Switzerland Fact-File Part 1:
Business Formation for Individuals

1.7 Switzerland Business Accounting

Accounting and Auditing Requirements for Individuals in Business

All business entities registered in the Commercial Register are obliged to maintain accounts in accordance with the Swiss Code of Obligations. It is mandatory to maintain records of a balance sheet, profit and loss statement and inventory in Swiss Francs, though this does not apply to routine bookkeeping entries.

An ordinary (full) audit, including verification that the correct internal controls are in place, must be conducted if two of the following factors are present:

Turnover in excess of CHF20m;
Balance sheet total in excess of CHF50m;
More than 50 employees.

Where there are more than 10 employees (but less than 50), a limited audit is likely to be necessary; where there are less than 10 employees, there is no requirement for audit, although such activity can take place on a voluntary basis.

In addition to producing an annual financial statement setting out income and balance sheet, annotated as necessary, larger companies must also produce a cash flow statement and management report.

For smaller companies and individuals it is sufficient to maintain proper records, recording all revenue receipts and items of expenditure and ensuring that employees’ records are kept up-to-date. It is also important to ensure accurate reporting to the tax authorities when required to do so, to avoid unnecessary penalties.

The fiscal year is from 1st January to 31st December.

Additional Reporting Requirements for Individuals in Business

As indicated, larger companies must submit cash flow forecasts and a management report on a regular basis. For small companies and sole proprietors, the principal reporting requirements involve submission of federal and cantonal income tax returns and VAT returns. The law also requires that an annual financial statement, including income and balance sheet (annotated) must be prepared and that an entity’s assets can be easily and accurately valued.