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When company owners have to pay taxes, this is basically positive. For founders, it means that you are likely to be among the approx. 20-30 percent of startups that survive in the long term. And established companies thus prove that they can operate profitably even in a crisis year.

The profit of a legal entity is recorded in Switzerland with the profit and capital tax. The tax is owed to the canton (state and municipal tax) and to the federal government (direct federal tax). In Switzerland, however, companies have a wide range of options for reducing profits by means of tax optimization.

The following measures, which are permitted under tax law, can be used to reduce profit and thus tax.

10 tax optimization measures for SMEs (small and medium-sized enterprises) in Switzerland

  1. Replenish inventories to the balance sheet date and thereby increase the formation of reserves (one third of inventory reserves is allowed for tax purposes in most cantons, which directly reduces the tax).
  2. Formation of allowance for doubtful accounts receivables. In the canton of Lucerne, for example, a flat 10% bad debt provision is allowed.
  3. Have investments, acquisitions and repairs carried out before the closing date.
  4. Post accrued expenses and deferred income on an accrual basis and deduct them for tax purposes, e.g. profit sharing, additional claims from social security, fiduciary and auditing.
  5. Accruals for guarantee work and warranty claims, which are permissible between 1-3% depending on the industry (consult tax books! … or ask leanrun).
  6. Contributions to employer contribution reserves. The employer can pay in five times the annual BVG employer contributions and reduce profit and tax by this amount.
  7. Sale of the private vehicle to the company as a business vehicle. Subsequently, all costs can be charged to the company, whereby the owner of the vehicle is charged a private share of 9.6% (basis net sales price excl. VAT, but at least CHF 1,800).
  8. Calculate overtime and vacation credits and book accruals. These are not only tax optimizations but also correct business accruals that reduce the profit.
  9. Make immediate or one-time depreciations for investments in fixed assets (cantonal different guideline values).
  10. Record home office costs as rental expenses. If you use a room in your home as an office, you can charge the costs incurred to your business. In the case of residential property, this rental portion must be taken into account specifically (rental income from third parties) and the benefit is lower, but worth checking.

Bonus tip Tax optimization for startups: sell IT, furniture and equipment to the company. Many entrepreneurs use privately financed fixed assets for their companies. These assets may be sold to the GmbH or AG (legal entity) and depreciated as long as there is effectively a business use and a realistic fair market value is applied.

However, an isolated consideration of the AG or GmbH from a tax point of view is often insufficient, as only the overall consideration of profit, tax, wages, dividends, social insurances as well as private income and wealth tax provides a meaningful overall picture and enables meaningful, sustainable measures.

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