and tax.
