Milk book accounting – The simple accounting system for freelancers in Switzerland

What is milk book accounting?

Milk-book accounting – also called Milchbüechli-Rechnung in Switzerland – refers to simple accounting in which each income and expenditure is recorded only once. It is essentially a simple income and expenditure account (similar to the Einkommen-Überschuss-rechnung, EÜR, in Germany). You keep a simple list of all business income and expenses, usually in chronological order according to the date of the cash flow (so-called actual method or cash principle). At the end, you can directly determine whether a profit or loss was made – complex accounting is eliminated.

Important: The basic principles of proper accounting also apply to the milk-book method. This means "no entry without a receipt" – every recorded income or expenditure must be verifiable by a receipt or invoice. Furthermore, the list should be complete, truthful, and clearly presented, allowing an expert third party to quickly gain an overview. Milk-book accounting is therefore simple, but not sloppy: All business transactions must be properly documented.

Origin of the term and cultural background

The term “milk booklet invoice” has a slightly joking undertone in Switzerland. Similar to the expression Milchmädchenrechnung in Germany, it is sometimes used to describe an overly naive or simple calculation.

Literally, it refers to a small booklet (Büchlein) that may have been used in the milk trade in the past – one imagines a farmer or a milk merchant entering their income and expenses related to milk deliveries in a small notebook.

In today's usage, however, "Milchbüchlein" accounting is by no means negative; rather, it officially refers to the permitted simplified accounting for small businesses. Since the 2013 revision of Swiss accounting law, small businesses are no longer required to keep duplicate accounts; instead, simple accounting is sufficient.

The term has become established because this form of accounting is so simple that it "fits into a Milchbüchlein." Nevertheless, there's sometimes a hint of irony – for example, when larger business models try to get by with a milk-book accounting system, which is then naturally ridiculed as inadequate.

Conclusion on the term: In Switzerland, milk-book accounting is a common term for small, sole proprietorship accounting at the simplest level – culturally rooted and tongue-in-cheek, but legally recognized for certain companies.

Why do many self-employed people in Switzerland use this simplified system?

The main reason: Because they are allowed to, and it saves them work. Swiss law allows sole proprietorships and partnerships with low turnover to maintain significantly simplified accounting. According to Code of Obligations (CO) Art. 957, sole proprietorships with less than CHF 500,000 in annual turnover must maintain at least simplified accounting, which only includes income, expenses, and the financial situation.

For micro-enterprises, this is purely legally no longer required. So why voluntarily put in more effort? Many solo self-employed people – freelancers, consultants, tradespeople, etc. – therefore resort to the milk-book method to minimize bureaucratic overhead and be able to concentrate on their core business.

Another reason is the cost and time savings. Those who keep their accounting simple can often do it themselves or require less help from a trustee.

There are no complex accounting entries, no in-depth accounting knowledge is required, and less time is spent on administrative tasks.

Especially in the start-up phase of a business, resources are scarce – so it's tempting to rely on a system that is "trivial and requires no accounting know-how." The simplicity of this method makes it possible for even entrepreneurs without financial training to manage their books.

In addition, many one-person businesses maintain a good overview of their finances even without sophisticated accounting. If the number of monthly entries is manageable, a separate business account and a simple spreadsheet are often sufficient to always know what you earn and what you spend money on.

Complex controlling tools are rarely needed on this scale. In short: Milk-book accounting serves the purpose, namely to document income for the tax office, without any bells and whistles.

Comparison with other accounting systems

How does cash-book accounting differ from other systems, especially double-entry bookkeeping and the procedures commonly used in Germany and Austria? Here are the key points for comparison:

Simple vs. double-entry bookkeeping:

With the simple cash-book method, each business transaction is recorded only once – either as income or as an expense, at the time of the actual cash flow (cash principle, actual posting). With double-entry bookkeeping, on the other hand, every transaction is posted twice: once in the account concerned, and once in the offsetting account (debit to credit).

Double-entry bookkeeping uses a chart of accounts, posting records, and often with accruals (debit principle), which requires significantly more specialist knowledge. Cash book accounting eliminates all this complexity – no chart of accounts, no accounts receivable/payable accounting, no depreciation or depreciation in the traditional sense. This makes it much easier to understand for non-accountants.

Scope of information:

A simple income and expenditure list essentially shows only the annual profit or loss. It doesn't provide as detailed insights as double-entry accounting, which allows for a complete balance sheet and income statement with account reconciliations.

Those who only keep cash book accounting know their surplus, but, for example, not necessarily the exact financial situation in the form of a balance sheet (although at least a statement of assets/liabilities at the end of the year is recommended).

For internal analyses or for banks/investors, double-entry accounting offers considerably more information and evaluation options.

Accounting in Germany and Austria:

Milk-book accounting corresponds in content to the Income Expenditure Account (EÜR) in Germany and the Income Expenditure Account (EÜR) in Austria.

Small businesses and freelancers are also permitted to calculate their profits in a simplified form based on the inflow-outflow principle. However, the thresholds are different: In Germany, for example, non-merchants and freelancers can always prepare an EÜR, while registered merchants are required to maintain double-entry bookkeeping above certain sales/profit thresholds (currently >€600,000 in sales or >€60,000 in profit).

In Austria, according to the Austrian Commercial Code, a threshold of approximately €700,000 in sales in two consecutive years applies, above which double-entry bookkeeping is required. Conclusion: The principle of simple income and expenditure accounting is well known throughout the DACH region, but the details of its application depend on national law.

In summary, milk-book accounting is the simplest legal form of accounting for small businesses. It contrasts with double-entry accounting, which, while more comprehensive and accurate, is often perceived as "using a sledgehammer to crack a nut" for very small businesses.

Advantages and disadvantages of this method

Like any system, cash-book accounting has certain advantages – but also disadvantages. Here's an overview:

Advantages:

Simplicity and Understandability: Compared to complex double-entry bookkeeping, the cash-book method is very easy to understand and implement. You don't need to master debit/credit entries, which saves a lot of headaches, especially for beginners.
Time and Cost Savings: Because there are fewer complicated steps involved, you spend less time on accounting and can potentially save on expensive external accountants. Many small business owners can manage their income and expenditure records themselves and thus save money.
Practical for Small Businesses: For sole proprietors and micro-enterprises with manageable payment transactions, simple bookkeeping provides a perfectly adequate framework for managing finances. You fulfill your legal obligations without getting bogged down in details, yet still maintain an overview.

Disadvantages:

Less information content: Simple accounting does not provide the depth of detail of double-entry accounting. For example, you cannot learn which categories of expenses account for the largest share or how receivables and payables are developing, since such items are not recorded separately. Overall, fewer financial key figures are available for analysis.
Fewer control options: Simple entry lacks an internal control system (no automatic debit/credit reconciliation). It can be more difficult to detect errors or discrepancies. A transposed number or forgotten receipt is not as easily noticed because there is no double-checking. The risk of inaccuracies is higher.
Not suitable for larger or more complex companies: As a company grows and business transactions become more numerous and diverse, milk-book accounting reaches its limits. It is not permitted for a stock corporation (AG) or limited liability company (GmbH) anyway, and even for larger sole proprietorships with complex transactions, it is usually not sufficient to adequately represent all financial information. For example, if you have a lot of inventory, several bank accounts or different business branches, you won't be happy with a simple income and expenditure list.

Who is milk book accounting suitable for?

Generally: For sole proprietors, freelancers, and partnerships that are small – more specifically, with an annual turnover of less than CHF 500,000. In this case, they may not (and do not have to) maintain complex accounting, but can choose the simplified option. Typical examples: freelancers such as web designers, graphic designers, journalists, and consultants; tradespeople with one-person operations; small online shop operators with low turnover; part-time self-employed individuals; startups in their very early years, while turnover is still low. Associations that do not have to be registered in the commercial register may also maintain a small-budget accounting system.

This system is not suitable for larger companies or legal entities. Capital companies such as GmbHs or AGs must always keep double entries, regardless of turnover. Likewise, small businesses reach their limits as business becomes more complex – e.g., with significantly increasing sales (> CHF 100,000) and the associated VAT obligations (see next section), with numerous cash sales (cash management), or with external investors who want to see detailed financial statements.

In such cases, it may be advisable to switch to double-entry accounting early on or at least involve a trustee. Experts recommend, for example, checking whether the milk-book accounting method is still feasible at the latest when VAT liability is reached (sales > CHF 100,000) – because accurate VAT accounting often requires more precise records, which are more difficult to ensure with a simple income and expenditure list.

In short: Milk-book accounting is ideal for very small, manageable businesses without complex processes. It's ideal for the start-up phase and for anyone who only accounts for the tax office but doesn't require internal controlling. However, anyone aiming for growth, managing a large number of outstanding invoices, or facing more demanding legal requirements should upgrade to a more comprehensive system in the medium term.

Legal framework (Switzerland vs. Germany/Austria)

In Switzerland, simple accounting is firmly anchored in the Swiss Code of Obligations. Article 957 of the Swiss Code of Obligations defines who is required to keep accounting records. Two thresholds are particularly relevant:

Turnover of CHF 500,000 or more: Above this threshold full accounting obligation applies, i.e., double-entry accounting with a balance sheet, income statement, and inventory must be prepared. Below this threshold, simple accounting is sufficient (for sole proprietorships and partnerships). Thus, CHF 500,000 is the magic number – above this, "large" accounting is mandatory, below this, "small" accounting is possible.
Turnover of CHF 100,000 or more: From this threshold a sole proprietorship must be registered in the commercial register (mandatory registration). Entry in the commercial register usually also entails VAT liability, as this also applies at sales of 100,000 (unless you are already voluntarily subject to VAT earlier). Important: Entry in the commercial register does not equate to double-entry bookkeeping – a registered sole proprietorship with sales between 100,000 and 500,000 may continue to maintain a milk-book accounting system, but must also correctly account for VAT. They can choose between the simplified balance tax rate method (flat rate) and the effective VAT method. Many micro-entrepreneurs use the former method because it suits simple accounting. However, those who choose effective VAT accounting have a higher accounting burden anyway, so switching to double-entry bookkeeping may make sense.

In addition to these sales limits, other general regulations apply: Even milk-book accounting must comply with the principles of proper accounting, as already mentioned. This includes, for example, the obligation to retain receipts for 10 years (Art. 958f of the Swiss Code of Obligations). Furthermore, accounting cannot be done simply "freestyle" – it must be a systematic record that shows the date, amount, business partner, and purpose of the payment. In practice, this means: A properly maintained income and expenditure journal with consecutive document numbers and neatly filed receipts is expected, not a pile of paper.

Germany and Austria: The systems in these countries are comparable, but there are some differences in the thresholds and formalities. In Germany, all registered merchants are required to keep accounting records according to the German Commercial Code (HGB), but Section 241a of the HGB provides an exemption for sole traders who maintain sales below €600,000 and profit below €60,000 for two consecutive years – they do not need double-entry bookkeeping, but can prepare a simple EÜR for the tax office. Freelancers (doctors, lawyers, artists, IT consultants, etc.) are not considered merchants anyway and may always use an EÜR, regardless of their profit. The EÜR rules are laid down in the Tax Code/Income Tax Act, and in practice are very similar to the Swiss cash book accounting: recording income and business expenses according to cash flow.

In Austria, corporate law stipulates that corporations and large businesses must keep double-entry accounting. Sole proprietors are only subject to double-entry accounting if their turnover exceeds €700,000 in two consecutive years (or more than €1 million in one year). Below this amount, they can maintain an income and expenditure account. For tax purposes, profit determination via an income and expenditure account (Section 4 (3) of the Income Tax Act) is also relevant for small businesses. As in Switzerland, VAT registration is mandatory for annual sales of approximately €35,000 or more, which must also be observed ([PDF] The Income and Expenditure Account - LEVIES AND TAXES) – small businesses below this amount are exempt from VAT and therefore have fewer record-keeping obligations.

In summary: Simplified accounting is available for small businesses in all DACH countries. Swiss Milchbüchlein Accounting is a special case term, but is comparable in content to the EÜR (Germany) and E/A Invoice (Austria). It is important to know the applicable sales limits and obligations. Anyone operating across borders should adhere to local regulations and seek advice if necessary.

Practical examples: What does a milk book accounting system look like?

Let's now take a concrete look at how such simple accounting can be done. Basically, you create two lists: one for all business income and one for all expenses. You can keep these in Excel, for example, or in a notebook – the key is to record all relevant information. The following columns are common: date, receipt number, description (what it is), and amount. With separate lists for income and expenses, one column for the amount is sufficient; if you keep a combined list, you would record income and expenses in separate columns or with a sign (+/-).

To illustrate this, here's a simple fictitious example of a web design freelancer for the month of January:

Income (Example)

Date	Receipt No.	Description	Income (CHF)
January 5, 2025	E-001	Website project for customer Müller	2,500
January 18, 2025	E-002	Logo design for customer Schmidt	1,200
January 28, 2025	E-003	Maintenance contract (January)	300
Total January			4,000

Expenses (example)

Date	Receipt no.	Description	Expense (CHF)
January 2, 2025	A-1001	New laptop (work tool)	1,500.-
January 10, 2025	A-1002	Adobe Creative Cloud software license (month)	60.-
January 15, 2025	A-1003	Web hosting & domain (annual fee)	120.-
January 20, 2025	A-1004	Office supplies (paper, printer ink)	45.-
January 25, 2025	A-1005	Business lunch with client	180.-
Total January			1,905.-

The income list lists all revenues for the month, and the expenditure list lists all operating expenses. At the end of the month (or year), you can compare the totals: In January, our example freelancer would have earned CHF 4,000 and spent CHF 1,905. The provisional profit for this period is therefore CHF 2,095. This difference is exactly what must be taxed as income later.

A few things to note in this example:

Each item has a receipt number: E-001, E-002,... for income and A-1001, A-1002,... for expenses. These numbers should match the physical or digital receipts (invoice numbers or sequentially assigned receipt numbers) so that each item can be documented later (keyword: verifiability).
The description contains sufficient details to understand the business transaction (e.g., "website project for client Müller" or "laptop as a work tool"). This way, the tax office will also know what was going on in case of doubt.
Entries were always posted on the date of the cash flow: e.g., income on January 5th when the customer paid Müller. (If you sent an invoice beforehand, you could optionally note it as an outstanding receivable, but for the cash book calculation, the receipt of payment is strictly the date that counts.)
All private expenses are, of course, missing. If the freelancer buys a television for personal use, it doesn't appear here. Non-deductible expenses aren't even recorded.

You can keep such a table for each month or continuously for the entire year. Many people do it monthly because it's clearer and you have monthly interim balances. At the end of the year, you draw a line in the sand and add up all income and expenses for the year – this gives you your annual profit. Additionally, you should also create a list of your assets and liabilities at the end of the year (e.g., bank account balance, outstanding customer invoices, larger fixed assets such as cars or machinery, and current liabilities such as loans).

While this isn't as formally prescribed in simple accounting as it is in the balance sheet, the Swiss Code of Obligations (OR) refers to the assets position, which should be recorded. A simple "assets vs. liabilities" breakdown doesn't hurt for completeness.

Note: Theoretically, as a minimalist, you could even do without tables altogether and simply collect all the receipts. The Swiss SME portal jokingly says: "Theoretically, it would be sufficient if you kept all receipts and documents in a reasonably orderly manner and presented them to the tax official during a tax audit." – This so-called shoebox accounting (collecting receipts in a box) actually occurs in practice, but it's risky and unprofessional. You'll have to add up the numbers for your tax return anyway. So, it's better to keep a neat list right away to save yourself trouble and keep track of everything yourself.

Digital tools and software solutions for cash-flow bookkeeping

Many self-employed people simply start their accounting with Excel or Google Sheets – and that's perfectly fine. From a legal perspective, an Excel template is perfectly sufficient for basic accounting. There are even pre-made Excel templates from accounting programs or consulting services that you can use (for example, Bexio provides a free template for income/expense lists on its website). It's important to proceed carefully when using Excel, as manual management naturally increases the risk of errors – so check formulas, double-check amounts, and don't forget a single line.

In addition, numerous digital tools are available that simplify or automate cash-flow bookkeeping.

Digital tools and software solutions for milk book accounting

Discover now

Tips for getting started and common mistakes

Finally, here are some practical tips on how to successfully set up your cash-book accounting system and which pitfalls to avoid:

Strictly separate business and personal matters: If possible, open a separate business account and process all business payments through it. This makes record-keeping much easier and also helps the tax office in the event of an audit. Private purchases or entertainment have no place in your accounting – the new PlayStation or vacation to Ibiza cannot be deducted as business expenses, even if a few photos were taken along the way. Such items would immediately be excluded during an audit (and, in the worst case, raise suspicions of tax evasion). So: business is business.
No entries without a receipt: Get into the habit of keeping a receipt for every income and expense – be it an invoice, receipt, sales slip, or note. Number the receipts and organize them systematically (digitally or in a folder). If a receipt is missing, the item should not be posted. If in doubt, it's better to create your own receipt than to have no receipt at all. While a shoebox full of receipts would theoretically suffice for simple accounting, in practice you should at least record the totals in a list (see example) and keep the receipts handy. Tip: Many people today use their smartphones to immediately photograph receipts and file them digitally.
Keep your accounting regularly: Don't leave everything until the end of the year! Experience has shown that errors are far fewer if you *update your books regularly (e.g., monthly). For example, take half an hour on the first weekend of every month to enter all the previous month's transactions. This way you'll always have an up-to-date overview and won't panic when your tax return is due. Regular updates also help you avoid forgetting anything – you'll have the receipts readily available and remember all the transactions. As Bexio recommends: *Make it a habit to check your books regularly – say, monthly.
Reconciliation with bank/cash register: Periodically check whether your income/expense journal matches your bank statements. A quick reconciliation with your bank statements will immediately show if you may have overlooked an income or entered an amount incorrectly. The same applies if you have a cash register: Count the cash and compare it with the cash register. Discrepancies indicate errors (or, in the worst case, money loss).
Acquire knowledge (at least the basics): Although cash register accounting is simple, learn a few financial basics. For example, learn which expenses are tax-deductible and which aren't – this way you can avoid mistakes like posting personal or unrecognized expenses. There are good guides and official websites with information (e.g., the SME portal), as well as courses for accounting beginners. If you're familiar with the basics, you'll make the most of the system and avoid pitfalls.
Consult software or a professional if necessary: Don't be afraid to ask a accountant (tax advisor) if you're unsure – especially at the end of the year for your financial statements or VAT returns. A quick check by a professional can confirm that everything is correct or point out problems before the tax office does. Alternatively, accounting software can eliminate many potential sources of error by, for example, automatically summing up figures, specifying formats, and issuing warnings if something is implausible. So consider whether a small investment in software or consulting could save you time and stress.
Keep an eye on thresholds: Monitor your sales throughout the year. If you anticipate exceeding the CHF 100,000 turnover threshold, prepare for VAT liability (register voluntarily beforehand if necessary, familiarize yourself with VAT accounting). Similarly, if your business is growing rapidly toward CHF 500,000 in turnover, then the switch to double-entry accounting is imminent. It's better to be proactive here than to be caught off guard at the end of the year and have to rush through the accounting process.
Tax honesty is key: Simple accounting may tempt some people to think they can sweep things under the rug. Don't do it – *any undeclared income or any illegal deduction of a private expense is tax evasion. The simplified method is a privilege for small business owners, not a license for creative tricks. So stick to the rules, and you have nothing to fear.