Your income statement (also called a profit and loss statement, or P&L) shows you at a glance whether your freelance business made a profit or a loss in a given period. It puts all your revenue on one side, all your expenses on the other, and delivers a clear result: plus or minus. In Switzerland, it's legally required once you hit CHF 500,000 in annual revenue — below that, simplified bookkeeping is enough.

But here's where things get confusing for a lot of freelancers: do you really need a formal income statement if you're a sole trader pulling in CHF 80,000 a year? Short answer: legally, no. Practically, often yes — because it helps you actually understand your business.

This guide explains the income statement the way I'd explain it to a freelancer friend over coffee. No accounting degree required. We'll cover when you need one, how it's structured, and I'll walk you through a concrete example with real numbers from a Swiss freelancer.

Key Takeaways

• Swiss sole traders under CHF 500,000 revenue don't need a formal income statement (Swiss Code of Obligations, Art. 957)
• Above CHF 500,000 revenue, double-entry bookkeeping with an income statement is legally required
• The income statement shows: revenue minus expenses = profit or loss for a specific period
• Even below the threshold, a simple P&L is worth doing — it feeds directly into your tax return
• Accounting software generates the income statement automatically from your transactions, no chart of accounts knowledge needed

What Is an Income Statement? A Simple Explanation

The income statement — also called a profit and loss statement (P&L) or, in German, Gewinn- und Verlustrechnung (GuV) — is one of the two core financial reports for any business. The other is the balance sheet. In Switzerland, the income statement follows the requirements of the Swiss Code of Obligations (OR).

Simply put: the income statement answers one question: did my business make money or lose money during this period?

It takes all your revenue (money coming in) and subtracts all your expenses (money going out). What's left is your profit. If the result is negative, you've made a loss.

Income Statement vs. Balance Sheet

These two reports get confused all the time, but they're fundamentally different:

• Balance sheet: A snapshot of your business on a specific date. It shows what you own (assets) and what you owe (liabilities). Reference date: e.g., 31 December.
• Income statement: A film over a period of time. It shows what happened between two dates — typically 1 January to 31 December.

The balance sheet says: "Here's where things stand today." The income statement says: "Here's how last year went."

Why Does This Matter for Freelancers?

As a freelancer, you might think: "I just check my bank account and I know if things are going well." The problem is that your bank account doesn't tell you the whole story.

Thomas, an IT consultant from Bern, had CHF 45,000 in his account at the end of 2025. Sounds good, right? But his income statement told a different story: he had CHF 120,000 in revenue but CHF 95,000 in expenses, including CHF 22,000 for new hardware he hadn't yet depreciated. His actual profit was CHF 25,000, not CHF 45,000. The rest was a buffer left over from the previous year. Without an income statement, he would have overestimated his standard of living.

When Do You Need an Income Statement as a Freelancer?

This is the key question for self-employed people in Switzerland. The answer depends on your revenue.

Under CHF 500,000 Revenue: Simplified Bookkeeping Is Enough

Under Art. 957 para. 2 of the Swiss Code of Obligations (OR), sole traders and partnerships with less than CHF 500,000 in revenue only need to keep simplified accounts. That means:

• A simple income and expense record (cash-basis bookkeeping)
• A net worth statement at the reference date
• No formal income statement required
• No double-entry bookkeeping required

In practice: you keep a straightforward log of your income and expenses. The official Swiss SME portal confirms: for most Swiss freelancers, this is perfectly sufficient.

Above CHF 500,000 Revenue: Double-Entry Bookkeeping with Income Statement

Once your annual revenue exceeds CHF 500,000, you're legally required to:

• Keep double-entry books
• Prepare an income statement
• Prepare a balance sheet
• Use a chart of accounts (typically the Swiss SME chart of accounts)

This is clearly regulated in Art. 957 para. 1 OR. The income statement must also meet the requirements of Art. 959b OR.

If you use accounting software for Swiss freelancers, the software generates these documents automatically from your bookings.

Voluntary Income Statement: When It's Worth Doing Anyway

Even if you're under CHF 500,000, there are good reasons to keep at least a simple income statement:

1. Tax return: The tax authorities want to know how much you've earned. A clean income statement makes filing your taxes much easier.
2. Business overview: You can see at a glance which costs are eating into your income and whether your business is actually profitable.
3. Creditworthiness: If you want a loan or leasing, banks often require an income statement.
4. Scaling up: If you're heading toward the CHF 500,000 threshold, it's better to build the structure before you get there.

My recommendation: even at CHF 60,000 in revenue, a simple P&L is worth doing. It takes 15 minutes a month if you're already tracking your income and expenses.

Income Statement Structure in Switzerland

The Swiss income statement follows a clear structure. Depending on the level of detail, you can choose between a single-step, two-step, or multi-step format.

The Single-Step Income Statement

The simplest form. All revenues are added up, all expenses are added up, and the difference gives you the result.

Total Revenue
- Total Expenses
= Annual Profit or Annual Loss

This is perfect for small sole traders who just want to know: what's left at the end?

The Two-Step Income Statement

The two-step version separates operating business from financial income. It shows two subtotals:

Operating Revenue
- Operating Expenses
= Operating Result (EBIT)

+ Financial Income
- Financial Expenses
= Net Result (Profit/Loss)

Why is this useful? You can see whether your core business is profitable, separate from interest or other financial effects.

The Multi-Step Income Statement

The multi-step version goes one step further and also shows gross profit:

Net Revenue (Turnover)
- Cost of Goods Sold / Material Costs
= Gross Profit

- Personnel Costs
- Other Operating Expenses
- Depreciation
= Operating Result (EBIT)

+ Financial Income
- Financial Expenses
+/- Extraordinary Items
= Annual Profit or Annual Loss

Which Format Do You Need as a Freelancer?

For most freelancers, the single-step or two-step income statement is more than enough. The multi-step version only becomes relevant once you have employees, purchase significant materials, or work with an accountant on more complex reporting.

The good news: modern accounting software automatically generates a multi-step income statement once you categorise your income and expenses. You don't have to calculate the steps yourself.

Income Statement Example: Swiss Freelancer with CHF 120,000 Revenue

Let's look at a concrete example. Léa is a graphic designer in Lausanne, working as a sole trader. Here are her 2025 figures:

Revenue

Expenses

Result

Total Revenue: CHF 120,000
- Total Expenses: CHF 39,400
= Annual Profit: CHF 80,600

Léa's income statement shows: of CHF 120,000 in revenue, CHF 80,600 is profit. That's her taxable income from self-employment, before income taxes.

How to Read These Numbers

What does this example tell you?

• Profit margin: 67%. That's typical for service-based freelancers with no material costs.
• Biggest cost blocks: AHV contributions (CHF 12,000) and office rent (CHF 9,600). This is where the biggest potential savings lie.
• Software costs: CHF 4,800 per year for tools. Worth checking whether all subscriptions are still needed.
• Marketing: Only CHF 2,000 against CHF 120,000 in revenue. Léa clearly wins clients through referrals and her network.

You only get these insights from an income statement — not from a glance at your bank account.

Creating Your Income Statement: 3 Options for Freelancers

1. Manually in Excel or Numbers

The cheapest option. You create a spreadsheet with two columns: revenue and expenses. At year end, you add everything up and calculate the difference.

Pro: Costs nothing. Con: Error-prone, time-consuming, no automatic categorisation, no VAT tracking.

2. With Accounting Software (Automatic)

The software generates the income statement automatically from your recorded income and expenses. You categorise as you go, and at year end the report is ready with one click.

Pro: Saves time, reduces errors, gives you your income statement throughout the year too (e.g. quarterly). You also get your VAT return covered at the same time. Con: Costs a monthly fee.

For freelancers under CHF 500,000 in revenue, this is the best approach: you're tracking income and expenses anyway, and the software does the rest.

3. Through Your Accountant (Fiduciary)

Many freelancers hand their bookkeeping to a fiduciary (Treuhänder). They then prepare the balance sheet and income statement.

Pro: Professional, accurate, handles edge cases. Con: Expensive (CHF 100–200/hour), and you lose day-to-day visibility into your business.

My tip: even if you work with an accountant, track your own income and expenses. That way you always know where you stand, and your accountant needs less time (= costs less).

Common Mistakes with Income Statements

Mixing Personal and Business Expenses

The classic one. You buy something personal on a Saturday and pay with the business card. Or the other way around: you pay a business dinner on your personal card and forget to log it.

Fix: Keep your business and personal accounts strictly separate. If you do pay for something business-related personally, log it as an expense right away.

Forgetting Depreciation

If you buy a laptop for CHF 3,200, you can't book the full amount as an expense in the year of purchase. You have to depreciate it over its useful life — typically 3–4 years.

In the income statement, this looks like:

• Year 1: CHF 1,067 depreciation
• Year 2: CHF 1,067 depreciation
• Year 3: CHF 1,066 depreciation

Ignoring Accruals

Lisa, a copywriter from Zurich, invoiced CHF 8,000 in December 2025. The client paid in January 2026. Which year does that revenue belong to?

Answer: The year in which the service was delivered — 2025. Even if the money only hits your account in 2026. That's the difference between cash-basis bookkeeping and accrual-basis accounting.

For freelancers under CHF 500,000 who only keep a simple cash record, this is less critical. In that case, what usually counts is when the payment arrives.

Income Statement Switzerland and Your Tax Return

How the Income Statement Feeds Into Your Tax Return

What the tax authorities are primarily interested in from your income statement is one number: your net profit. That's your taxable income from self-employment.

The process is straightforward:

1. You prepare your income statement (or your simplified income-and-expense record)
2. The profit or loss is entered in the "Self-Employment Income" form
3. Combined with any other income, this gives you your total taxable income

What the Tax Authorities Want to See

Forms vary slightly by canton, but broadly speaking the tax authorities need:

• A breakdown of income (by category)
• A breakdown of expenses (by category)
• Proof of AHV contributions
• A depreciation schedule for larger purchases, if applicable
• For VAT-registered businesses: VAT information

A clean income statement makes this process significantly easier. Instead of scrambling to find receipts in February, you've got everything ready to go.