Accounting is the process of recording, organising, checking, and reporting financial transactions. It shows what a business owns, owes, earns, and spends. In Switzerland, accounting also supports annual accounts, tax returns, VAT reporting, payroll, and compliance with the Swiss Code of Obligations.
Accounting is not only a legal or tax task. Good business accounting helps owners understand cash flow, measure profit, prepare budgets, control costs, and make better decisions. Switzerland’s SME Portal also highlights clear accounting as a key part of maintaining control over a company’s financial position.
What Is Accounting in Simple Terms?
In simple terms, accounting turns daily financial activity into useful information. It records sales, expenses, customer invoices, supplier bills, bank transactions, equipment, loans, payroll, social contributions, VAT, and taxes.
These records help a business answer practical questions:
Are we making a profit?
How much cash can we use?
Which customers still owe us money?
Are costs growing faster than sales?
Can we afford to hire or invest?
How much VAT or tax may be due?
Formula
Accounting is built on one basic formula:
Assets = Liabilities + Equity
Assets are what the business owns or controls. Liabilities are what it owes. Equity is the value left for the owners after liabilities are deducted.
Accounting serves two main roles: compliance and management.
First, complete records support annual accounts, tax filings, VAT returns, payroll reports, and audits. They also provide evidence when a bank, investor, authority, or business partner asks for financial information.
Second, accounting shows how the business is performing. Sales show what the company earns from customers. Gross profit is what remains after direct costs. Operating profit reflects the result after normal business expenses. Net profit is the final result after interest, tax, and other costs.
Accounting also protects cash flow. A profitable company can still face payment problems when customers pay late or large bills fall due. Regular reporting can highlight overdue invoices, rising expenses, seasonal gaps, and future tax payments.
Reliable accounts support pricing, hiring, purchasing, funding, and expansion decisions. Banks and investors also expect clear financial statements, realistic forecasts, and proof of financial control.
How Does the Accounting Process Work?
The accounting cycle follows seven main steps.
1. Collect Financial Documents
The business gathers sales invoices, supplier bills, receipts, bank statements, payroll records, expense claims, loan documents, and VAT records.
2. Record Each Transaction
Each transaction is entered as a journal entry. Under double-entry accounting, one account is debited, and another is credited.
This system records every transaction in at least two accounts and keeps the accounting equation balanced. Learn more about double-entry accounting in Switzerland.
3. Post Entries to the General Ledger
The general ledger groups transactions into accounts, such as sales, rent, salaries, cash, receivables, payables, and VAT.
4. Reconcile the Accounts
The accountant compares the records with bank statements and other evidence. Customer, supplier, payroll, and VAT balances are checked for missing or incorrect entries.
5. Make Period-End Adjustments
Accrued expenses, prepaid costs, depreciation, inventory changes, bad debt provisions, and deferred revenue may need to be recorded in the correct period.
6. Prepare Financial Statements
Once the ledger is complete, the business prepares its balance sheet, income statement, notes, and other reports.
7. Close the Accounting Period
Final checks are completed before the annual accounts, tax returns, and management review are prepared.
What Are the Main Types of Accounting?
Financial accounting prepares reports for shareholders, banks, authorities, and other external readers.
Managerial accounting turns financial data into internal reports for budgets, pricing, cost control, and planning. See how managerial accounting in Switzerland supports business decisions.
Tax accounting supports taxable-profit calculations, deductions, provisions, and filings.
Cost accounting measures the cost of products, services, projects, or departments.
Payroll accounting covers salaries, employer costs, social insurance, pension deductions, accident insurance, and source tax.
Forensic accounting investigates fraud, disputed transactions, and financial irregularities.
What Are the Main Financial Statements?
Financial statement
What it shows
Balance sheet
What the business owns, owes, and holds as equity on a specific date
Income statement
Revenue, expenses, and profit or loss over a period
Cash flow statement
Cash generated and used by operations, investing, and financing
Notes to the accounts
Accounting methods, commitments, debt, risks, and other details
Balance sheet
What it showsWhat the business owns, owes, and holds as equity on a specific date
Income statement
What it showsRevenue, expenses, and profit or loss over a period
Cash flow statement
What it showsCash generated and used by operations, investing, and financing
Notes to the accounts
What it showsAccounting methods, commitments, debt, risks, and other details
Financial statement template
The balance sheet may include cash, receivables, inventory, equipment, supplier balances, loans, and share capital. The income statement explains how revenue becomes profit or loss.
The cash flow statement is different. A company may report a profit but have little cash because customers have not paid or it invested in equipment.
Swiss legal entities, including SAs and Sàrls, must keep accounts under the Swiss Code of Obligations. Sole proprietorships and partnerships with turnover above CHF 500,000 must also keep full accounts.
Businesses below this threshold may use simplified accounting that records income, expenses, and assets.
Supporting documents, accounting records, annual reports, and audit reports must generally be kept for at least ten years. Electronic records are allowed, but they must remain accessible. The business must also be able to trace changes to electronic accounting data.
Swiss VAT Requirements in 2026
VAT area
2026 position
Standard rate
8.1%
Reduced rate
2.6%
Accommodation rate
3.8%
General registration threshold
CHF 100,000
Filing method
Online filing required
Standard rate
2026 position8.1%
Reduced rate
2026 position2.6%
Accommodation rate
2026 position3.8%
General registration threshold
2026 positionCHF 100,000
Filing method
2026 positionOnline filing required
Swiss VAT requirements
The CHF 100,000 threshold is the general rule for most businesses, although exemptions and sector-specific rules may apply.
Since 1 January 2025, VAT-registered businesses must submit their returns online through the Federal Tax Administration Portal.
Swiss Code of Obligations, Swiss GAAP FER, or IFRS?
Framework
Main purpose
Typical users
Swiss Code of Obligations
Statutory compliance
Most Swiss businesses
Swiss GAAP FER
True-and-fair reporting
SMEs, groups, nonprofits, and investor-backed businesses
IFRS
International comparability
International groups and some listed companies
Swiss Code of Obligations
Main purposeStatutory compliance
Typical usersMost Swiss businesses
Swiss GAAP FER
Main purposeTrue-and-fair reporting
Typical usersSMEs, groups, nonprofits, and investor-backed businesses
IFRS
Main purposeInternational comparability
Typical usersInternational groups and some listed companies
Swiss Code of Obligations, Swiss GAAP FER, or IFRS?
Most Swiss companies start with the Code of Obligations.
Swiss GAAP FER adds clearer and more comparable reporting for banks, boards, and investors. The framework focuses on a true and fair view of a company’s financial position, cash flows, and operating results. It is designed mainly for SMEs and organisations with a national reach.
IFRS is more common when a company reports to international stakeholders. Read the full comparison of Swiss GAAP FER vs IFRS.
Main applicationsCash runway, recurring revenue, investor reporting
Common riskTreating bookings as earned revenue
Professional services
Main applicationsTime billing, project profit, receivables
Common riskLate invoices and weak cost tracking
Retail and e-commerce
Main applicationsInventory, payment platforms, returns, VAT
Common riskMissing transactions across systems
Hospitality
Main applicationsDaily sales, payroll, stock, VAT
Common riskPoor cash checks and margin leakage
Construction and real estate
Main applicationsProject costs, work in progress, financing
Common riskRecording income or costs in the wrong period
Nonprofits
Main applicationsGrants, donations, funds, restricted spending
Common riskGrants, donations, funds, restricted spending
Accounting applications in various industries
The accounting principles stay the same. However, the chart of accounts, reporting schedule, internal controls, and performance measures should fit the industry.
A SaaS company may focus on recurring revenue and cash runway. A retailer needs strong inventory and payment-platform controls. A construction business must track costs and revenue by project.
The Latest Accounting Updates in 2026
Cloud accounting continues to replace manual files. Businesses can centralise documents, connect bank feeds, work remotely, and reconcile accounts faster.
Software can capture invoice data, match payments, classify expenses, create recurring entries, and update reporting dashboards.
Swiss reporting is becoming more digital. VAT returns are now filed online, while QR-bills support structured payments. Swissdec-certified payroll software can also send salary and benefit data directly to selected tax offices, social insurance bodies, insurers, and other authorities.
AI can help classify transactions, find unusual entries, and prepare draft reports. It does not remove the need for expert review. VAT, tax, payroll, valuation, and legal questions often depend on facts that software cannot judge alone.
Digital tools do not remove record-keeping duties. Businesses still need a complete, readable, secure, and reliable audit trail throughout the required retention period.
When Should You Outsource Accounting Services?
utsourcing can make sense when your business:
Is registered for VAT
Hires employees
Manages stock or inventory
Operates across borders
Receives external investment
Needs regular management reports
Has limited internal accounting knowledge
Is growing faster than its finance processes
A Swiss fiduciary often combines accounting and bookkeeping, tax planning, VAT management, payroll, annual accounts, company formation, financial reporting, and business advice.
This gives an SME wider expertise without building a full internal finance team.
The goal is not only to process transactions. It is to give you reliable figures, clearer reporting, and a financial system that supports growth.
Need Clearer Accounts for Your Business in Vaud?
Fiduciaire Vaudoise can manage your bookkeeping, annual accounts, VAT, payroll, and financial reporting. Meet Swiss requirements with confidence and spend more time running your business.
