Bookkeeping for Sole Proprietorships: The practical guide for the self-employed

The accounting obligations that apply to you depend, among other things, on your annual turnover. At the same time, you must correctly retain receipts, record income and expenses, account for social security contributions, and, depending on your turnover, settle VAT.

In this guide, you will learn how accounting works for a sole proprietorship in Switzerland, what legal requirements apply, and how to organize your bookkeeping step by step.

Is a sole proprietorship required to keep accounts?

Yes. A sole proprietorship must also document its business transactions. The extent of the bookkeeping required depends primarily on your annual turnover.

Sole proprietorship with less than CHF 500,000 annual turnover

If your sole proprietorship generates less than CHF 500,000 in turnover per year, you are generally permitted to use simplified accounting.

In doing so, you must at a minimum record your:

• Income

• Expenses

• Financial position

in full. In Switzerland, this simplified form is often referred to as "Milchbüechli-Rechnung" (simple ledger accounting).

Sole proprietorship with CHF 500,000 or more annual turnover

From an annual turnover of CHF 500,000, more comprehensive accounting regulations apply. Your sole proprietorship must then maintain proper accounts in accordance with the requirements of the Swiss Code of Obligations.

This includes, in particular, double-entry bookkeeping as well as a balance sheet and an income statement.

In addition, there is another important turnover threshold: once you reach CHF 100,000 in relevant turnover, you may generally become subject to mandatory VAT registration.

The CHF 100,000 threshold is also relevant for the commercial register entry of your sole proprietorship. If you operate a business in a commercial manner and generate an annual turnover of at least CHF 100,000, registration is generally mandatory.

→ You can find out more about this in our article on commercial register entries for sole proprietorships.

It is therefore worth keeping a constant eye on your revenue. This allows you to prepare for new accounting, VAT, or registration obligations at an early stage.

What does bookkeeping for a sole proprietorship involve?

Well-organized bookkeeping for the self-employed means more than just entering income and expenses into a spreadsheet.

Proper bookkeeping for your sole proprietorship includes, in particular, the ongoing recording of your business transactions and a clear, traceable filing system for the corresponding receipts.

It is also important to clearly separate private and business expenses. This not only makes your ongoing bookkeeping easier, but also simplifies your year-end closing and tax return.

If your sole proprietorship is subject to VAT, you must also correctly record and settle VAT.

As a self-employed person, you are also responsible for your social security contributions. This includes, in particular, contributions to AHV, IV, and EO, which are settled through the relevant compensation fund.

Finally, at the end of the financial year, you will need a clear overview of your business figures as a basis for your tax return.

How can I do the bookkeeping for my sole proprietorship myself?

Especially for a smaller sole proprietorship, you can generally handle the bookkeeping yourself. The key is to establish a clear structure from the start to avoid discrepancies.  

Here is a step-by-step guide:

1. Separate your business and private accounts

A separate business account is not strictly mandatory for a sole proprietorship. Nevertheless, keeping them separate is highly recommended.

When private and business transactions are processed through different accounts, you can allocate business expenses more easily and reduce the effort required for bookkeeping and tax returns.

2. Consistently collect and digitize receipts

There should be a traceable receipt for every relevant transaction.

You should therefore record invoices, receipts, and other business documents on an ongoing basis and store them in a structured manner – ideally digitally.

Don't wait until the end of the year to do this. The longer you leave receipts sitting around, the harder it becomes to correctly assign individual transactions later on.

3. Use a suitable chart of accounts

If you use double-entry bookkeeping, you need a sensible chart of accounts.

The Swiss SME chart of accounts can be a good foundation for this and can be adapted to the requirements of your sole proprietorship and industry.

4. Record income and expenses on an ongoing basis

One of the most important rules for simple bookkeeping: book regularly.

If you update your bookkeeping monthly, for example, you will have a better overview of your financial situation and won't have to catch up on several months at once at the end of the year. This also gives you a monthly overview of your current figures.  

5. Keep an eye on the VAT threshold

Value-added tax is particularly important for growing sole proprietorships.

Keep a constant eye on your revenue and check early on whether your sole proprietorship is subject to VAT.

If you are already liable for VAT, you should ensure that VAT is recorded correctly and your return is submitted on time.

6. Prepare the annual financial statements

At the end of the financial year, you must neatly consolidate your business figures.

The requirements that apply depend on your accounting obligations. With simplified bookkeeping, you primarily need a complete overview of income, expenses, and your asset position.

These figures form an important basis for your sole proprietorship's tax return.

Bookkeeping for sole proprietorships: Excel or accounting software?

For a very small sole proprietorship, a simple Excel solution may be sufficient at first. However, as the number of invoices, receipts, and transactions grows, so does the administrative burden.

A digital accounting solution can help you organize your documents, keep an eye on your business figures, and handle recurring administrative tasks more efficiently.

What matters is not just the software itself, but also a clean accounting structure. Automation is of little help if receipts are missing or business transactions are recorded incorrectly.

Common bookkeeping mistakes for sole proprietorships

In practice, we repeatedly see the same mistakes when it comes to bookkeeping for sole proprietorships.

For example, receipts are not collected consistently or are only recorded months later. Private and business expenses are processed through the same account, making them difficult to separate later on.

Another common pitfall is VAT: if the company grows quickly, the relevant turnover threshold can be reached sooner than expected.

Deadlines for the compensation fund, tax authorities, or other government agencies can also easily be overlooked in the daily grind.

Many of these problems can be avoided if you set up your bookkeeping in a structured way from the start and update it regularly.

Should you do your own bookkeeping for your sole proprietorship or outsource it?

Whether you should handle your sole proprietorship's bookkeeping yourself or outsource it to an accountant depends primarily on the complexity of your business and the time you have available.

Especially in the initial phase, it can make sense to record simple business transactions yourself. A digital system can help you organize receipts, documents, and important financial information clearly.

With MoneyKey, you can manage your financial administration centrally and gain a better overview of your records and business figures.

At the latest when your sole proprietorship grows, you become subject to VAT, or your bookkeeping takes up an increasing amount of time, professional support may be worthwhile.

Bookkeeping for your sole proprietorship with MKY

Do you want to set up your bookkeeping correctly, spend less time on administration, and ensure your sole proprietorship meets all relevant requirements?

MKY supports sole proprietorships across Switzerland with bookkeeping, taxes, VAT, and other administrative tasks. Together, we will review your current situation and determine which support makes the most sense for your business.

This way, you stay on top of your numbers – and have more time for your actual business.