1. Why is it worthwhile to outsource annual financial statements to a fiduciary?
Many companies in Switzerland choose to outsource their annual financial statements to a fiduciary. And for good reasons!
Handling the process internally carries the risk of missing deadlines, making errors, or failing to comply with legal requirements.
Below, you will learn about the risks of preparing the annual statement internally and why a fiduciary is often the better choice.
Typical pitfalls when preparing annual financial statements internally
If you create the annual statement yourself, you can quickly run into these common issues:
- Too little time and attention: Preparing annual financial statements requires focus and accuracy. In the daily operations of small businesses, this task often gets pushed back and is completed under time pressure.
- Legal uncertainties: Many companies are unsure when an appendix is mandatory, how the balance sheet must be structured, or from which thresholds an audit becomes necessary. Mistakes in these areas often lead to objections.
- Missing or incomplete documentation: If receipts, inventories, or accounts receivable lists are not complete, the annual statement loses reliability. This regularly leads to follow-up questions from the tax authorities.
- Incorrectly booked depreciation and provisions: Machines or equipment are not depreciated correctly, and provisions are recorded incorrectly. This distorts the results and can unnecessarily increase the tax burden.
These pitfalls make one thing clear: preparing annual financial statements is not a simple task but a complex process with legal and formal requirements. This is where working with a fiduciary brings significant advantages.
Advantages of working with a fiduciary
A fiduciary ensures that all requirements are met so you can focus on your core business:
Time savings
Preparing annual financial statements is time-consuming. A fiduciary handles document checks, reconciliations, and postings. This allows you to focus on running your business.
Example: A small GmbH prepared its annual financial statements internally for many years. Due to lack of time, delays occurred again and again. Since working with a fiduciary, the process runs in a structured way, the annual statement is completed on time, and the company has more time for the tasks that really matter.
Legal certainty
A qualified fiduciary knows the legal requirements that apply to your business. They ensure annual financial statements are formally correct and reduce the risk of formal objections from authorities or auditors.
Example: A sole proprietorship exceeds the CHF 500,000 revenue threshold. While a simple income-expense statement was sufficient before, a full annual financial statement with balance sheet and income statement is now required. The fiduciary ensures that this new obligation is implemented correctly.
Accurate figures and fewer revisions
A fiduciary ensures all documents are included, provisions are correctly recorded, and depreciation is properly applied. This makes annual financial statements more reliable and prevents corrections.
Example: A construction company incorrectly recorded outstanding receivables for years. During a tax audit, the errors were flagged. A fiduciary would have written off the doubtful receivables in time, avoiding trouble and back payments.
2. How does the annual financial statement process work with a fiduciary?
An annual financial statement may seem like a mere formality at first glance. In practice, however, it involves much more: complete bookkeeping, account reconciliations, and legally compliant year-end adjustments. A fiduciary ensures that all these tasks are handled professionally and reliably.
Completing the bookkeeping
The starting point is complete bookkeeping. All income and expenses, salaries, social security contributions, and VAT returns must be recorded. Missing receipts are added, and outstanding items are cleared.
A fiduciary like Qovera ensures that nothing is overlooked and that you begin the year-end process with a solid foundation.
Reviewing balances and accounts
To ensure accuracy, the next step is inventory and account reconciliation. Inventory, supplies, machinery, and equipment are valued, while bank accounts, receivables, and payables are reconciled. This guarantees that the balance sheet is not only formally correct but also economically meaningful.
Performing year-end adjustments
The fiduciary then handles all year-end adjustments. These include depreciation, provisions, accruals and deferrals, and value adjustments. Foreign currency positions are also revalued. These steps are crucial to ensure that your annual financial statement reflects the true financial position of your business.
Preparing the annual financial statements
Next, the fiduciary prepares the annual financial statements. These consist of several components, which vary depending on company size and legal structure:
- Balance sheet: Shows your company’s assets and financial position. The assets side includes cash, receivables, inventory, and fixed assets. The liabilities side includes debts, provisions, and equity.
- Income statement: Shows business performance. All expenses and revenues of the year are included, indicating whether the company generated a profit or loss.
- Notes: Provide additional information to complement the balance sheet and income statement. Besides formal information (company name, registered office, business purpose), they explain valuation principles and specific accounting positions.
For larger companies, a cash flow statement and management report may also be required. The cash flow statement shows how liquidity has changed, while the management report provides insights into business development, risks, and future outlook.
Finalizing the annual financial statements
Finally, the completed annual financial statement is reviewed with you. You gain insight into how key financial indicators have developed and which measures are recommended for the upcoming financial year.
Because the statutory financial statements under the Swiss Code of Obligations (CO Art. 957 et seq.) are binding for tax purposes (“principle of authority”), they also form the basis of your tax return.
After your approval, the annual financial statements (including balance sheet, income statement, and notes) are formally approved by the general meeting or shareholders and filed with your tax return with the competent tax authorities.
If your company is subject to an audit, the annual financial statements are also submitted to the external auditor.
3. How much does it cost to have an annual financial statement prepared?
The cost of having an annual financial statement prepared by a fiduciary depends heavily on your company. The following factors, among others, influence the price:
- the size of your company
- the quality and completeness of your bookkeeping
- the complexity of your business transactions
4. Have your annual financial statements professionally prepared by Qovera
If you have your annual financial statements prepared professionally, you save time, avoid errors, and can focus on the important aspects of your business. At Qovera, we support you with experience, expertise, and a holistic perspective. Because with us, the work doesn’t end with the annual accounts.
Whether your company is growing or undergoing change, our expertise in fiduciary services, legal matters, and CFO services ensures that you are well positioned in every situation.
