Accounting for Firms

Wilson

Hey Forum.
For different types of firms in Switzerland (Einzelfirma, GmbH, AG), how do the accounting and auditing requirements differ? Specifically, what are the criteria for transitioning from a restricted audit to an ordinary audit, and how do these requirements impact the financial reporting obligations for each type of company?

Underwood

Wilson
Hey there!

Here's a breakdown of the accounting and auditing requirements for different types of companies in Switzerland:

Einzelfirma (Sole Proprietorship)
Accounting: If your Einzelfirma earns less than CHF 500,000 per year, you can stick to simple cash accounting. Once you cross the CHF 500,000 threshold, you’ll need to switch to double-entry bookkeeping and prepare financial statements (balance sheet, income statement, etc.).
Auditing: Good news! Einzelfirmen aren’t required to undergo an audit, no matter the size. This keeps things pretty straightforward.
GmbH (Gesellschaft mit beschränkter Haftung, Limited Liability Company)
Accounting: All GmbHs must do double-entry bookkeeping and prepare annual financial statements in line with Swiss GAAP.
Auditing:
Restricted Audit (Review Audit): This is usually required unless your GmbH qualifies for an ordinary audit or decides to opt out.
Ordinary Audit: You’ll need to go through this if your GmbH meets two out of these three criteria over two consecutive years:
Total assets ≥ CHF 20 million
Revenue ≥ CHF 40 million
≥ 250 full-time employees
Opting Out: If you have fewer than 10 full-time employees, you can skip the audit altogether if all shareholders agree.
AG (Aktiengesellschaft, Joint-Stock Company)
Accounting: Like GmbHs, AGs need double-entry bookkeeping and annual financial statements. If your AG is publicly listed, you might also need to comply with IFRS or US GAAP.
Auditing:
Restricted Audit: This is the standard unless you meet the criteria for an ordinary audit.
Ordinary Audit: Triggered if you meet two of the following for two consecutive years:
Total assets ≥ CHF 20 million
Revenue ≥ CHF 40 million
≥ 250 full-time employees
Opting Out: Similar to a GmbH, you can opt out of any audit if you have fewer than 10 full-time employees and unanimous shareholder consent.
Impact on Financial Reporting:
Einzelfirma: With no audit requirements, reporting stays simple and low-cost.
GmbH & AG: Transitioning to an ordinary audit means more scrutiny and detailed financial reporting. While it boosts transparency, it also ramps up compliance costs and complexity.
Transition from Restricted to Ordinary Audit:
If your GmbH or AG meets the criteria I mentioned (two out of three thresholds) for two years in a row, you’ll need to switch to an ordinary audit. This involves a much deeper dive into your finances, which can be both a good thing (more trust and transparency) and a challenge (higher costs, more work).

Hope this helps! Feel free to ask if you have more questions.

Wilson

Underwood

Thank you very much.
I might still have some questions in the future.