Cash-basis vs. accrual accounting: which method?
Cash-basis (recording payments when received) or accrual (recording when invoiced)? The difference and what it means for your Swiss sole proprietorship.
Cash-basis: recording when paid
Under cash-basis accounting (vereinnahmt), you record income when the money arrives in your bank account — not when you issue the invoice. This is the standard method for sole proprietorships in Switzerland and generally the simpler option: you only record what has actually been paid.
Accrual: recording when invoiced
Under accrual accounting (vereinbart), you record income at the time of invoicing. For VAT, the accrual method is mandatory if you use the effective VAT method — VAT is due when the invoice is issued, not when it's paid. For income tax, however, you can generally continue with cash-basis.
What applies to you?
For income tax, sole proprietorships almost always use cash-basis accounting. For VAT, the method depends on your VAT accounting method: effective method = accrual (mandatory), net tax rate method = cash-basis (standard). Exception: if you exceed CHF 100,000 in revenue per year from services to VAT-registered entities, the accrual method becomes mandatory even for VAT.
Accurate as of: The rates and amounts mentioned in this article reflect the state as of 7 August 2026. They are for information only and do not replace tax or legal advice. For binding information, contact the Swiss Federal Tax Administration (ESTV), your cantonal tax office, or a fiduciary.
Frequently asked questions
- Can I mix cash-basis and accrual?
- Yes, it's actually standard: cash-basis for income tax, accrual for VAT (if you use the effective VAT method). The two systems serve different purposes and coexist in practice.
- What about expenses?
- The same principle applies: under cash-basis, expenses are recorded when paid. Under accrual, when the invoice arrives. For most sole proprietorships, cash-basis for expenses is standard.