Tax Return for Self-Employed Persons in Switzerland: The 12 Most Common Mistakes

Basics about mistakes in tax declarations

For self-employed persons, taxable income is based on the result of the financial year closed during the calendar year. The tax return must be submitted together with either annual financial statements or, in the case of simplified bookkeeping, schedules of assets and liabilities, income and expenses, as well as private withdrawals and private contributions. In addition, the relevant cantonal guidance notes remain important for cantonal specifics.^1,2,5

This is exactly where many mistakes arise: for self-employment, the tax return is not just a form-filling exercise, but the condensed result of proper bookkeeping. Anyone who sorts receipts, assets, private portions or year-end adjustments only when completing the return is usually working too late.^1,2,3

Records and bookkeeping

Mistake 1: Filing without complete year-end records

A common mistake is to look only at the account balance or pure cash flow. Even with simplified bookkeeping, the FTA requires structured schedules, and the SME Portal states that sole proprietorships with turnover of up to CHF 500,000 must at least keep books showing income, expenses and financial position.^1,2,3

What to watch out for: Before completing the tax return, prepare a clean year-end closing with all income, expenses, assets, liabilities, private withdrawals and private contributions. This helps prevent important items from surfacing only afterwards.

Mistake 2: Keeping only bank statements instead of supporting documents

Bank and credit card transactions show that a payment took place, but not always why it was business-related. Records and other supporting documents related to self-employment must be retained for 10 years. Electronic retention is permitted if the link to the business transaction remains secured and the documents can be read at any time.^1,2,4

What to watch out for: Keep a traceable receipt or equivalent documentation for every posting. Especially for online purchases, cash expenses and mixed expenses, proof of payment alone is often not sufficient.

Mistake 3: Posting private payments as business expenses

From income from self-employment, items such as private expenses, income and wealth taxes, debt repayments and private portions of business overheads may not be deducted. Typical mispostings include private insurance, private telephone and household costs, or private living expenses booked through the business.^1,2

What to watch out for: For every expense, first assess whether it is business-related. Where private use exists, you need an appropriate allocation instead of a full deduction.

Mistake 4: Deducting investments immediately in full as an expense

The acquisition or improvement of assets is not simply an ongoing business expense. For fixed assets, commercially justified depreciation is permitted, and the FTA refers to Circular A with standard rates by asset category.^1,2,6

In practice, this particularly affects vehicles, machinery, IT, office equipment or larger tools. Anyone who posts such purchases directly and fully as an expense distorts the business result and risks corrections.

Private portions

Mistake 5: Failing to record withdrawals of goods and private consumption

Income from self-employment also includes benefits in kind taken from your own business. If you withdraw goods, products or services for private use, these withdrawals must be accounted for correctly and must not disappear unnoticed in expenses or inventory.^1,2

This is particularly relevant in hospitality, retail, trades or businesses with their own material consumption. The closer the connection between business and private life, the more consistently the separation must be handled.

Mistake 6: Forgetting private portions in mixed-use costs

The FTA requires an allocation where the business has also borne private portions of heating, electricity, cleaning, telephone, internet or similar costs. The same applies to private portions of wages and other mixed business overheads.^1,2

What to watch out for: Define a clear method for recurring mixed-use costs and apply it consistently. Without a documented method, private portions quickly appear arbitrary.

Mistake 7: Posting your own pension contributions incorrectly in the income statement

For your own occupational pension contributions, only the employer portion may be reflected in the income statement. The remaining private portion, as well as all pillar 3a contributions, do not belong in the income statement but in the relevant deduction positions of the tax return.^1,2

This is a classic double mistake: on the one hand, too much expense is recorded in the bookkeeping, and on the other hand, the same amount is treated incorrectly again in the tax return.

Mistake 8: Failing to document private withdrawals and private contributions properly

For simplified bookkeeping, FTA questionnaire 15a expressly requires schedules of private withdrawals and private contributions. Anyone who does not separately record private contributions used to finance the business or private withdrawals from the cash register makes the derivation of the result unnecessarily unclear.^1,2

What to watch out for: Always separate movements between private and business funds consciously and promptly. This also makes it easier later to assess liquidity, equity and tax-relevant expenses.