Journal entries in Switzerland: debits, credits and worked examples

How do you know which account to debit or credit?

Start by identifying what changes. Is the business receiving money? Acquiring an asset? Becoming liable to pay a supplier? Making a sale? The answer points to the relevant category of account.

This table covers the usual mechanics, excluding contra accounts and particular cases. For example, money received increases an asset, so the bank account is debited. Your bank statement may appear to show the reverse because the bank keeps its own accounts from its side of the relationship with you.

Then use the Swiss SME chart of accounts to select the specific account. Include the date, a document reference and a meaningful description. “Website hosting invoice, September” is more useful than “Miscellaneous”.

Purchases and sales: distinguish the invoice from its payment

We will first leave VAT out to focus on double-entry bookkeeping. A business receives a CHF 500 invoice for goods and pays it a few days later.

The first entry records the purchase and the debt. The second settles the debt and reduces the bank balance. Recording an expense again when paying would count the same purchase twice.

For a service delivered and invoiced to a customer for CHF 1,000, the logic is reversed: debit 1100 Trade receivables and credit 3400 Service revenue. On payment, debit Bank and credit Trade receivables for CHF 1,000.

A sale paid immediately in cash increases petty cash, not automatically the bank account. Depositing that cash in the bank later transfers money between assets; it does not create a second sale. The accounting cycle shows how these entries feed into the wider checking and reporting process.

How do you record an invoice with VAT?

Suppose a VAT-registered business invoices a domestic Swiss service at the standard rate of 8.1%, for CHF 1,000 excluding VAT. We assume it uses the effective VAT method and accounts for VAT on agreed consideration, meaning the invoice basis.

The customer owes CHF 1,081. Revenue is CHF 1,000 and the remaining CHF 81 is VAT payable. It is not additional income.

For a purchase of goods costing CHF 500 excluding VAT, assuming full entitlement to deduct input VAT, debit Purchases for CHF 500, debit Input VAT for CHF 40.50 and credit Trade payables for CHF 540.50.

Payment then settles the CHF 540.50 owed to the supplier. Input VAT must not be deducted a second time. The net tax rate method, private expenses, exempt supplies and foreign purchases require a separate analysis. Our explanation of how Swiss VAT works covers these distinctions.

Payroll entries: separate gross pay, net pay and employer contributions

A gross salary of CHF 6,000 is not the amount paid into the employee’s bank account. To illustrate the entries, assume employee deductions of CHF 1,000 and employer contributions of CHF 700. These are illustrative amounts, not statutory contribution rates.

The illustrated employer cost is CHF 6,700. The employee’s CHF 1,000 in deductions is not an additional employer expense. It is withheld from gross salary and remains payable to the relevant institutions.

In practice, liabilities are split between the insurers, pension institutions and any tax authorities concerned. Account 2270 and its subaccounts may be used for social insurance liabilities, while a separate subaccount tracks net pay owed to employees. Our payroll management service handles these balances alongside the related statements. Actual deductions depend on the applicable Swiss social security contributions and the employee’s circumstances.

Inventory, fixed assets and leases: avoid shortcuts

Adjust inventory at year-end

Under a periodic inventory system, assume opening inventory of CHF 8,000, purchases of CHF 40,000 and correctly valued closing inventory of CHF 11,000. The cost of goods consumed is CHF 37,000: CHF 8,000 + CHF 40,000 − CHF 11,000.

The CHF 3,000 inventory increase is recorded here by debiting Inventory and crediting Purchases or the appropriate inventory movement account. The entry depends on the system and type of inventory. Simply transferring raw materials to finished goods does not account for every production cost; valuation also requires a proper review of those costs.

Buy equipment, then depreciate it

Assume a CHF 12,000 machine will be used over several years and meets the criteria for recognition as a fixed asset. On purchase, debit the fixed asset account and credit Trade payables or Bank. This example excludes VAT.

With a five-year useful life and no residual value, straight-line depreciation for a full year is CHF 2,400. Debit Depreciation expense and credit the asset directly or an accumulated depreciation account. This illustrative amount is not a universal tax rate. Our article on depreciation in Switzerland explains the calculations and the distinction from tax treatment.

Account for a lease according to the contract and reporting framework

A monthly payment should not automatically be posted to a loan account. For a contract treated as a rental expense, a CHF 1,000 instalment excluding VAT is recorded by debiting the appropriate expense and crediting Trade payables or Bank.

Other treatments may apply depending on the contract and accounting framework. Disclosure requirements in the notes must also be considered. IFRS 16 should not automatically be applied to every SME preparing accounts under the Swiss Code of Obligations.

Capital, contributions and withdrawals: which entries apply?

Once a Swiss LLC has been legally formed and the funds are available, a simplified example with CHF 20,000 of fully paid share capital shows a CHF 20,000 debit to Bank and a CHF 20,000 credit to Share capital. The capital deposit process and formation costs are left out of this example.

The contribution is not income. A Swiss LLC issues membership interests, called parts sociales in French, while a corporation issues shares. A later loan from a shareholder is recorded as a liability according to its terms, not automatically as capital.

In a sole proprietorship, a private withdrawal reduces the bank balance and is recorded through the owner’s private account. It is not a salary expense. Our article on accounting for sole proprietorships and partnerships explains the details.

How should you check an entry before posting it?

Check the supporting document, date, account types, amounts and VAT. Then make sure the transaction has not already been recorded through a bank import or invoicing module.

Equal debits and credits are an arithmetic check. They do not detect an omitted invoice, an incorrect account or a balanced duplicate. To correct an error, use a method that preserves the original entry’s audit trail and explains the correction.

Frequently asked questions