Why annual closing matters

Annual closing is the moment when a company draws the bottom line on its financial year: it records all pending transactions, values assets and liabilities, and produces the financial statements that will be presented to shareholders and, where applicable, the commercial register. For GmbH (art. 772 ff. CO) and AG (art. 620 ff. CO), the closing is not merely a formality — it is a legal obligation with precise deadlines and consequences for non-compliance.

The Swiss Code of Obligations (CO, art. 957-963) governs bookkeeping and financial reporting for all legal entities. Companies subject to ordinary audit must also comply with recognised standards (Swiss GAAP FER or IFRS), while SMEs not subject to ordinary audit may apply the minimum CO requirements.

Errors or delays in the closing process can lead to tax penalties, personal liability of the management bodies and, in the most serious cases, loss of limited liability protection. A well-organised closing, on the other hand, ensures transparency towards shareholders and authorities, facilitates tax planning and provides reliable data for strategic decisions.

Calendar and deadlines

For companies whose financial year coincides with the calendar year (1 January – 31 December), the main deadlines are as follows. Timelines may differ for non-calendar year-ends.

Period	Obligation	Responsible party
31 December	Financial year-end date (accounting cut-off)	GmbH / AG
January – March	Preparation of balance sheet, income statement and notes	Management / Fiduciary
Within 6 months (30 June)	Approval of financial statements by the general assembly (art. 699 CO for AG, art. 805 CO for GmbH)	Shareholders / Partners
Within 30 days of the GA	Filing with the commercial register (if required)	Board of directors
Within 9 months (30 September)	Submission of tax return (varies by canton)	GmbH / AG
Within 6 months of the GA	Distribution of declared dividends	GmbH / AG

Preparing for the closing

An efficient closing starts weeks before the balance sheet date. Here are the essential preparatory activities:

Verify that all issued and received invoices are recorded and that there are no outstanding documents from suppliers or customers
Reconcile all bank accounts with statements as at 31 December and clarify any differences or pending items
Carry out a physical inventory of stock and fixed assets, compare it with book balances and record any discrepancies
Gather documentation for accruals and deferrals: leasing contracts, insurance policies, subscriptions and other costs/revenues spanning the year-end
Verify intercompany receivable and payable balances (if the company is part of a group) and reconcile them with counterparts
Request bank confirmations, fiduciary balance confirmations and legal representation letters (lawyer's letter) for any pending litigation

Accounting checklist

The actual accounting close requires the recording of all adjusting entries. Here are the 8 fundamental steps:

Accruals and deferrals

Record costs and revenues attributable to the current year that have not yet been invoiced (accruals) and reverse portions of costs/revenues already paid but attributable to the next year (deferrals).

Depreciation and amortisation

Calculate and record depreciation on tangible and intangible fixed assets according to the approved schedule (straight-line or declining-balance, fiscally accepted rates).

Provisions

Assess and record provisions for foreseeable risks and charges: warranties, litigation, taxes, extraordinary maintenance, restructuring. Art. 960e CO governs the creation and release of provisions.

Receivable adjustments

Analyse the ageing of trade receivables and adjust doubtful or uncollectable debts. Swiss practice allows a flat rate of 5% on domestic receivables and 10% on foreign ones (Delcredere).

Inventory valuation

Value inventory at the lower of cost or net realisable value (art. 960a CO). Record any write-downs for obsolescence or deterioration.

Deferred taxes

Calculate deferred tax assets and liabilities arising from temporary differences between book values and tax values (mandatory for companies subject to ordinary audit).

Foreign currency translation

Translate foreign-currency balances at the closing exchange rate (art. 960 CO) and record realised and unrealised exchange differences in the income statement.

Clearing transitory accounts

Zero out transitory accounts (assets and liabilities) and reconcile them with supporting documentation. Verify that all suspense items have been resolved.

Balance sheet and income statement

The balance sheet and the income statement are the two main reports of the annual closing, mandatory for all GmbH and AG (art. 959-959c CO).

The balance sheet presents the company's financial position at the closing date: assets (what the company owns), liabilities (what the company owes) and equity (difference between assets and liabilities). The CO prescribes a minimum structure with specific items that must be shown separately.

The income statement summarises the revenues and expenses for the year, showing the operating result (EBIT), the financial result and the net profit or loss. SMEs may adopt the classification by nature of expense or by function (art. 959b CO).

Current assets: cash, trade receivables, inventory, prepaid expenses
Non-current assets: tangible, intangible and financial fixed assets
Current liabilities: trade payables, tax liabilities, accrued expenses, current portion of long-term debt
Non-current liabilities: bank loans, mortgages, provisions
Equity: share capital, legal reserves, voluntary reserves, retained earnings and current-year profit/loss
Income statement: net revenue, inventory changes, personnel costs, other operating expenses, depreciation, financial result, taxes

Notes to the financial statements

The notes (Anhang) are the third mandatory element of the annual closing for GmbH and AG (art. 959c CO). They contain supplementary information needed to understand the balance sheet and income statement:

Accounting policies

Description of the valuation methods applied to the main balance sheet items: depreciation method, inventory valuation, foreign currency treatment, revenue recognition criteria.

Commitments and guarantees

Detail of off-balance-sheet commitments: sureties, guarantees, operating lease obligations, significant contractual obligations, pledges on company assets.

Significant participations

List of direct and indirect holdings exceeding 5% (or other relevant thresholds), including company name, registered office, ownership percentage and share capital.

Treasury shares / own quotas

Number and nominal value of treasury shares held by the company or group companies at the beginning and end of the year, with details of changes during the period.

Receivables and payables with shareholders and officers

Amount of receivables and payables towards shareholders/partners, board members and group companies, disclosed separately.

Subsequent events

Significant events occurring after the balance sheet date but before the approval of the financial statements: material losses, emerging litigation, substantial changes in operations or corporate structure.

General assembly and approval

The general assembly (GA) is the supreme body of the GmbH and the AG. Approval of the annual financial statements is one of its non-delegable duties (art. 698 para. 2 no. 4 CO for the AG, art. 804 para. 2 no. 5 CO for the GmbH):

Convocation

The ordinary general assembly must be convened within 6 months of the financial year-end. Notice is given by letter or, if allowed by the articles, by e-mail, at least 20 days in advance for AG and 10 days for GmbH.

Documents to be made available

The annual report, annual financial statements (balance sheet, income statement, notes) and, if applicable, the auditor's report must be made available to shareholders at least 20 days before the assembly (art. 696 CO).

Resolution and vote

The assembly approves the annual financial statements by a simple majority of votes represented. At the same time, it resolves on the appropriation of profit or coverage of loss and, if applicable, on the distribution of dividends.

Discharge of officers

The assembly may grant discharge (décharge) to the members of the board of directors and management, releasing them from liability for the management of the approved financial year.

Minutes of the assembly

Resolutions must be recorded in minutes signed by the chairman and the secretary. The minutes must be kept together with the approved financial statements for at least 10 years (art. 958f CO).

Commercial register filing

After the financial statements are approved by the general assembly, certain companies are required to file them with the commercial register office.

The filing obligation applies in particular to AG whose shares are listed on a stock exchange and to companies subject to ordinary audit. For unlisted SMEs not subject to ordinary audit, filing is generally not mandatory, but contractual obligations may apply (e.g. banking covenants). In any case, the financial statements must be kept accessible for 10 years.

Balance sheet approved and signed by the board of directors or management
Income statement approved and notes to the financial statements
Auditor's report (if the company is subject to audit)
Minutes of the general assembly with the resolution approving the financial statements and appropriation of profit

Important: in the event of capital loss (art. 725 CO for AG, art. 820 CO for GmbH), the board of directors or management has immediate notification and convocation obligations, regardless of the ordinary closing. If assets no longer cover debts (over-indebtedness), notification to the court is mandatory.

Practical tips

Start preparing for the closing in November: verify balances, chase missing documents and schedule the physical inventory — you will avoid the last-minute rush
Use a digital checklist to track each closing step: who is responsible, what is complete, what is pending. AccountEX offers integrated monitoring tools
Automate bank reconciliations through direct connections to financial institutions — real-time updated balances drastically reduce closing workload
Keep all supporting documentation for adjusting entries (contracts, depreciation schedules, confirmation letters) in a structured digital archive
Plan the general assembly well in advance: book the venue, prepare the documents, send notices within the legal deadlines and verify that the quorum is achievable
If your company is not subject to ordinary audit, consider an opt-in for limited audit: it signals transparency to banks, investors and business partners
Use AccountEX to automate invoice recording, manage accruals and deferrals in a structured way and generate CO-compliant balance sheet and income statement with one click

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