Mandatory accounting: what each legal form requires

Not all Swiss businesses have the same accounting obligations. The Code of Obligations (CO) grades the requirements according to legal form and size. Knowing which category you fall into saves you from doing too much — or too little. Here is the map.

The criterion is not only the legal form

The CO distinguishes two regimes, and the main dividing line is a threshold of annual turnover: CHF 500,000.

• Below CHF 500,000 in turnover, sole proprietorships and partnerships may limit themselves to so-called simplified accounting: a record of income, expenses and the asset situation (“accounts based on turnover”). No full balance sheet and income statement.
• From CHF 500,000 in turnover, the obligation of full ordinary accounting kicks in: accounting records with a balance sheet, income statement and notes, according to the rules of the CO.

Legal entities — GmbHs and AGs — are instead required to keep full ordinary accounting regardless of turnover, from the very first franc. Here it is not size that counts: it is the legal form.

Sole proprietorship and partnership

If you operate as a sole proprietorship or a simple/general partnership:

• Below the threshold: it is enough to document income, expenses and assets. This is the lightest regime, suited to those starting out or with limited volumes.
• Above the threshold: full accounting like a corporation, with all the entries, the valuation of assets and the annual closing according to the CO.

Note: “simplified accounting” does not mean “no obligation”. You must still keep the documents, track the movements and have reliable data for the tax return and for any VAT liability (which has its own threshold, CHF 100,000 in turnover).

GmbH and AG: full accounting from day one

Corporations must keep ordinary accounting according to the CO, which requires:

• A balance sheet representing assets, liabilities and equity.
• An income statement with the revenues and costs of the financial year.
• Notes with the required supplementary information.

All in compliance with the CO’s accounting principles: going concern, clarity, prudence, and correct valuation of inventories, fixed assets and provisions. This is where topics such as depreciation and hidden reserves stem from.

When an audit is required

Once the size threshold is exceeded, the obligation of an audit of the accounts is added to the accounting. The CO provides for two intensities:

• Ordinary audit for companies that exceed, for two consecutive financial years, two of the three parameters: balance sheet total, turnover and number of full-time positions above certain thresholds.
• Limited audit (restricted review) for other corporations that do not fall under the ordinary audit obligation.

Smaller SMEs can opt out of the limited audit (opting-out) if they have a reduced number of full-time employees and all the partners consent. It is a useful simplification, but it must be resolved correctly and entered in the commercial register.

What to keep, and for how long

Regardless of the regime, the CO requires the retention of accounting books, supporting documents and business correspondence for ten years. The documents must be kept in an orderly manner and legible for the entire period. Electronic retention is permitted provided that the integrity and availability of the data are guaranteed.

The mistake of underestimating the threshold

Crossing the CHF 500,000 mark is not a switch that someone flips for you: it is up to you to notice that you have exceeded the threshold and to adjust the accounting system. Anyone who reaches year-end with “accounts based on turnover” when they should have kept full accounts finds themselves reconstructing everything after the fact, with much higher costs and risks of error.

The same applies to VAT: the two thresholds — CHF 500,000 for accounting and CHF 100,000 for VAT — are different and must be monitored separately.

How we work

At SIH ONE we start from your legal form and your volumes to define the correct accounting regime — neither oversized nor insufficient — and we monitor the thresholds in real time, so that the move to a higher obligation does not catch you unprepared. Current bookkeeping is pre-processed by our AI systems and validated by a qualified professional, with archiving compliant with the ten years required by the CO.

Would you like to know which accounting regime is genuinely mandatory for your business? Let’s check it together.