Accounting for a sole proprietorship
A sole proprietorship does not have to keep the same books as a GmbH. How much the law asks depends on revenue. Here is what applies, when VAT comes in and what Bilanzi does for your business.
What the law requires
The duty to keep accounts is set out in the Code of Obligations, from Art. 957. For sole proprietorships and partnerships, what counts is revenue in the last financial year. If it was below CHF 500’000, simple books of income, expenditure and financial position are enough. In Switzerland this is often called the «Milchbüchlein».
If revenue was CHF 500’000 or more, the full duty to keep accounts and report applies. You then need complete books, in practice double-entry, and annual accounts with a balance sheet and an income statement. For a GmbH or an AG this always applies, whatever the revenue.
What applies to simple books too
Simple does not mean without rules. The principles of proper accounting apply to simple books as well, with the necessary adjustments. You record every transaction completely and truthfully, and every entry needs a voucher.
You keep books and vouchers for ten years, counted from the end of the financial year. You may keep them electronically, as long as you can make them readable again at any time.
Sources: Code of Obligations, Art. 957, 957a and 958f (fedlex.admin.ch)
Bilanzi keeps double-entry books
Bilanzi has no separate mode for simple books. Every entry goes into the journal with a debit and a credit, even for a small sole proprietorship. The law allows that. Simple books are the minimum, not a limit.
The benefit shows when your revenue grows. When you reach CHF 500’000, you have nothing to change. The balance sheet and income statement are already there, with the accounts behind every line.
Day to day, you see little of debits and credits. With «Record an expense» you say what you bought, what it cost, what it was for and how you paid. Bilanzi turns that into a draft entry with both sides, and you post it.
VAT and the CHF 100’000 threshold
If your revenue from taxable supplies in Switzerland and abroad stays below CHF 100’000 a year, you are exempt from VAT liability. You can waive the exemption and register voluntarily. If you become liable, you register with the ESTV yourself within 30 days of the start of your liability.
During setup, Bilanzi asks whether your business is on the VAT register. If it is not, Bilanzi records that with your name and the date, and you write your invoices without VAT. Bilanzi does not work out any revenue threshold. Whether you reach CHF 100’000 is yours to watch. You can see your revenue at any time in the income statement. If you become liable later, you add the registration with its date. From then on, on the Starter plan, Bilanzi works out the return, by the effective method or at a net tax rate.
What Bilanzi does for your sole proprietorship
During setup, you choose the legal form Sole proprietorship and your line of business. Bilanzi proposes a chart of accounts based on the Swiss SME chart. The capital account is called Equity. You can rename every account and add more yourself, such as a private account for your own withdrawals.
After that, you work the way a small business works. All of this is part of the Free plan:
- Photograph receipts with your phone and attach them to the entry
- A list of entries that still lack a receipt, with an own receipt for verbal agreements
- Invoices with a QR payment part and dunning
- Bank statement import and reconciliation
- Balance sheet and income statement at any time, year-end close with a checklist
- Your books as files to download at any time
Your own income and AHV
As the owner of a sole proprietorship, you are not employed by yourself. You are self-employed and pay AHV contributions on the income from that work. These contributions go through your compensation office, not through a payroll run.
Payroll in Bilanzi is for your employees. It belongs to the paid plans, from Starter.
Sources: Federal Act on Old-Age and Survivors’ Insurance, Art. 8 and 9 (fedlex.admin.ch)
What does not work yet
Bilanzi does not offer a plain list of income and expenditure. It always keeps double-entry books. Bilanzi does not warn you when your revenue reaches CHF 100’000 or CHF 500’000. It does not work out private shares either, for example for the car or a home office.
Bilanzi does not calculate your own AHV contributions, and it does not fill in a tax return. You file the VAT return yourself in the ESTV ePortal. There is no direct bank connection.
Frequently asked questions
Does a sole proprietorship need double-entry books?
Only if revenue in the last financial year was CHF 500’000 or more. Below that, simple books of income, expenditure and financial position are enough. You may still keep double-entry books if you want to.
What is the «Milchbüchlein»?
It is the Swiss name for the simple books under Art. 957(2) CO. You record income and expenditure and show what the business owns and what it owes. Here too, every entry needs a voucher.
When does my sole proprietorship have to charge VAT?
When your revenue from taxable supplies reaches CHF 100’000 a year. Below that you are exempt, but you can register voluntarily. Bilanzi does not work out the threshold. You state during setup whether you are registered.
How long do I have to keep receipts?
Ten years, counted from the end of the financial year. That applies to the books and to the vouchers. In Bilanzi you take your books out as files at any time and file them with your records.
What does Bilanzi cost for a sole proprietorship?
Nothing, as long as the Free plan is enough. It covers one company, two people and many years of receipts, for good and with no credit card. For the VAT return you need the Starter plan. The prices are on the pricing page.
What it costs
This is part of the Free plan, so it costs nothing, and of every other plan too.
Related topics
Accounting software that costs nothing
Bilanzi has a plan that costs nothing and does not expire. It is called Free, and it holds the accounting for one company, without the VAT return. Here is what it includes, where its limits are and when a paid plan is worth it.
The VAT return
Bilanzi works out the VAT return from the lines you post anyway. You check it position by position and file it with the ESTV yourself.
Get started today. For free.
The easiest way to test Bilanzi is with one month of your sole proprietorship. Create an account, choose the legal form Sole proprietorship and record your receipts. The Free plan costs nothing.
Free forever. No credit card.