Taxation of sole proprietorships and partnerships

Sole proprietorships and partnerships are not taxable as companies because they are not legal entities. This means that sole proprietors and partners must pay tax on their private and business income and assets as a whole.

Taxable income consists of all income from the business and other income. As a natural person, income must be taxed at federal, state, and local levels.

However, the private and business assets of sole proprietors and partners in partnerships are only subject to municipal and cantonal taxes, but not to direct federal tax.‍

Tax optimization

‍Entrepreneurs will generally try to keep their tax burden as low as possible. They can achieve this through various measures:

• Investments in consumer goods can be claimed as depreciation. Depreciation rates range from 3% to 45%. If, on the other hand, the assets are leased, the expenses can be claimed in full.
• Furthermore, it is possible to create provisions for any risks and deduct these from taxable profit.
• Losses from the previous seven reporting periods are deductible at federal and cantonal level.

It is particularly important to make a strict distinction between private and business expenses. In principle, only costs that are attributable to the business activity of the company are deductible.

Our experts will be happy to advise you on all topics relating to the taxation of sole proprietorships and partnerships.

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