Accounting
Accounting for Swiss sole proprietorships and general partnerships
A sole proprietorship and a general partnership require a clear separation between business activity and the owners’ private finances. Learn how to record drawings, capital contributions and expenses paid personally, distinguish profit from cash withdrawals, and allocate a partnership’s result with practical accounting examples.
By Sarah Prieur · Swiss certified accountant
At a glance
Key takeaways
- A sole proprietorship is an individual’s business, not legally a partnership. A Swiss general partnership is called SNC in French.
- Below CHF 500,000 of turnover in the preceding financial year, simplified records of receipts, expenses and financial position are permitted.
- An owner’s private withdrawal is not a deductible salary.
- Each partner’s capital, drawings and profit share must be separately identifiable.
Sole proprietorship and general partnership: what differs?
A sole proprietorship has one individual owner and no legal personality separate from that owner. A Swiss general partnership, or société en nom collectif (SNC), involves at least two natural persons. It can enter contracts and act under its business name, but is not a legal person like an LLC or corporation.
The two structures are compared here because their accounting and tax mechanisms have similarities, not because a sole proprietorship is legally a partnership.
| Topic | Sole proprietorship | General partnership |
|---|---|---|
| Owners | One individual | Two or more partners |
| Capital records | Owner’s position | Separate position for each partner |
| Profit | Attributed to the owner | Allocated under the applicable agreement and rules |
| Private drawings | Owner’s individual withdrawals | Separate tracking and agreed conditions per partner |
| Income tax | Owner’s personal position | Each partner’s personal position |
Keeping separate business records does not create the liability protection of a limited company. Consider the legal structure and liability rules separately.
Simplified records or full accounts: the CHF 500,000 threshold
The reference is turnover in the preceding financial year. Below CHF 500,000, sole proprietorships and partnerships can keep records of receipts, expenses and financial position. From CHF 500,000, full bookkeeping and financial reporting are required.
Simplified accounting is therefore more than a list of bank payments. Business assets, obligations and private movements must remain identifiable. Full accounts may be useful before the threshold, especially with significant inventory, unpaid invoices, borrowing or several partners. Coordinate any change with the tax method.
Sole proprietorships and partnerships outside the rules for larger businesses may dispense with notes to the annual accounts. Necessary supplementary information must then appear in the balance sheet or income statement. This does not permit unexplained figures.
For routine record keeping, see bookkeeping for the self-employed.
If you delegate this work, choose an accounting firm familiar with sole proprietorships and partnerships.
What is the owner’s private account?
The private account records transactions between the owner and the business: drawings, private expenditure paid by the business and business expenses paid personally. It is a ledger account, not necessarily a separate bank account.
Account 2850 is commonly used in the Swiss SME chart of accounts for a sole proprietor. For a partnership, create separate accounts or subaccounts for each partner and distinguish these movements from long-term capital contributions.
| Transaction, excluding VAT | Debit | Credit | Profit effect |
|---|---|---|---|
| CHF 2,500 private withdrawal | Owner’s private account | Bank | None |
| CHF 300 business administration expense paid personally | Administration expense | Owner’s private account | CHF 300 expense |
| CHF 150 personal purchase paid by business bank | Owner’s private account | Bank | None |
| CHF 5,000 long-term capital contribution | Bank | Owner’s capital | None |
If the business reimburses the CHF 300 advanced personally, the payment settles the owner’s account. Do not book the expense a second time. Keep the invoice and evidence of payment linked to the entries. The Swiss chart of accounts helps separate business expenses, capital and private transactions.
Profit and drawings are different amounts
A sole proprietorship may earn CHF 80,000 while its owner withdraws CHF 50,000 for living costs. The CHF 30,000 retained in the business does not automatically become tax-free. Tax is based on attributable profit, with the applicable adjustments.
Conversely, withdrawing CHF 90,000 from a business that earned CHF 80,000 does not create an additional CHF 10,000 expense. The drawings also use capital or other available resources.
A sole proprietor does not pay themselves an employee salary. A fixed monthly transfer can help household budgeting, but it remains drawings. Wages paid to genuine employees follow their own rules.
Profit also differs from the bank balance: it may be tied up in stock or unpaid customer invoices.
How to allocate profit between SNC partners
The partnership agreement and applicable law determine allocation. Consider any agreed remuneration, capital interest and other clauses before distributing the remaining result. Drawings during the year do not replace that calculation.
In this simplified example, CHF 80,000 is available for allocation after the agreed adjustments, split 60% to A and 40% to B. No separate interest or special remuneration applies.
| Movement | Partner A | Partner B | Total |
|---|---|---|---|
| Opening capital | CHF 30,000 | CHF 20,000 | CHF 50,000 |
| Profit share | CHF 48,000 | CHF 32,000 | CHF 80,000 |
| Private drawings | −CHF 36,000 | −CHF 24,000 | −CHF 60,000 |
| Closing position | CHF 42,000 | CHF 28,000 | CHF 70,000 |
Total capital increases by CHF 20,000. The bank balance need not increase by the same amount because other assets and liabilities may also change.
Give each partner a clear statement of their position for their personal tax return and to prevent disputes over previous withdrawals. Do not invent allocation terms through year-end entries instead of following the agreement.
Income tax, AVS contributions and VAT
Business profit and business wealth are attributed to the owner or partners for direct tax. This is not a dividend distribution as in an LLC or corporation. Intercantonal or international activity can affect taxing rights, so private residence alone may not settle the allocation.
Self-employed AVS/AI/APG contributions use assessable income under social insurance rules. In 2026, the maximum combined rate is 10%, with lower rates for income below the relevant threshold and additional charges where applicable. It is not a percentage mechanically applied to drawings. See the contribution scale and instalment rules.
Avoid deducting the same contribution twice when it appears both in business records and personal tax-return sections. Keep a reconciliation between the accounts and the amounts declared.
VAT is separate from the accounting threshold. A sole proprietorship or partnership may need to register for Swiss VAT even while eligible for simplified accounts.
For a Geneva return, follow the canton’s self-employed instructions and prepare the appropriate schedules. Keep drawings, business expenses and asset movements identifiable for every partner.
Checks before the year-end close
- Reconcile bank accounts and list outstanding receivables and liabilities.
- Document stock and fixed assets.
- Review mixed-use costs and private payments recorded by the business.
- Include business invoices paid personally by the owner.
- For each partner, reconcile opening capital, contributions, drawings, expenses advanced and profit share.
- Check the figures against the partnership agreement, especially before a partner joins or leaves.
Setting aside cash for tax and social insurance is useful treasury management. Moving money into a reserve account does not automatically create an accounting expense.
Use these checks when preparing your year-end accounts, so that private movements and closing balances can be explained.
Frequently asked questions
Is a sole proprietorship a partnership?
No. It is the business activity of an individual. An SNC is a partnership. They share some accounting features, including the tracking of owners’ private transactions and personal attribution of profit.
Can I pay myself a salary as a sole proprietor?
You can make regular transfers for personal spending, but these are drawings rather than a deductible employee salary paid to yourself.
Is profit taxable if I leave it in the business?
Retaining profit does not remove its tax attribution to the owner or partners. Taxable income depends on the result and the adjustments required by tax law.
Can a general partnership use simplified accounting?
Yes, below CHF 500,000 of preceding-year turnover. It must still record receipts, expenses and financial position, including the partners’ individual positions. Full accounts may be more useful even below that threshold.
Does each partner need a private account?
Each person’s movements must be separately traceable. Separate ledger accounts or subaccounts can achieve this. A single undetailed balance makes allocation and checking difficult.
Sources and further reading
About the author
Sarah Prieur
Sarah is a Swiss certified accountant, partner and head of operations at Karpeo. She supports SMEs and self-employed clients with accounting, tax, VAT and payroll, and oversees the quality of client files and year-end accounts. Before Karpeo, she spent eight years in audit at PwC Switzerland, progressing to manager.
Make each owner’s position clear
Karpeo can organise drawings, capital contributions and profit allocation, and help prepare the figures needed for the owners’ tax returns.
