Single vs. Double-Entry Bookkeeping: Which Do You Need?

Bookkeeping comes in two forms: single-entry, which records income and expenses, and double-entry, which records every transaction twice. The law tells you which you need.

Single-entry bookkeeping

Single-entry (the Milchbüchlein method) records receipts and payments in a simple cash book. You note each inflow and outflow in one list, typically without a formal balance sheet.

It is only allowed for small businesses. Sole proprietorships with modest turnover and no obligation to keep full accounts may use this simplified method.

The main advantage is simplicity. It takes little accounting knowledge and minimal time, which is why it suits the smallest businesses.

The drawback is limited insight. Because it does not track assets and liabilities separately, it does not show the true financial position of the business.

• Simple cash book of income and expenses.
• Only for small sole proprietorships.
• No full balance sheet required.
• Limited insight into assets and liabilities.

Double-entry bookkeeping

Double-entry records every transaction in two accounts: a debit on one side and a credit on the other. Every entry has a counterpart, which keeps the books balanced.

This method produces a full balance sheet and income statement. It shows not just what you earned and spent, but what you own and owe.

Companies, and sole proprietorships above certain thresholds, must use double-entry. The law sets these thresholds based on turnover, assets and staffing.

Double-entry is more work but far more informative. It gives you a real financial picture and is what a fiduciary, bank or investor expects to see.

• Every transaction recorded twice.
• Produces a balance sheet and income statement.
• Required for companies and larger firms.
• More work, far more insight.

How the law decides

The Code of Obligations ties the method to your size and legal form. Registered companies must keep double-entry accounts without exception.

Sole proprietorships cross into full accounting when they reach the statutory thresholds, for example CHF 500,000 in turnover. The exact figures should be checked against current law.

Even below the thresholds, double-entry is never prohibited. You can always choose the more complete method voluntarily.

Switching later is possible but disruptive. Many businesses start single-entry, then move to double-entry as they grow past the threshold.

• Legal form decides first.
• Turnover thresholds decide for sole proprietors.
• Double-entry is always allowed voluntarily.
• Check thresholds against current law.

Choosing the right approach

If you are a tiny sole proprietorship under the thresholds, single-entry is a legitimate way to start. Keep it simple but complete.

If your revenue or legal form requires full accounting, use double-entry. There is no shortcut around this obligation.

Consider double-entry even before the law requires it. The insight it gives into profitability, debtors and cash helps you run the business better.