Swiss Bookkeeping and Accounting Guide

Swiss Cash Basis Accounting Guide Swiss Cash Basis Accounting Guide

Swiss Cash Basis Accounting Guide

This guide explains who in Switzerland may or must use the Einnahmen-Ausgaben-Rechnung (EAR), how it works in practice, and how its figures flow into your Swiss tax return. You’ll also find a concise comparison with full double-entry accounting under the Swiss Code of Obligations (OR/CO) plus practical VAT notes.

Use the table of contents below to jump straight to what you need.

Who may (or must) use the EAR?

In Switzerland, the Swiss Code of Obligations (OR/CO) governs bookkeeping and reporting. Small sole proprietorships and partnerships under certain size criteria may keep an income-expense record and a statement of assets instead of full double-entry accounts. This is often called the “Milchbüchleinrechnung”. :contentReference[oaicite:0]{index=0}

CO thresholds & accounting duties

Entities with sales of at least CHF 500,000 in the last financial year (sole proprietorships/partnerships) and all legal entities must keep proper accounts and prepare financial statements (balance sheet, P&L, notes) under Art. 957 ff. CO. Below CHF 500,000, only an income-expense account and statement of assets are required. :contentReference[oaicite:1]{index=1}

Who may continue using the EAR

Sole proprietors and partnerships with sales < CHF 500,000 can use the EAR. If your business grows beyond that threshold, you must switch to full double-entry bookkeeping the following year. :contentReference[oaicite:2]{index=2}

How the EAR works (mechanics)

The EAR determines taxable profit using a simple cash-basis view of the year’s receipts and payments, complemented by a statement of assets and liabilities at year-end.

Cash basis (receipts & payments)

Record business income when received and expenses when paid. Unlike full accrual accounting, receivables, payables and accruals are generally not recognized in the income-expense statement. However, the statement of assets shows key positions (e.g., bank balance, equipment, loans). :contentReference[oaicite:3]{index=3}

Assets & depreciation

Business assets used over multiple years are typically depreciated for tax purposes based on Swiss tax depreciation guidelines (industry standard rates). Small tools and low-value items are often expensed immediately by practice/materiality. Coordinate rates with your canton or advisor.

Swiss VAT (MWST) treatment

  • Rates since 1 Jan 2024: Standard 8.1%, reduced 2.6%, special (accommodation) 3.8%. :contentReference[oaicite:4]{index=4}
  • Registration: Generally required at CHF 100,000 annual turnover (resident businesses; also worldwide turnover for foreign businesses with Swiss-taxable supplies). :contentReference[oaicite:5]{index=5}
  • Methods: The effective method (normal input tax deduction) or the net tax rate / Saldosteuersatz method (flat % of turnover). Filing can be on agreed consideration (accrual) or received consideration (cash). :contentReference[oaicite:6]{index=6}
  • Filing cadence: Returns are typically due within 60 days of the end of the reporting period. :contentReference[oaicite:7]{index=7}

Records & documentation

Keep a chronological list of receipts and payments, evidence (invoices/receipts), and a simple asset/debt overview. Retention and auditability follow OR/CO. :contentReference[oaicite:8]{index=8}

Integrating the EAR into your Swiss tax return

EAR results flow into your personal tax return (cantonal/communal and direct federal tax) if you operate as a sole proprietor or partnership.

Cantonal filing & what to attach

With e-filing (e.g., eTax portals), attach your income-expense statement and the statement of assets & liabilities; some cantons provide templates. Practices vary by canton—follow your canton’s checklist. :contentReference[oaicite:9]{index=9}

Where the result goes in the return

Your net business result (profit or loss) is included under self-employed income in the individual return; business assets and debts feed into wealth tax schedules at the cantonal level. :contentReference[oaicite:10]{index=10}

Social insurance (AHV/IV/EO)

Self-employed persons must register with the compensation office (SVA) and pay AHV/IV/EO contributions based on profit; small activities under CHF 2,300 per year may be exempt from mandatory contributions (but can opt in). :contentReference[oaicite:11]{index=11}

EAR vs. Double-entry accounting (OR/CO)

Topic EAR (income–expense) Double-entry (OR/CO)
Method Cash basis: record when money flows; statement of assets at year-end. Accrual basis: receivables, payables, inventories; full financial statements.
Complexity Lightweight; fewer formalities. Formal system per Art. 957 ff. CO with notes and, where applicable, audit rules.
Who uses it Sole proprietors/partnerships with sales < CHF 500k. Entities ≥ CHF 500k sales and all legal entities.
Stakeholders Sufficient for small businesses and simple compliance. Preferred by banks/investors; enables deeper analysis.

Quick checklist

  • Eligibility: Sales < CHF 500,000 last year? EAR is allowed. :contentReference[oaicite:12]{index=12}
  • Method: Record cash receipts/payments; keep a year-end assets/debts overview. :contentReference[oaicite:13]{index=13}
  • VAT: Check if you must register (CHF 100,000 threshold) and pick your VAT method (effective or net tax rate). :contentReference[oaicite:14]{index=14}
  • Filing: Include business result in your personal return; attach EAR statements per canton. :contentReference[oaicite:15]{index=15}
  • AHV/IV/EO: Register and budget contributions. :contentReference[oaicite:16]{index=16}

Common pitfalls

  • Not switching to full accounting after crossing the CHF 500k sales threshold.
  • Mixing VAT into profit when on the effective method (record net of VAT).
  • Ignoring the asset/debt statement (required even with EAR).
  • Choosing the wrong VAT method (effective vs. Saldosteuersatz) for your margin profile.
  • Forgetting AHV/IV/EO registration when income rises above small thresholds.

Deadlines at a glance

  • Personal tax return: Cantonal deadlines vary; extensions commonly available.
  • VAT returns: Due within 60 days after the reporting period. :contentReference[oaicite:17]{index=17}
  • AHV/IV/EO: Ongoing contributions based on assessed profit; advance on account with year-end adjustment. :contentReference[oaicite:18]{index=18}

Transitioning to full accounting

If your sales reach or exceed CHF 500,000, implement double-entry bookkeeping from the next financial year. Prepare an opening balance sheet, start recognizing receivables/payables and inventories, and align VAT, tax and social-security reporting accordingly. :contentReference[oaicite:19]{index=19}

Mini examples

Example 1 — Cash receipt timing

You invoice CHF 5,000 on 20 December and receive payment on 5 January. Under EAR, the income is recorded in January (when received).

Example 2 — Annual insurance

You pay an annual liability insurance premium on 8 January. Under EAR, the full cash payment belongs to January (no accrual). The asset/debt statement reflects cash/bank accordingly.

Example 3 — Small equipment

You buy a CHF 600 office chair and pay immediately. By practice, such low-value purchases are often expensed in the year of payment; larger equipment is depreciated using Swiss tax rates.

Frequently asked Questions about Swiss Cash Basis Accounting:

ℹ️ Click a question to reveal the answer:

➕ Who may use the Einnahmen-Ausgaben-Rechnung (EAR) in Switzerland?

Sole proprietors and partnerships with sales < CHF 500,000 in the last financial year may keep an income-expense account and a statement of assets instead of full double-entry books. :contentReference[oaicite:20]{index=20}

➕ Who must keep full double-entry books under Swiss law?

Businesses with sales ≥ CHF 500,000 and all legal entities must keep proper accounts and prepare financial statements per Art. 957 ff. CO. :contentReference[oaicite:21]{index=21}

➕ What does the EAR include at year-end?

An income-expense statement (cash basis) and a statement of assets & liabilities (e.g., bank, equipment, loans). :contentReference[oaicite:22]{index=22}

➕ How are assets treated under the EAR?

Assets used over several years are typically depreciated following Swiss tax practice; small tools may be expensed immediately by materiality.

➕ What are the current Swiss VAT (MWST) rates?

8.1% standard, 2.6% reduced, and 3.8% for accommodation (since 1 Jan 2024). :contentReference[oaicite:23]{index=23}

➕ When do I have to register for Swiss VAT?

Generally once annual taxable turnover reaches CHF 100,000. For foreign businesses, worldwide turnover may be considered if they make Swiss-taxable supplies. :contentReference[oaicite:24]{index=24}

➕ Which VAT accounting methods exist in Switzerland?

The effective method (input tax deduction) and the net tax rate / Saldosteuersatz method (flat % of turnover). Returns can be based on agreed vs. received consideration. :contentReference[oaicite:25]{index=25}

➕ How do EAR figures flow into my Swiss tax return?

You include the business result in your personal return as self-employed income and attach the EAR statements. Business assets/debts impact wealth tax. :contentReference[oaicite:26]{index=26}

➕ Do I have to submit my records electronically?

Most cantons support or require e-filing (e.g., eTax). Follow your canton’s instructions on attachments. :contentReference[oaicite:27]{index=27}

➕ Are there Swiss “10-day rule” timing exceptions like in Germany?

No identical rule. Under EAR, the income-expense view is generally cash based; no regular accruals are posted in the statement (but the assets/liabilities overview is still required). :contentReference[oaicite:28]{index=28}

➕ How is private use (e.g., car, phone) handled?

Allocate business vs. private use reasonably (e.g., logbook). Only the business share is deductible; adjust input VAT where applicable.

➕ How often do I file Swiss VAT returns?

Typically quarterly (some businesses semi-annually or monthly), due within 60 days after period end. :contentReference[oaicite:29]{index=29}

➕ Is there Swiss trade tax like in Germany?

No separate trade tax. Sole proprietors pay income tax (federal, cantonal, communal) on profits and wealth tax on net assets at the cantonal/communal level.

➕ Do I need an inventory under EAR?

The income-expense statement remains cash-based, but your asset statement should reflect material stocks and debts at year-end.

➕ How are losses treated for a sole proprietor?

Losses reduce your taxable income in the personal return. Cantonal carryforward rules apply; check your canton for specifics.

➕ What social insurance contributions apply to self-employed persons?

AHV/IV/EO contributions based on profit; registration often required once activity is more than incidental (guidance mentions CHF 2,300/year). :contentReference[oaicite:30]{index=30}

➕ Can I switch from EAR to double-entry voluntarily before hitting CHF 500k?

Yes. Many businesses adopt double-entry earlier to meet bank/investor expectations and to manage inventory/receivables.

➕ How do VAT flat rates (Saldosteuersatz) interact with EAR?

They’re independent choices. EAR is a bookkeeping simplification; Saldosteuersatz is a VAT settlement method—often simpler for small businesses. :contentReference[oaicite:31]{index=31}

➕ How should I document private drawings (Entnahmen) and injections (Einlagen)?

Track them clearly to separate business and private spheres. They affect equity/wealth but not profit directly.

➕ What happens once I cross the CHF 500k sales threshold?

Implement double-entry bookkeeping from the next financial year and prepare full financial statements under OR/CO. :contentReference[oaicite:32]{index=32}

Sources

  • Swiss Code of Obligations, Art. 957 ff. (accounting & reporting). :contentReference[oaicite:33]{index=33}
  • Swiss VAT rates and obligations (ESTV/FTA). :contentReference[oaicite:34]{index=34}
  • VAT methods: effective vs. net tax rate (Saldosteuersatz). :contentReference[oaicite:35]{index=35}
  • Self-employment tax & filing guidance for SMEs. :contentReference[oaicite:36]{index=36}
  • AHV/IV/EO guidance for self-employed. :contentReference[oaicite:37]{index=37}