Complete Guide to Tax Deductions for Independent Workers

Optimize Your Expenses and Maximize Your Profits.
Tips and Strategies to Make the Most of Deduction Options and Reduce Your Tax Burden as a Freelancer

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We've told you before: The Federal Tax Administration (FTA) is your best friend. When the fateful moment arrives, they are there to help you. But that's not all... at Magic Heidi, we're also here to guide you in the right direction and help you anticipate that beautiful tax declaration you'll make to them.
Because you will know the amount of your income, your expenses, and most importantly, where to report these amounts.
Your income is up to you to manage.

Today, we will focus on your expenses.

What Deductions Can You Make?

We propose these categories that follow the logic of an accounting plan (except for category 5) to give you an overview of your company's expenses.

1. Raw Materials, Goods, and Services Expenses

  • Invoices for purchases of raw materials, goods, and services
    • Purchase of cork to manufacture clothing, purchase of drinks for additional sales, ordering flyers from a service provider + related costs such as delivery charges
  • Changes in your inventory
    • You need to draw up an inventory on January 1st and an inventory on December 31st.
    • Change in inventory = Final stock - Initial stock
  • Losses of materials or goods
    • A refrigerator breakdown, theft...
  • Discounts that were generously granted to you because you are friendly
    • Rebate: reduction granted in relation to a defect in the quality or conformity of the good or service
    • Discount: reduction granted in relation to the quality of the customer
    • Rebate: reduction granted in relation to the volume of your purchases
    • Early payment discount: reduction granted in relation to the payment date, for good payers

2. Personnel Expenses

  • Salaries
    • Wages, salaries, allowances, bonuses, loyalty bonuses, gifts, benefits in kind
  • Social contributions
    • AVS, AI, APG, AC, AF, and Amat to be paid to your Compensation Fund
  • Occupational pension scheme
    • Employer's share of the occupational pension scheme

3. Depreciation, Provisions, and Interest on Your Debts

  • Depreciation
    • Purchase of furniture, computer equipment, tools, machines, cars, bicycles if they are part of your activity
  • Provisions for expenses payable
    • The invoice will be paid next year, so an expense of an exact or similar amount is created.
    • When you ordered goods last year and will receive the invoice the following year. The expense must be in the correct year. This is why we "create" a provision.
    • The following year, we remove the amount of the expense.
  • Provisions for expenses paid in advance
    • The invoice was paid this year but the service will take place next year. The amount is then moved to the following year.
  • Provisions for open invoices
    • A client has not paid your invoice and shows no signs of life. The deadline must be more than one year to make such provisions.
  • Interest on debts
    • You have taken out a bank loan to finance a project. There is interest to be paid which is an expense for you. They are to be accounted for.

4. General Expenses and Other Charges

  • Miscellaneous rent
    • Coworking space rental, meeting room, your office, rental value
    • The rental value is a special taxation for owners of real estate who occupy their property. If you want to pay rent to the owner, i.e., yourself, you will need to make an estimate based on similar properties. You can contact the cantonal tax administration for more information.
  • Maintenance and repair costs for furniture and equipment
    • These are repairs to your bicycle, your computer, changing the bulb in your desk lamp
  • Vehicle and transportation expenses
    • License plate tax, fuel, public transportation
  • Insurance premiums
    • Your Civil Liability insurance, fire insurance
  • Energy costs
    • Related to your premises + waste disposal costs
  • Marketing expenses
    • All expenses related to advertising on social networks or other platforms, travel expenses, gifts

5. Benefits in Kind and Private Shares of Overheads

  • Withdrawal of goods
    • Count the price of the goods you would have had to pay outside your company. This transaction is considered income for your company or income in kind for you.
  • Rental value + energy costs
    • When the company owns premises for commercial use and used partly for living: a rental value (rent) can be paid as compensation and a private share of energy costs is calculated according to a flat rate. You pay part of the costs back to the company.
    • Here, this transaction is considered a reduction in expenses for your company since you pay rent to your company.
    • For any information related to the rental value, contact the cantonal tax administration or your municipality.
  • Use of staff for private purposes
    • If you ask an employee of your bicycle repair company to repair your own bicycle, this is considered private use of labor. As such, this person (your company) must be compensated.
    • Here, this transaction is considered income for your company.
  • Automobile expenses
    • Whether the car belongs to the company or not, there are 2 methods: according to actual costs or a flat rate.
    • The 1st method requires keeping a logbook with the trips.
    • The 2nd is a flat-rate calculation.
    • If the car belongs to you privately, then this transaction is an expense for the company. Otherwise, you pay part of the costs back to the company.

There remains a category of expenses that are not deductible. They mainly concern your own maintenance costs for your assets that do not concern the company, or the taxes you pay on your own income. More broadly, anything that has no connection with business use.


Expenses Not to Forget to Reduce Your Taxable Income.

At the end of the day, we always want to reduce the taxable amount of our activity as much as possible, to pay less tax. But when you're self-employed, the line between private and business isn't always clear. To help you deduct everything you're entitled to, here's a list of expenses you've probably paid and shouldn't forget to deduct!

  • You go to a restaurant with a potential client and pay for the meal.
  • You go to Finland for three days for a conference that could allow you to find new clients.
  • You buy a camera to shoot promotional clips for your business.
  • You buy a Python programming course.
  • You make a donation to a charity or a political party.


Are you still here?

The expenses you account for during your activity are to be declared once.
You need to distinguish the categories in a table and enter the expenses first.
At the time of the tax declaration, the cantons provide you with guides with explanations for each section to be filled in.
Moreover, this article was written thanks to this guide from the City of Geneva.
Secondly, some expenses require a "revision" in order to best reflect your activity and your expenditures. We refer you to category 5 in particular.
Through good expense management, you also add value to your company.
What to do next?
There are other ways to add value to your company: donations to associations, for example. We can explore this topic in a future article.

We wish you every success!