Income Statement in Switzerland: Structure, Steps and Example Explained Simply
An income statement compares all revenues and expenses of a company for a given period and shows whether a profit or loss was incurred. In Switzerland, according to Art. 958 para. 2 CO, it is part of the annual financial statements. It is always mandatory for LLCs (GmbH), corporations (AG), and cooperatives, and for sole proprietorships and partnerships with an annual turnover of CHF 500,000 or more.
What is an income statement, and why do you need it?
The income statement answers exactly one question: Did your company generate more revenue than it incurred in expenses during a given period? The formula is extremely simple: revenue minus expenses equals profit or loss. Everything else builds on this core.
In Switzerland, the term «Erfolgsrechnung» (income statement) is commonly used. In Germany and Austria, the same document is called «Gewinn- und Verlustrechnung (GuV)» (profit and loss account). The principle is the same, but the legal structure requirements differ in detail.
The result is not only read by yourself: banks use the income statement for loan decisions, the tax office for tax assessment, and the management uses it to steer the company. Anyone who wants to know the basics will find further accounting principles for SMEs on nextesy.com.
Who has to prepare an income statement?
Whether you have to prepare an income statement depends on your legal form and your turnover. AGs, GmbHs, and cooperatives are always obliged to do so. Sole proprietorships and partnerships are only required to do so from a turnover of CHF 500,000; below this, a simple record of income, expenditure, and assets is sufficient.
Legal form | Obligation to prepare an income statement |
|---|---|
AG, GmbH, cooperative | Yes (independent of turnover) |
Sole proprietorship, general and limited partnership from CHF 500,000 turnover | Yes |
Sole proprietorship, general and limited partnership under CHF 500,000 turnover | No, keeping records of income, expenditure, and assets is sufficient |
Exceptions apply to smaller associations and foundations: they also only have to record income, expenditure, and assets.
The legal basis is set out in Art. 957 CO for the bookkeeping obligation and in Art. 958 para. 2 CO for the annual financial statements. Even those who are not legally obliged benefit: the income statement makes cost drivers visible and facilitates discussions with trustees and banks.
How is the income statement structured?
The income statement compares the revenue of a period with the expenses incurred during that period. In practice, it is usually presented in report form: revenue is at the top, and the expenses are deducted step by step below until the profit or loss is left at the end. The structure follows the Swiss SME chart of accounts, the de facto standard for small and medium-sized enterprises in Switzerland. Operating revenue is in class 3, operating expenses in classes 4 to 6, non-operating income, and extraordinary and non-operating items in classes 7 and 8.
Revenue side (Account Class 3):
Production revenue (Account 3000), trade revenue (Account 3200), and service revenue (Account 3400) according to the Swiss SME chart of accounts
Expense side (Account Classes 4 to 6):
Class 4: Material and merchandise expenses
Class 5: Personnel expenses
Class 6: Other operating expenses, depreciation, and financial result
Other results (Account Classes 7 and 8)
Class 7: Non-operating operating income
Class 8: Non-operating, extraordinary, non-recurring or prior-period expenses and revenue, as well as direct taxes
The law prescribes what an income statement must contain as a minimum (Art. 959b para. 2 CO): net revenue, changes in inventories of unfinished and finished products and of unbilled services, material expenses, personnel expenses, other operating expenses, depreciation, financial expenses and financial revenue, non-operating expenses and revenue, extraordinary items, direct taxes and, at the end, the annual profit or annual loss. This structure applies to the production income statement, whereas there is a separate one for the sales income statement.
There are two options for the structure. Most Swiss SMEs use the production income statement, which structures expenses according to their nature, such as materials or personnel. The sales income statement, which classifies expenses according to what they were incurred for, such as production, sales, or administration, is also permitted.
Important: Revenue and expenses must not be offset against each other. Anyone who has rental income and pays rent themselves, for example, must report both amounts individually.
Single-step or multi-step: What is the difference?
The single-step income statement shows you whether you made a profit. The multi-step statement shows you where it came from.
In the single-step form, all revenues are added together and all expenses are deducted. At the end, there is a single result: profit or loss. This is quickly done and is sufficient for small companies with a simple structure.
Single-step | Multi-step | |
|---|---|---|
What you see | Only the final result (net profit or net loss) | Final result plus intermediate results |
Suitable for | Small, simple companies | SMEs that want to take a closer look |
Workload | Low | Slightly higher |
The multi-step form calculates in stages:
Gross profit: Net revenue minus material and merchandise expenses
EBITDA: Gross profit minus personnel expenses and other operating expenses
EBIT: EBITDA minus depreciation
Net profit: EBIT plus or minus financial result and other items (non-operating income, non-operating and extraordinary items), minus taxes
This allows you to see at each stage where money is being made and where it is being lost. EBITDA and EBIT are common key figures, but the law does not prescribe them.
What is the difference between an income statement and a balance sheet?
The income statement and the balance sheet both show profit, but from different perspectives: the income statement as a period, the balance sheet as a snapshot on a specific key date (such as at the end of the year).
Feature | Income statement | Balance sheet |
|---|---|---|
Time reference | Period of time (e.g. 01.01. to 31.12.) | Reporting date (e.g. 31.12.) |
What does it show? | Revenue and expenses | Assets and liabilities |
Which question does it answer? | Did I make a profit? | What do I own and what do I owe? |
The two are directly linked: the profit from the income statement increases the equity in the balance sheet, while a loss reduces it. The amount must be exactly the same in both.
Together with the notes, the income statement and balance sheet form the annual financial statements (Art. 958 CO). Every AG and GmbH must prepare them. Sole proprietorships and partnerships with a turnover of CHF 500,000 or more prepare a balance sheet and income statement; they can usually dispense with the notes.
How do you prepare an income statement? Step-by-step explanation
Preparing an income statement always follows the same process, whether you run a sole proprietorship or a GmbH. The five steps below show you how it works.
Step 1: Collect receipts
Gather all receipts and bank statements for the period. Without complete documents, bookings will be missing, and the result will not be correct.
Step 2: Assign accounts
Assign each receipt to the correct account in the Swiss SME chart of accounts, for example rent to account 6000 «Rent expense» or wages to account 5000 «Wage expense». Correct account assignment is the basis of every analysis, because a wrongly assigned receipt distorts all intermediate results.
Step 3: Closing entries
At the end of the year, entries are added for which there is no external voucher: depreciation on equipment or vehicles and amounts that belong to another year, such as an insurance premium paid in December for the whole of the following year. You create an internal voucher for these bookings, such as a depreciation table.
Step 4: Calculate result
Group the accounts according to the Swiss SME chart of accounts, i.e. revenue, material expenses, personnel expenses, other operating expenses and depreciation. Then deduct the expenses step-by-step from the revenue. This gives you the intermediate results and, at the end, the profit or loss. Most accounting programs do this step automatically.
Step 5: Reconcile with the balance sheet
Reconcile the net profit of the income statement with the profit in the balance sheet. Both amounts must be identical. If they deviate, there is a booking error somewhere.
Three errors that frequently happen to beginners:
Booking VAT as revenue: Under the actual reporting method, an invoice for CHF 10,810 (incl. 8.1% VAT) contains only CHF 10,000 in revenue. The VAT is paid to the FTA (Federal Tax Administration) and is not your own revenue. Read more under VAT in Switzerland.
Forgetting depreciation: A computer for CHF 2,400 is normally depreciated over its useful life, for example at CHF 800 per year over three years. If you record the device as an asset but forget the annual depreciation, you will show profits that are too high.
Ignoring deferrals and accruals: January rent paid in December is an expense for the new year. In the old year, it is therefore recorded as an active prepaid expense. If you forget this, you shift expenses into the wrong year and distort the result.
Example: This is what an income statement looks like
This example shows you step by step how turnover becomes net profit. The figures come from a sample sole proprietorship with one employee for the financial year 01.01. to 31.12.2026.
Area | Position | CHF |
|---|---|---|
Revenue | Service revenue | 95,000 |
Trade revenue | 25,000 | |
Reductions in revenue | -2,000 | |
= Net revenue | 118,000 | |
Cost of goods sold | Purchase of merchandise | -14,000 |
= Gross profit | 104,000 | |
Personnel expenses | Wages | -42,000 |
Social security | -5,800 | |
Operating expenses | Other operating expenses | -26,000 |
= EBITDA | 30,200 | |
Depreciation | -3,000 | |
= EBIT | 27,200 | |
Financial result | Interest income | 200 |
Interest expense | -1,400 | |
= Net profit | 26,000 |
The gross profit of CHF 104,000 shows what is left after merchandise expenses. The EBITDA of CHF 30,200 shows what the operating business generates after personnel and operating expenses. After depreciation, there remains an EBIT of CHF 27,200, and after the negative financial result of CHF 1,200, a net profit of CHF 26,000 remains. Taxes do not appear here because a sole proprietorship does not pay its own income taxes. The profit is taxed privately as income of the owner and is also subject to OASI.
Create income statement automatically with accounting software
If you record receipts and payments on an ongoing basis, you no longer have to prepare the income statement yourself. Accounting software such as nextesy creates it automatically from your bookings, because the Swiss SME chart of accounts is already stored. This means you can see how your business is doing at any time, and not just at the end of the year. Especially those who are founding a new company save themselves the effort of setting up the account structure and can start straight away. Test nextesy for free.
Frequently asked questions about the income statement
What are the stages of the income statement?
The multi-step income statement calculates in stages. First, it deducts merchandise expenses from net revenue, resulting in the gross profit. Personnel and other operating expenses are followed by EBITDA, and depreciation by EBIT. At the end, financial results and any taxes are offset, leaving the net profit.
What is the difference between a balance sheet and an income statement?
The balance sheet shows assets and liabilities on a specific reporting date. The income statement shows revenue and expenses over a whole period. The net profit from the income statement flows directly into the equity of the balance sheet; both documents are legally inseparably linked according to the CO.
What is the profit and loss account in Switzerland?
«Gewinn- und Verlustrechnung (GuV)» is the term used in Germany and Austria for what is called «Erfolgsrechnung» (income statement) in Switzerland. The principle is the same, but the legal structure requirements differ in detail. The Code of Obligations (CO) consistently uses the term «Erfolgsrechnung».
Do I have to prepare an income statement as a sole proprietorship?
From CHF 500,000 turnover in the last financial year, yes. Then the full bookkeeping obligation according to Art. 957 CO applies, including balance sheet and income statement. Below this, simple accounting of income, expenditure, and assets is sufficient. However, an income statement is also worthwhile on a voluntary basis: you see where your money goes and have a good basis for discussions with trustees or banks.
