Taxes for the self-employed

Declaring business income

Anyone who is self-employed must state the profit earned from the self-employed activity in the tax return. As a rule, the basis is the accounts or, in simpler circumstances, a statement of income and expenses.

In addition to the profit, business assets such as machinery, vehicles or inventories must also be declared. The valuation follows the applicable tax rules and can vary depending on the type of asset.

Decisive for the question of whether a self-employed activity in the tax sense exists at all is, among other things, whether an activity is carried out at one's own risk, in one's own name and with the use of labour and capital. This distinction is not always clear-cut, especially in the case of a secondary activity or contractual relationships with individual clients.

If a sole proprietorship is run, all business assets are considered for tax purposes to be the assets of the owner. In the case of a corporation, on the other hand, a distinction is made between the assets of the company and the private assets of the persons involved, which leads to a different tax treatment.

Deductible business expenses

Costs that are necessary to generate the business income can be deducted from the profit. These include, for example, rent for business premises, materials, salaries of employees or depreciation on business assets.

Clean and traceable bookkeeping not only makes the tax return easier, but also creates clarity vis-à-vis the tax administration. Keep all receipts in an orderly manner.

Private shares of use, for example for a vehicle used for both business and private purposes or a home office, must also be separated out appropriately. In principle, only the business-related share of the respective costs is deductible.

In the case of larger investments, the question also arises as to whether these must be booked immediately as an expense or depreciated over several years. The applicable depreciation rates are regulated differently for different types of assets.

• Rent and ancillary costs for business premises
• Purchase of materials and goods
• Salaries and social security contributions for employees
• Depreciation on business assets
• Vehicle and travel costs for business purposes

OASI (AHV) contributions and social insurance

Self-employed persons are responsible for their own OASI (AHV) contributions and must register with the competent compensation office. The contributions are based on the employment income earned.

Unlike employees, self-employed persons are not subject to compulsory pension fund insurance. Voluntary pension provision via pillar 3a or other instruments can make sense and should be reviewed individually.

OASI (AHV) contributions are usually levied provisionally on the basis of the most recently known income and adjusted later on the basis of the definitive tax assessment. Larger fluctuations in income can therefore lead to additional payments or refunds, which should be planned for financially in advance.

Anyone who additionally wishes to take out loss-of-earnings or daily sickness benefits insurance must organise this themselves as a self-employed person, since there is no automatic cover via an employer. This, too, can affect the tax return, for example through deductible premiums.

Special aspects and individual review

The tax treatment of self-employed persons depends heavily on the legal form, the sector and the specific set-up of the business. Topics such as capital contributions, conversion into a corporation or cessation of business have their own tax consequences.

Due to this complexity, a review by a specialist is often recommended in the case of self-employment, especially in the event of significant changes in the business or larger business assets.

The tax framework can also change when moving from a secondary to a main self-employed activity or vice versa. Early clarification with the tax administration or a specialist helps to avoid surprises later on.

Value added tax and other business obligations

In addition to income and wealth tax, self-employed persons may have further obligations, such as accounting for value added tax once a certain turnover is reached. This obligation must be assessed independently of the direct tax assessment.

Depending on the activity, there may also be sector-specific permits, insurance or reporting obligations. Even if these do not directly concern the tax return, they often affect the cost structure and thus indirectly the taxable income.

If the business is run together with a partner or in a simple partnership, the income and assets must be divided between the persons involved according to the agreed share and declared individually.

What you should have ready

• Accounts or statement of income and expenses
• Receipts for business expenses and investments
• Overview of business assets and debts
• Confirmations from the OASI (AHV) compensation office
• Details of any employees and salaries
• Documents on the legal form of the business

Frequently asked questions