Accounting 101 — the comprehensive guide for startups, freelancers and SMEs

Do I need accounting?

Yes, if you are self-employed, you must always keep an accounting in Switzerland.

This also applies if you are not registered in the commercial register as a sole proprietorship. In simple cases, an income and expenditure overview is sufficient as an accounting department, but depending on this, you may need to keep proper bookkeeping.

Do I have to do double bookkeeping?

Regular bookkeeping is required by law in these cases:

If you have founded a GmbH or AG
For individual or collective firms with an annual turnover of 500,000 Fr.

In these cases, an income/expenditure statement is not enough and you need double accounting. However, proper bookkeeping, for example for value added tax, is often worthwhile even for companies that are not yet obliged to do so.

The duties for proper bookkeeping are in the Code of Obligations in Art. 957a regulated.

Ordinary vs. simplified accounting

What is the difference between ordinary and simplified accounting?

Ordinary bookkeeping

Regular bookkeeping requires you to do double bookkeeping — with balance sheet, income statement and inventory.

With proper bookkeeping, you get better evaluations. It's easier for you to see how successful you are doing business.
You are on the safe side when it comes to taxes, as you can always provide correct financial statements and statements.
If you keep a clean bookkeeping early on, you'll save yourself a lot of work later on.

Simplified accounting

With simplified accounting, it is sufficient to simply list your income, expenses and financial position in an overview. This works if you don't have many orders at the start.

It is a legitimate form if you don't have many orders yet and your turnover is relatively small.

If you are subject to VAT or voluntarily submit to VAT, the statement can be tedious without proper bookkeeping.

Do I have a company?

If you act as a self-employed person under your own name, you automatically have a sole proprietorship, even if you are not registered in the commercial register — with a sole proprietorship, an annual turnover of up to CHF 100,000 is not absolutely necessary. Simplified bookkeeping is mandatory even then.

Your official company name on invoices

Even if you act as a self-employed person with an imaginary name (e.g. Studio11), your last name must also be included in the official company name on invoices (e.g. Studio11 Holzberg).
Collective companies, AGs and limited liability companies are completely free from imaginary names, as long as the legal form amendment is available.

Registration and personal liability

To register your company in the commercial register, you can register via EasyGov, the federal online counter for start-ups, get it done.

With sole proprietorships, you are always fully liable, i.e. with all your private assets for debts, regardless of whether your company is registered or not.
In the case of limited liability companies and AGs, liability is limited to business assets, but a minimum capital is required.

What is double bookkeeping?

Dual bookkeeping is a common system for recording bookings. Bookings are always recorded at two locations — this is also where the term “double” bookkeeping comes from.

For example, a payment for an office supplies purchase is recorded in the following two accounts:

Office material: An account into which all expenses that fall into the category of office equipment are posted.
checkout: An account that represents the cash of the company with which the expenditure was paid.

On the one hand, it is therefore recorded that new material is available and, on the other hand, that money has been spent. In this way, you always have a complete overview and errors can be identified more easily.

Should and have

In double bookkeeping, all business transactions are posted to at least two accounts. This involves recording one side of the transaction in debit and the other side in credit.

Should: This is the “left side” of an account. Debit entries usually stand for additions. For example, a bank account is debited when money is received.
Haben: This is the “right side” of an account. Registrations in credit usually represent contributions. So when you pay an invoice, your bank account is credited.

It is the other way around for debt accounts and income — these increase in credit and decrease in debit.

Automated booking with accounting software

In modern accounting programs such as Infinity Finance, debit and credit are regulated completely automatically in the background.

The chart of accounts explained

Finances are presented using accounting accounts. There are accounts for your business assets, such as your bank account, but also for debts, income, and expenses.

Most Swiss accounting programs use the SME chart of accounts. This is the recommended standard chart of accounts for small businesses and new founders.

View the official version of the SME chart of accounts

What types of accounts are there?

In accounting, accounts are generally divided into 4 account types. The asset accounts and debt accounts together form the balance sheet, while the expense and income accounts form the income statement.

Assets (assets): Funds and investments owned by your company, such as bank deposits, inventories or real estate
Debt accounts (liabilities): Debts that you have with third parties (e.g. bank loans) or owners (equity)
Expense accounts: Accounts that you use to represent expenses incurred, such as material purchases or rent
Income accounts: Accounts with which you represent income earned, such as revenue from services or product sales

What are account numbers?

In some accounting programs, four-digit account numbers are used to refer to accounts.

Accounts starting at 1000: Asset accounts, e.g. your company account (1020), outstanding receivables (1100) but also various tangible assets such as machinery, vehicles or real estate.
Accounts from 2000: Debt accounts that reflect the company's debts to strangers or company owners.
Accounts starting at 3000: Income accounts from your sales or services that you provide.
Accounts starting at 4000: Majority expense accounts for expenses incurred in your company (e.g. production costs, wages, rent) and the financial result.
Accounts starting at 7000: Revenue and expenses from subsidiary businesses
‍Accounts starting at 8000: Non-operating or extraordinary expenses and income
‍Accounts starting at 9000: Closing and opening accounts

You can look up these account numbers in the SME chart of accounts.

In Infinity Finance, you can set yourself whether you want to see account numbers or not.

Create your own accounts

Depending on your business model, it may be worthwhile to create income accounts specific to your income, for example. For example, a production company could use several income accounts to comprehensibly evaluate revenue:

3000 — Revenue from plastics production
3001 — Revenue from metal processing
3002 — Proceeds from 3D printing
3003 — Revenue from textile production

The most important rule of accounting

The most important accounting rule is that the accounting equation always works out. This means that the balance sheet total on both sides must always equal the same sum:

The reason for this is double bookkeeping, meaning that both sides are affected by the same amount of every transaction.

If you have a difference between your assets and liabilities during the year, do you still have unbooked profit or loss, which is then definitely recorded at the end of your financial year.

Opening your accounts

Accounting is opened at the beginning of the financial year. This uses a special “Open” account to transfer the initial balances to all of your other accounts.

When opening your accounting the accounting equation must necessarily be fulfilled This means that your assets and liabilities must be the same at the beginning.

A simple example:
So if you start your business with, for example, 20,000 Fr. share capital, you must book this 20,000 Fr. into the bank and also share capital into the debt account, as the company owes this money to its owner (this is called “equity”).

Steps to organize your accounting in infinity.swiss

To get started with accounting in Infinity Finance, start the 14-day free trial for your company.

Then open your accounting on the “Book” tab with the function “Start with initial stocks”.
If necessary, adapt the chart of accounts to your company, e.g. separate income accounts for specific sources of income for your company.
If you have a supported bank, you can also connect your bank account directly to Infinity Finance and receive automatic booking suggestions with AI.

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Balance sheet and income statement

With the help of accounting statements, you can see how a company is doing. There are two important evaluations that you need to know when doing your bookkeeping: the balance sheet and the income statement.

The balance sheet is a snapshot of your company at a specific point in time. Here you can see how many assets and liabilities your company has.
The income statement represents changes over a specific period of time. Here you can see how much income and expenditure your company had.

In both analyses, you can see your annual profit or loss. If they don't match, there's something wrong with your accounting.

At the end of the fiscal year, you prepare these financial statements after you have completed the financial year in full. These financial statements then provide the basis for the next financial year and are relevant for your taxes.

In accounting programs such as Infinity Finance, you can view a balance sheet or income statement at any time.

When do I need an escrow expert?

It is often worthwhile to consult a trustee to review your bookkeeping.

Such a consultation is also worthwhile if you need to reflect specific issues in your accounting, e.g. crypto transactions, investments, complex differentiations, etc.

In Infinity Finance, you can invite your escrow expert to check your accounting for free. We recommend for preparing financial statements and tax advice our trust partner FINFINITY.

However, you no longer need a permanent specialist for everyday tasks with Infinity Finance. As a rule of thumb, hiring someone as a permanent accountant is only a worthwhile option if you have 30 employees or a turnover of more than one million.