A simple guide to income declaration for the self-employed

Article by Cristina Quesado

This time of the year is overwhelming for the Self-employed because they need to declare their income from the previous year.

In order to ease that overwhelm, I would like to give some tips:

TIP #1: Financial records – You should do your bookkeeping on a cash basis. What does that mean? On a Cash basis of accounting, on your bookkeeping, you should register the cash you received (all the customer-paid invoices) and the cash you spent (the supplier invoices you have paid). The registration date should be the same as the date of the received payments from clients or when you paid something.

TIP #2: Expenses – In order for an expense to be deductible, it needs to comply to some simple rules: 

        Rule #1: Business purpose.

All expenses have to connect to your business.

        Rule #2: Ordinary.

They need to be common for your business type. It would be standard for a coach to have annual software subscriptions in order to communicate with their clients online or to have room rentals if they do coaching in person. That is normal. It would NOT be normal for a coach to buy an AirStream. If that expense is in your future, you may need a different business entity.

       Rule #3: Necessary.

You can ask yourself: Does this expense make money? This question is powerful. When you do this before you make every purchase, you increase the profitability of your business. Try It!

       Rule #4: Document it.

If you do not document the expense properly, it might not be deductible. Even if it checks all the above rules, documenting is Avery important part of your regular bookkeeping process. You will appreciate it later!

How to document it?

It depends on the expense but may include:

  1.  Detailed receipts
  2.  Kilometers or other activity logs
  3.  Loan documents or other business agreements
  4.  Meeting minutes

TIP #3: Profit – After you know how much you received and how much you spent last year, you will be able to know your Profit.

Revenue – Expenses = Profit

For Self-employed persons, this will be your income for last year. You will report this amount to the Social Security of the kanton you registered in and to the Tax Authorities on your Tax Returns.

If you’re a business owner and want to learn all about swiss taxation then you will want to join the workshop on this exact topic coming up March. Email me at info@smartbusinessbycristina.com to save your spot or if you have any additional questions!

For more information check out www.smartbusinessbycristina.com

Join Our Newsletter

Scroll to Top