Closing the Books in Switzerland: The Complete Year-End Checklist for SMEs

What is the year-end closing?

This article builds on our guide to business taxation in Geneva.

The year-end closing (or closing of the accounts) is the set of accounting operations carried out at the end of the financial year to draw up the company's financial statements: the balance sheet, the income statement and the notes. In Switzerland, the legal framework is set out in the Code of Obligations (CO, art. 957 et seq.).

Legal entities, and sole proprietorships/partnerships with turnover above CHF 500,000, are required to prepare annual accounts in accordance with the CO. The accounts must present the company's economic situation in such a way that a third party can form a well-founded opinion of it (art. 958 para. 1 CO).

The financial year usually matches the calendar year (1 January to 31 December), but a different closing date is allowed (e.g. 30 June for companies with seasonal activity).

The closing must be completed within a reasonable time after the end of the financial year. In practice, the accounts must be approved by the general meeting within 6 months of the year-end (art. 699 CO for SAs, art. 805 para. 2 CO for Sàrls (LLCs)).

Phase 1: preparation (December - January)

Closing preparation ideally starts before the end of the financial year:

Bank reconciliations: check that all bank accounts are reconciled. Every bank movement must have a matching accounting entry. Any discrepancies must be identified and corrected.

Physical inventory: companies holding stock must carry out a physical count as close as possible to the closing date. Stock is valued at acquisition or production cost, or at market value where that is lower (the lower-of-cost-or-market rule, art. 960a CO).

Review of receivables: go through your trade receivables. Identify doubtful receivables and book the necessary provisions (a bad-debt allowance). The flat-rate allowance accepted for tax purposes varies (generally 5% on Swiss receivables, 10% on foreign receivables).

Cut-off of income and expenses: make sure all expenses and income are allocated to the correct financial year (the accruals principle). Invoices received after the closing date but relating to the current year must be booked as accrued expenses.

Phase 2: closing entries (January - February)

The most common closing entries:

Depreciation: calculate and book depreciation on fixed assets. In Switzerland, the maximum rates accepted for tax purposes are set out in the depreciation tables of the Federal Tax Administration (FTA) (e.g. furniture 25%, vehicles 40%, IT equipment 40%, buildings 4%).

Provisions: set up the provisions needed for the risks and charges you have identified. Examples: provision for litigation, provision for warranties, provision for taxes.

Accruals and deferrals: book the accrued and deferred assets and liabilities. Examples: prepaid rent, accrued interest not yet due, invoices to be received.

Stock movements: if the company holds stock, record the change between opening and closing stock.

Taxes: provision for the year's profit tax and capital tax.

Dividends: if a dividend is planned, it will be decided by the general meeting. The Swiss withholding tax (anticipatory tax, 35%) on dividends must be deducted and paid to the FTA within 30 days of the due date.

Klear Conseils uses standardised closing-entry templates to make sure nothing is missed in the closing.

Phase 3: financial statements (February - March)

The financial statements required under the CO:

Balance sheet: shows the assets (what the company owns) and the liabilities (what it owes) at the closing date. The minimum line items are set out in art. 959a CO.

Income statement: shows the year's income and expenses. The CO requires the operating result, the financial result and the extraordinary result to be presented separately (art. 959b CO).

Notes: contain the additional information needed to understand the accounts. For SMEs, the notes can be simplified. They must, however, mention at minimum: the valuation principles, liabilities to pension institutions, the amount of long-term debt, and material events occurring after the closing date.

For large companies (balance sheet > CHF 20 million, turnover > CHF 40 million, > 250 employees — 2 of the 3 criteria over 2 financial years), additional requirements apply: extra disclosures in the notes, a cash flow statement and an annual report (art. 961 CO).

The accounting standards recognised in Switzerland are: Swiss GAAP FER (for SMEs), IFRS/IFRS for SMEs, US GAAP and IPSAS (the minimum CO requirements are not a recognised accounting standard within the meaning of the ARR ordinance).

Phase 4: tax return and general meeting (March - June)

Once the accounts are prepared:

Tax return: the annual accounts form the basis of the legal entity's tax return. In Geneva, the ordinary filing deadline is 31 March for financial years ending on 31 December. An extension can be requested (subject to a fee).

The accounts must be attached to the tax return together with:
• Signed balance sheet and income statement
• Notes to the accounts
• Breakdown of depreciation and provisions
• Breakdown of reserves

General meeting: the accounts must be submitted for approval to the general meeting within 6 months of the year-end. The general meeting also decides on the appropriation of profit (carry-forward, dividend distribution, allocation to reserves).

Auditor: companies subject to an ordinary or limited statutory audit must have their accounts checked by a licensed auditor. SMEs meeting certain criteria can waive the limited audit (an opt-out) if all shareholders/members agree and the company does not exceed 10 full-time employees.

Practical tips from Klear Conseils

For an efficient, stress-free year-end closing:

Plan ahead: start the preparatory work in December. A well-prepared closing takes 2 to 3 weeks; a chaotic one can take 2 months.

Keep your bookkeeping up to date: the closing is far simpler when bookkeeping is done monthly rather than "all at once at year-end".

Document everything: every closing entry must be backed by a document (invoice, calculation, board decision). In a tax audit, the burden of proof lies with the company.

Talk to your fiduciary: send over the documents they need as early as possible. Your fiduciary is probably handling dozens of closings at the same time in the early months of the year.

Plan your distributions: if you are considering a dividend, discuss it with your fiduciary before the closing to optimise the tax treatment (salary/dividend coordination).

Klear Conseils offers turnkey year-end closing packages for Geneva SMEs: preparation, closing entries, financial statements, tax return and coordination with the general meeting. Get in touch from November onwards to plan your closing.

See also: business taxation in Geneva · salary or dividend · hidden profit distributions