Accounting for Swiss Sole Proprietors: Your 2025 Survival Guide

Every year, over 50,000 new businesses launch in Switzerland—and most start as sole proprietorships. If you're one of them, you've probably realized accounting isn't just about staying compliant. It's your business dashboard, your growth roadmap, and yes, your ticket to avoiding tax penalties.

This guide shows you exactly what to do, when to do it, and how to automate the boring parts.

Under CHF 100,000: Simple and Flexible

What you need:

• Basic income-expense tracking (Milchbüechli-Rechnung)
• Receipts for all business expenses (keep for 10 years)
• No VAT registration required

What this means: You can use simple spreadsheets or basic accounting software. Just track what comes in and what goes out. Many freelancers comfortably manage this themselves.

CHF 100,000–499,999: Add VAT Complexity

What changes:

• VAT registration becomes mandatory (within 30 days of hitting threshold)
• Must charge new 2025 rates: 8.1% standard, 2.6% reduced, 3.8% accommodation
• Choose between Saldo or effective VAT method
• Quarterly or annual VAT reporting (annual now available for turnover under CHF 5,005,000)

What this means: Your bookkeeping stays simple, but you're now collecting taxes for the government. This is where many sole proprietors switch to accounting software or hire help.

CHF 500,000+: Professional-Grade Required

What changes:

• Double-entry bookkeeping becomes mandatory
• Must produce proper balance sheet and profit/loss statement
• Need structured chart of accounts
• Often triggers commercial register requirement

What this means: You're running a serious business. Most Einzelfirma owners at this level work with a Treuhänder (fiduciary) or use comprehensive accounting platforms.

Pro tip: Set calendar reminders at CHF 90,000 and CHF 450,000 to prepare for upcoming threshold changes. Scrambling to register for VAT or switch bookkeeping methods while managing your business is stressful.

Choose Your Accounting Method

Option 1: Manual/Spreadsheet

• Cost: Free to CHF 100/year
• Best for: Under CHF 50,000 revenue, simple operations
• Downside: Time-consuming, error-prone, no automation

Option 2: Accounting Software

• Cost: CHF 10–75/month
• Best for: CHF 50,000–500,000 revenue, growth-focused
• Advantage: Automation, VAT handling, bank imports, time savings

Option 3: Full Treuhänder Service

• Cost: CHF 1,500–5,000/year
• Best for: CHF 100,000+ revenue, complex situations, people who hate accounting
• Advantage: Professional expertise, audit protection, strategic advice

Essential Tools You Need

1. Business bank account – Separation is clarity
2. Receipt capture system – Phone camera works (but thermal receipts fade!)
3. Invoice numbering system – Sequential, no gaps
4. Tax reserve account – Set aside 25–30% of income automatically
5. Document archive – Digital preferred, 10-year retention required

Total monthly time investment: 2.5–4 hours

Even if you value your time at just CHF 25/hour, software pays for itself immediately.

Common Non-Deductible Expenses

❌ Personal meals (even if you "think about work")
❌ Commuting from home to regular workplace
❌ Clothing (unless specific work uniform)
❌ Life insurance premiums
❌ Personal portion of mixed-use items

Critical rule: You need receipts for everything. Digital copies are acceptable, but "I remember buying it" doesn't count.

When to Register for VAT

Registration becomes mandatory when:

• Your annual turnover from taxable services exceeds CHF 100,000
• You provide taxable services and want to reclaim input VAT (voluntary registration)

You must register within 30 days of hitting the threshold.

Choosing Your VAT Method

Saldo Method (Flat-Rate)

• Pay fixed percentage of turnover (varies by industry: 0.1%–6.5%)
• Simpler calculations
• No need to track input VAT on every expense
• Best for low-expense service businesses

Effective Method (Actual)

• Charge VAT on sales, deduct VAT on purchases
• Pay the difference
• More paperwork, but better if you have high business expenses
• Mandatory if turnover exceeds CHF 5,005,000

New for 2025: SMEs with turnover up to CHF 5,005,000 can now choose annual VAT reporting instead of quarterly, with optional installment payments. This reduces administrative burden significantly.

E-Commerce VAT Rules (New 2025)

If you sell through platforms like Amazon or eBay, the platform may now be the "deemed supplier" responsible for VAT collection. Verify your specific situation with your platform.

The Private Withdrawal System

As a sole proprietor, you make private withdrawals (Privatentnahmen/prélèvements privés) from your business account:

1. Transfer what you need to your personal account
2. Record it as "private withdrawal" (not expense!)
3. These withdrawals do NOT reduce your taxable profit
4. You pay tax on your entire business profit in your personal tax return

Example:

• Business profit: CHF 80,000
• Private withdrawals: CHF 60,000
• Taxable income: CHF 80,000 (not CHF 20,000!)

The remaining CHF 20,000 stays in your business as working capital.

The Tax Reserve Strategy

Here's a strategy that prevents year-end tax shock:

1. Calculate your expected effective tax rate (income tax + AHV/AVS + pension)
2. This typically ranges from 25–40% depending on your canton and income
3. Automatically transfer 30% of every client payment to a separate savings account
4. Use this reserve to pay quarterly/annual tax bills

Never touch this reserve for business expenses. When tax bills arrive, you'll have the money ready.

For Simple Bookkeeping (Under CHF 500,000)

December tasks:

1. Collect all final receipts and invoices
2. Record all December transactions
3. Create final income-expense summary
4. Calculate total profit (income minus expenses)
5. Export or print summary for tax filing

What you'll submit to tax authorities:

• Income-expense statement
• Supporting documents (available if requested)
• Tax return form with business profit reported

For Double-Entry Bookkeeping (CHF 500,000+)

Additional requirements:

1. Balance sheet showing assets and liabilities
2. Proper profit/loss statement
3. Depreciation schedules
4. Year-end inventory valuation (if applicable)

At this level, working with a Treuhänder becomes almost essential unless you have accounting expertise.

The Cost-Benefit Calculation

Manual bookkeeping time: 6–8 hours monthly = CHF 3,000–4,000 yearly (at CHF 50/hour)
Software cost: CHF 300–900 yearly
Time saved: 4–6 hours monthly
Break-even: First month

Even if you value your time at just CHF 25/hour, software pays for itself immediately.

Magic Heidi offers all must-have features with a Swiss-first approach: bank integration, QR-bill generation, VAT compliance, and mobile-first design.

When to Hire a Treuhänder

Consider professional help when you experience:

Complexity triggers:

• VAT registration (especially effective method)
• First employee hire
• International transactions
• Multiple income streams
• Turnover approaching CHF 500,000

Time triggers:

• Spending 10+ hours monthly on bookkeeping
• Missing deadlines regularly
• Making frequent errors
• Avoiding accounting for weeks

Growth triggers:

• Planning to convert to GmbH or AG
• Seeking bank financing
• Adding business partners
• Expanding to new cantons or countries

Cost comparison:

• DIY with software: CHF 500–1,000/year + your time
• Treuhänder partnership: CHF 1,500–5,000/year + peace of mind
• Emergency audit repairs: CHF 3,000–10,000

Prevention is always cheaper than correction.

The sole proprietors who succeed long-term treat accounting as a business dashboard, not a yearly chore. They know their numbers monthly, spot problems early, and make decisions based on data.

You don't need to love accounting. You just need to respect it enough to do it properly.

Ready to automate your Einzelfirma accounting? Try Magic Heidi free for 30 days. Swiss-made software designed specifically for freelancers and sole proprietors—bank integration, QR-bills, VAT compliance, and year-end closing included. No credit card required.

Last updated: January 2025. Tax laws change regularly. Consult a qualified tax professional for advice specific to your situation.