Type of accounting

The type of accounting depends on your turnover level. This is why this article is aimed at self-employed persons with an income from work of less than or equal to CHF 500,000.
Here is an excerpt from Article 957, paragraph 2 of the Code of Obligations on the obligation to keep accounts according to the type of company

Art. 957

1. The following companies only keep accounts of income and expenses as well as assets:

• sole proprietorships and partnerships that have achieved a turnover of less than CHF 500,000 in the last financial year;
• associations and foundations that are not required to apply for registration in the commercial register;

2. The principle of regularity of accounting applies by analogy to companies referred to in para. 2.*

*By "regularity", we mean that you follow the various income and expenditure operations of your company via a table. Look here: How to keep accounts for self-employed people in Switzerland?

Declaration of daily allowances paid to the AVS to self-employed people.

Registration with the AVS must be submitted from 2300.00 CHF and 2 customers. The organization then studies your situation and determines your registration.
Here are the summarized contribution rates:

• General rate 8.1%
• If the gross income is between 9,800 CHF and 58,800 CHF then the rate is 4.35%.
• If the gross income is less than or equal to 9700 CHF then the amount of the contribution is 422 CHF per year unless the amount is already received on the salary of a dependent activity.

Below you will find a reworked excerpt from Article 9, point 2 "Concept and determination" of income from self-employment in order to understand how your contributions are calculated.

Article 9 defines and determines income from self-employment. This income includes:

• Any income from work other than remuneration for work in a dependent situation.
• To calculate this income, several deductions are allowed from gross income:
• General expenses,
• Depreciation,
• Business losses,
• Payments to pension funds,
• Personal payments to occupational pension funds,
• Interest on equity invested in the company*

The cantonal tax authorities determine this income and the equity invested and then transmit it to the compensation funds. The compensation funds add the deductions admissible according to tax law to calculate the contributions due.

*The interest on the equity invested corresponds to a charge for your company. When you take out a bank loan, the bank receives monthly or annual interest as remuneration. Here, it is the same thing: if you have built up capital in a blocked account for your business, then it is estimated that you must receive interest on this capital. Very often, you do not actually collect it but create a false charge. It is accepted by the AFC. This tool should be requested from an accounting professional. # Contribution to 2nd pillar insurance
If you are insured with professional insurance, you can:

For taxpayers insured under the 2nd pillar scheme
Employees and those exercising a self-employed activity who are compulsorily or optionally insured with an occupational pension fund (2nd pillar) can deduct the amounts paid, but at a maximum of: CHF 7,056 for the year 2023

Normally, on your insurance website, you have a statement of contributions available for declaration.

If you are not insured with professional insurance, you can:

For taxpayers who are not insured under the 2nd pillar scheme
Employees and those exercising a self-employed activity who are not affiliated with an occupational pension fund (2nd pillar) can deduct the amounts paid up to 20% of the net income* from a gainful activity, but at a maximum of: CHF 35,280 for the year 2023

*Net income corresponds to your gross income minus all expenses.
**Extract from the “additional information” document available on the AFC website.

Page 1 - General information

B. Accounting

You must select the way in which the amounts you are going to enter are constructed.

The accounting type "based on invoiced amounts" means based on the invoice and not the payment.

Let's go more slowly! You make a sale for a customer and you issue an invoice. Your customer has a period to pay this invoice. If you choose to declare according to the invoiced amounts then you must add this amount to your declaration.

On the contrary, if you choose to declare the amounts based on receipts then you must take into account the invoices paid only.

Here is a diagram to visualize

The accounting type cannot be changed during your declaration. Do not mix the types of amounts!

We advise you to select "based on receipts".

C. AVS, AI, APG contributions and personal family allowances (AF) of the operator

If you are affiliated with a compensation fund, you must request the statement on your AVS space and write "yes" on the form.
For more information, here is our article on joining the AVS.

D. Professional pension plan (2nd pillar)

The amounts recorded as operating expenses correspond to the contribution statements paid during the year for you and your employees. This information is to be retrieved from your insurance accounts.

It is quite possible that you do not have a 2nd pillar as a self-employed person and that the amount to be indicated is 0.

E. Deductions in kind and private shares in the overheads of the amounts recorded

These questions allow us to determine the structure of your private expenses that are recorded within your company this year. The overall question is: are there private expenses that reduce the result of my sole proprietorship?

Therefore, if you answer "yes" to any of these questions, you will need to know the amounts to declare them in Part II on pages 2 and 3 of the form.

In most cases, self-employed people answer "no" to all the questions in this section.

Page 2 – Part 2 - A

3. Other services that are worth money

Things offered by your customers in return for your service, for example.

7. Professional expenses

Here, you can only fill in points a) and b). The rest is on page 3 in the "General expenses" section.

8. Inventory variations

As specified at the beginning of the article, this is where the amount of your stock variation (Final inventory - Initial inventory) will be entered from the inventory table on page 3.

If you work on the basis of receipts, the rest is not mandatory. However, the guide "Additional instructions" allows you to enter these amounts.

Page 3 – Part 2 - B. General expenses

You can go to this article to identify your expenses. It will be an additional help to tackle this part!

Let's go!

Points 1 and 2 are self-explanatory. You must provide employees' salaries, salaries in kind if applicable (provision of a vehicle for example) and contributions paid to the AVS and 2nd pillar insurance premiums.

3. Professional travel and representation expenses (except vehicle costs, which must be indicated under number 4)

This section includes professional travel expenses of employees and the operator. This is the time to book your stay abroad to meet a client.

4. - 5. Commercial vehicle costs / Private vehicle costs charged to the company

For points 4 and 5, there are two solutions:

• Either your vehicle belongs to your company (commercial assets) then point 4 must be completed.
• Or your vehicle belongs to you (private assets) then point 5 must be completed. In this case, you must include all the costs of the car. Then, you calculate a share of professional use and a private share according to your use.

Example: 60% professional use and 40% private use; the costs amount to CHF 10,000.-; commercial use share = CHF 6,000 and remaining share = CHF 4,000.

You can enter the amount of CHF 6,000 which is an expense for the company in point 5.

6. Interest on commercial debts

You must enter the amount of interest paid during the tax year if you have a loan in progress for your company.

Points 7 to 12 correspond to the operating expenses of the company: rent, property insurance, internet and telephone subscription, etc.

14. Private share of overheads (without the private share of commercial vehicle costs already deducted under number 4)

If you have taken a private share of overheads then you must enter the amount.
Here is an article that explains the use of a telephone in a private and commercial manner.

Page 3 & 4 – Part 3 – Tables to fill in

The inventory table allows you to take stock of the “in progress” spanning 2 financial years.

If you work on the basis of receipts, the rest does not have to be filled in.

For example, the inventory of work in progress corresponds to the part completed during the year and what remains to be done. It is therefore necessary to base it on the estimates and costs of this year. You cannot apply all the charges for a construction site over a year if it is not finished. This instruction applies to construction and craft work as well as to liberal professions.

Inventory of stocks is mandatory. Their estimate in the table "Estimate of stocks of goods" below is not.

Then, these amounts will be reported on page 2, number 8 of the form.

The table of assets and liabilities is a snapshot of your company's balances. This table is not mandatory.

It is linked to the accounting management of your company and can be completed by an accounting professional. This applies to the following table: "Depreciation table for the financial year".

End

Finally, you are at the end of the form! The last table identifies the distribution of your turnover if you have an activity in several municipalities then this will be taken into account in your tax. The name of the table is "Indications allowing intercommunal and intercantonal distributions to be carried out". It is not mandatory.

Summary

Congratulations! You have reached the bout of the form. Only the net result of the activity is to be reported in your tax return in the "Independent activities" section.

This is point no. 10 on page 2 of the form.

Good preparation in advance allows you to complete this form and transfer this information to your declaration.

This allows you to enter your total gross income and the amount of expenses. And Magic Heidi is a great tool for this operation.

As for the private part, it is important to record what you used. And for the car, you must estimate your use.

For information, there are:
24 hours in a day,
120 hours for 5 days,
168 hours in 7 days

A 100% employee works between 210 and 230 days per year depending on the number of authorized vacation days.

Do not hesitate to contact the administration if you have any questions.

As a reminder, the management of depreciation and provisions for charges is worth being transmitted to accounting professionals for good monitoring and a fair declaration. These people are there to save you money.

Here are all the tools that can guide you to correctly fill out your form:

• Refer to point 1 of this article, "The criteria to be met for a self-employed declaration"
• Additional instructions from the Canton of Vaud
• Notice N1/2007 - Income in kind of the self-employed
• 2022 tax guide for the self-employed in PDF format from the Canton of Geneva