Year-End Closing Sole Proprietorship Switzerland: Step-by-Step Guide 2026

You can prepare the year-end closing of your Swiss sole proprietorship yourself -- if you are below CHF 500'000 in annual turnover, you need no double-entry bookkeeping and you file nothing with any authority. What you do need: a complete income and expense statement, a balance sheet as of 31 December and ordered receipts. If your bookkeeping is kept up to date during the year, that rarely takes more than half a day.

Every December the same picture: freelancers and self-employed people in Switzerland frantically hunting for receipts, reconciling bank accounts by hand and wondering whether they are actually doing it right. Yet it is straightforward once you understand what is really required -- and what is not.

This guide explains exactly what a year-end closing means for a sole proprietorship, which legal requirements actually apply and how you walk through the five steps to a finished closing.

Key Takeaways

• Sole proprietorships below CHF 500'000 turnover only keep an income and expense statement -- no double-entry bookkeeping required (CO Art. 957)
• You do not file the year-end closing anywhere -- but you need it for your tax return
• Balance sheet and income statement as of 31 December form the core of the closing
• Receipts must be kept for 10 years (CO Art. 958f)
• If your bookkeeping is kept up to date, you are done in half a day

What is a year-end closing -- and do you really need one as a sole proprietorship?

A year-end closing is a summary of all income, expenses, assets and debts of your business at the end of the financial year -- as a rule 31 December.

As a sole proprietorship in Switzerland you need a year-end closing for two reasons:

1. For your tax return. The cantonal tax office wants to know how much profit you made. The year-end closing is the basis for that. Without it you cannot correctly fill in the form for self-employed persons.

2. For your own overview. How much did your business really earn? What do you still owe? Which expenses were the largest? A year-end closing answers that in an hour -- with no surprises in March.

When is a year-end closing mandatory?

The Swiss Code of Obligations (CO), Article 957, distinguishes two categories:

For most freelancers and sole proprietorships in Switzerland that means: no double-entry bookkeeping. You book income when it arrives and expenses when you pay. That is the so-called simplified accounting or income and expense statement.

Difference between the year-end closing of a GmbH and a sole proprietorship

GmbHs and AGs must prepare their year-end closing according to recognised accounting standards and -- above a certain size -- have it audited. As a sole proprietorship these obligations do not apply at all. You prepare the closing for yourself and for the tax office, and that is it.

Simplified bookkeeping: what applies to sole proprietorships below CHF 500'000?

Simplified bookkeeping under CO Art. 957 para. 2 allows you to record your income and expenses on a cash basis. That means:

• You book an invoice when you receive the money, not when you issue the invoice
• You book an expense when you pay, not when the invoice arrives
• You need no accounts payable or accounts receivable ledger

That makes things considerably simpler than double-entry bookkeeping.

The income and expense statement explained simply

Your income statement then looks like this:

Income (all payments received)            CHF 95'400
- Expenses (all payments made)            CHF 32'600
= Profit (before taxes and AHV)           CHF 62'800

That is your net profit -- the amount you declare in your tax return as income from self-employment.

When do you have to switch to double-entry bookkeeping?

As soon as your annual turnover exceeds CHF 500'000 you are required to keep double-entry books. That does not happen overnight -- but if you are approaching that limit it pays to bring in a fiduciary early. Switching mid-year is possible, but laborious.

Preparing the year-end closing of a sole proprietorship: 5 steps

Here is an example from practice. Stefan, a freelance graphic designer from Zurich, did his first year-end closing himself. He used Magic Heidi for invoices and expenses all year -- on 3 January he sat down and was finished by 3 p.m. This is how he did it.

Not in the mood for manual work? If your receipts are already in Magic Heidi, you get the year-end closing done at the push of a button in 5 minutes -- receipts as a ZIP, income and expense statement and VAT summary as Excel.

Step 1: Reconcile income and expenses

Before anything else: check that all transactions are recorded.

For income:

• Compare the invoices you issued with the payments received in your account
• Mark all invoices as paid that were actually paid
• Income invoiced in December but only paid in January belongs to the new year (cash basis)

For expenses:

• Check your account for expenses that are not yet recorded
• Record business expenses you paid privately
• Attach receipts to all expenses -- retroactively too

If you kept your bookkeeping up to date, this step takes 20 minutes. If not, plan for two hours.

Tip: Magic Heidi shows you straight away which invoices are still open and which expenses have no receipt attached -- so you see the gaps at a glance.

Step 2: Clarify open items as of 31.12.

Now you check what is outstanding at year-end:

Open invoices (debtors): Which client invoices were issued but not yet paid? These do not appear in your income and expense statement (cash basis) -- but you note them for the balance sheet.

Open supplier invoices (creditors): Which invoices have you received but not yet paid? Same thing: not in the income statement, but relevant for the balance sheet.

Step 3: Prepare the balance sheet as of 31 December

Even with simplified accounting you need a simplified balance sheet -- a snapshot of your assets and debts as of 31 December.

Assets (what you own or what is owed to you):

Liabilities (what you owe):

Equity is the "buffer" -- what remains after deducting all debts. It does not have to be large, it only has to be right.

Practical balance sheet example (simplified):

ASSETS                            LIABILITIES
Bank account:   CHF 18'400        Creditors:       CHF  2'100
Debtors:        CHF  6'200        AHV liability:   CHF  4'800
MacBook Pro:    CHF  1'800        Equity:          CHF 19'500
               ----------                         ----------
Total:          CHF 26'400        Total:           CHF 26'400

Step 4: Calculate the result

Now you work out the profit:

Total income (collected):            CHF 95'400
- Operating expenses (paid):         CHF 21'300
- AHV contributions (your own):      CHF  8'600
- Professional insurance:            CHF  2'700
= Net profit:                        CHF 62'800

This net profit is what you declare in your tax return as income from self-employment. The cantonal form for self-employed persons (e.g. form 21021-b in Vaud) asks for exactly this figure.

Important: AHV contributions on your own income are tax-deductible. Get the annual statement extract from your compensation fund -- you need it for the tax return.

Step 5: Archive receipts

Under CO Art. 958f, sole proprietorships have a 10-year retention obligation for:

• Business books and accounting records
• Income and expense statements
• Contracts and correspondence of lasting economic significance

In practice that means:

• Keep all receipts and invoices -- digital is permitted in Switzerland
• Do not delete year-end closings
• Archive bank statements

Stefan from our example solved it like this: he photographs every receipt with Magic Heidi right after the purchase. The photo lands automatically on the right expense entry -- no shoebox, no searching in January. At year-end he exports the receipt archive once as a ZIP and stores it on his NAS. Ten years of retention, handled in five minutes a week.

With Magic Heidi you scan receipts by photo or PDF upload -- the AI extracts date, amount, vendor and VAT automatically. You can see at any time which expenses are still missing a receipt, before it becomes critical at year-end.

What belongs in the balance sheet of a sole proprietorship?

The balance sheet can be more or less extensive -- depending on how your business is set up. As a freelancer without a large machine park it typically stays very manageable.

Assets: what belongs there?

Current assets (short-term):

• Bank balances (all business accounts as of 31.12.)
• Cash on hand
• Open client receivables (debtors)
• Prepaid expenses (prepaid subscriptions etc.)

Fixed assets (long-term):

• Computer, laptop, tablet
• Vehicles (proportionally, if used for business)
• Office furnishings
• Intangibles (e.g. software licences with a term over 1 year)

Depreciation: the FTA flat rates in practice

Anything that lasts longer than a year is not deducted in one go -- you depreciate it over its useful life. The Federal Tax Administration accepts flat rates for this, applied to the book value, not to the purchase price:

Concretely: a laptop for CHF 4'000 is depreciated by 40% in the first year, which is CHF 1'600. In the second year you again apply 40% -- but to the remaining book value of CHF 2'400, so CHF 960. That continues on a declining basis until almost nothing is left. If you prefer straight-line depreciation on the purchase price, you take half the rate, so 20% instead of 40%.

A laptop is not a year-end closing. The more common mistake is not the rate but the period. A device bought in May belongs in the current year with its depreciation, not with the full purchase price and not in the next year. If that is booked too late or not at all, bank balance, book profit and the declared result drift apart -- and the difference only shows up when reconciling with the tax return. That is why the asset register does not belong in a separate file, but in the closing.

Liabilities: equity, debts, provisions

Short-term liabilities:

• Creditors (supplier invoices, not yet paid)
• VAT liability (if VAT-registered, as of 31.12.)
• AHV liability (contributions owed, not yet paid)

Equity: The equity of a sole proprietorship is simple: assets minus all debts. There is no minimum capital and no separate capital contribution. Equity can also be negative -- that is not unusual in the early phase of self-employment.

Private withdrawals, private contributions and mixed-use assets

The most delicate point of a sole proprietorship is not the balance sheet but the line between private and business assets. Legally, the firm and the person are the same -- in the books they must not be.

Private withdrawals and contributions are not profit-and-loss events. If you transfer CHF 3'000 from the business account to your private account, that is not an expense and does not reduce your profit. If you inject private money, that is not turnover. Both only move equity. If such transactions still end up in income or expenses, the net profit is wrong -- and so is the tax return.

Mixed-use assets need an allocation key. A car you drive to client appointments and privately is not 100% business expense. You need a traceable business share: a mileage log, a kilometre estimate or the cantonal flat rate. The same applies to the home office and the mobile phone. Without documentation a clear expense becomes an estimate you cannot justify when it matters.

The cheapest moment to decide is when you record the transaction: business, private or proportional. Anyone who sorts that out in January is guessing.

The VAT closing: what gets added if you are VAT-registered

As a sole proprietorship you become liable for VAT from CHF 100'000 in annual turnover from taxable supplies. Below that, the topic does not concern you. Above it, the VAT closing is the part of the year-end where most goes wrong.

Which turnover hits which rate?

Since 1 January 2024 three rates apply in Switzerland:

The actual work is not knowing the rates, but assigning them consistently when booking. If you separate turnover by rate during the year, at year-end you have a final check instead of a VAT mountain.

Effective method or net tax rate

With the effective method you offset the VAT you collected against the input tax you paid. That is worthwhile if you buy or invest a lot -- but it requires a complete set of receipts, because any input tax without a receipt is lost.

With the net tax rate you still charge your clients the normal rate, but remit only an industry-specific flat rate to the FTA and deduct no input tax in return. Less arithmetic, but no input tax deduction. For service providers with little material expense this is usually the more convenient option.

In both cases things get delicate with mixed-use purchases: for a laptop you use 70% for business, you may only claim 70% of the input tax. If the usage is not documented, it turns into a correction later.

What belongs in the closing as of 31.12.

The VAT you charged your clients is not yours. Whatever has not been remitted by year-end appears as a VAT liability under liabilities in your balance sheet. And the settlement itself should come straight out of your recorded receipts and invoices, not out of a separate Excel side-project -- otherwise you type the same figures twice, once for the bookkeeping and once for the FTA.

Year-end closing and tax return: what goes where?

This is the question most sole proprietorships ask: what do I actually have to file?

The short answer: you do not file the year-end closing with any authority. You prepare it for yourself -- and then transfer the net profit into your tax return.

What do you have to submit to the tax office?

In most cantons you fill in the form for self-employed persons (e.g. in Zurich the "Fragebogen für Selbstständigerwerbende"). It asks for:

• Turnover (total income)
• Operating costs (total expenses, split by category)
• AHV contributions (your own contributions as a self-employed person)
• Net profit (result)

Depending on the canton, a simplified balance sheet can also be attached. Check the form of your canton.

Cantonal differences: what varies?

The forms are regulated cantonally. The substantive requirements are similar, but the labels and level of detail differ. What is the same everywhere:

• The basis is your year-end closing
• You declare the net profit as earned income
• AHV contributions are deductible
• Business costs must be substantiated (receipts!)

The SME portal of the Confederation gives a good overview of the legal basis.

Handover to the fiduciary: the documents in the right order

If you do not prepare the closing yourself after all but hand it over, the order determines the number of follow-up questions. Not a folder of loose files in an email attachment, but:

1. The result first: income and expense statement and simplified balance sheet as of 31.12.
2. Then the VAT: the settlement as PDF and XML, if you are VAT-registered.
3. Then the details: asset register with the depreciation and the journal.
4. Finally the receipts: a complete ZIP export for questions and audits.

That way the fiduciary sees the figure first and the derivation afterwards, not the other way round. Fiduciary-ready is not what looks pretty, but what can be checked without follow-up phone calls.

After that comes the tax return with the clean allocation between private and business assets. From that point on it is no longer bookkeeping, only declaration -- and the new year does not start with tidying up.