Calculating Profit as a Sole Proprietorship: Formula, Example & Tax Tips

The profit is the most important metric of your sole proprietorship. It determines how much you pay in income tax, how high your OASI contributions are and how much you can take home. Yet many self-employed persons are unsure: What exactly counts as income? Which expenses can I deduct? And what is the difference between turnover, gross profit and net profit?

In this article, we explain the profit calculation step by step — with the relevant legal foundations, a concrete calculation example and tips on how the profit flows into your tax return.

01The Basic Profit Calculation Formula

The profit calculation for a sole proprietorship with simple bookkeeping (income-expense statement per OR Art. 957 Para. 2) is fundamentally straightforward:

FormulaProfit = Revenue − commercially justified expenses − depreciation

Or in more detail:

Revenue (all business income for the year)
minus commercially justified expenses (operating costs per DBG Art. 27–31)
minus depreciation on fixed assets (per ESTV guideline A1995)
= Net profit (= taxable income from self-employed activity)

This net profit is your taxable income from self-employed activity. It is declared in the tax return and also serves as the basis for your OASI/DI/APG contributions.

02What Counts as Revenue?

Revenue of your sole proprietorship includes everything you receive in the course of your business activity. The most common items:

Sales revenue: All income from the sale of goods or services — the main component
Own consumption: If you use goods or services from your business privately, this counts as revenue for tax purposes (e.g. you are a photographer and take free family photos with your business equipment)
Ancillary income: Interest on the business account, rental income from commercially used premises, proceeds from the sale of fixed assets
Subsidies and compensation: Government contributions, insurance benefits for business damage

Note: Own consumptionOwn consumption is often overlooked. If you use products or services from your business privately, you must record the market value as revenue. The same applies for VAT if you are VAT-liable (MWSTG Art. 31).

03What Can Be Deducted as an Expense?

According to DBG Art. 27, all 'commercially justified' costs are deductible. These are expenses necessary for carrying out your self-employed activity. Art. 28–31 DBG provide further specification.

The most common deductible expenses:

Category	Examples	Legal Basis
Materials / Goods	Purchase of raw materials, trade goods, consumables	DBG Art. 27
Rent	Office rent, storage rent, coworking space	DBG Art. 27
Home office	Proportionate apartment rent, electricity, internet (business share)	DBG Art. 27
Insurance	Professional liability, daily sickness allowance, property insurance	DBG Art. 27
Vehicle costs	Business vehicle: leasing, insurance, fuel, maintenance (minus private share)	DBG Art. 27
Communication	Telephone, internet, mobile subscription (business share)	DBG Art. 27
Training	Job-related courses, trade literature, conferences	DBG Art. 27
Software & Tools	Bookkeeping software, cloud services, licences	DBG Art. 27
OASI/DI/APG contributions	Personal social insurance contributions	DBG Art. 33
BVG contributions	Voluntary 2nd pillar for self-employed	DBG Art. 33
Depreciation	Reduction in value of fixed assets (computer, vehicles, furniture)	DBG Art. 28

Not deductiblePrivate living costs (private apartment rent, groceries, clothing) are not deductible — not even partially, unless there is a demonstrable business share. Fines and penalties are also never deductible (DBG Art. 34).

04Difference Between Turnover, Gross Profit and Net Profit

These three terms are often confused but have different meanings:

Term	Definition	Example
Turnover (Revenue)	All income from business activity, without deductions	CHF 120'000
Gross profit	Turnover minus direct costs (materials, goods purchased)	CHF 120'000 − CHF 25'000 = CHF 95'000
Net profit	Gross profit minus all other operating costs and depreciation	CHF 95'000 − CHF 30'000 = CHF 65'000

For you as a sole proprietor, net profit is the decisive figure. It corresponds to your taxable income from self-employed activity and is the basis for the OASI calculation.

Important to knowYour turnover says little about your actual earnings. Someone with CHF 200'000 turnover and CHF 150'000 in costs has less profit than someone with CHF 80'000 turnover and CHF 15'000 in costs. What matters is the net profit.

05Calculation Example: Profit of a Sole Proprietorship

Marco is a self-employed web developer in Zurich. He runs a sole proprietorship and keeps simple books. Here is his profit calculation for 2025:

Revenue

Item	Amount
Revenue from client projects	CHF 135'000
Maintenance contracts	CHF 12'000
Own consumption (personal website)	CHF 500
Total revenue	CHF 147'500

Expenses

Item	Amount
Coworking space (12 x CHF 450)	CHF 5'400
Software subscriptions (hosting, tools, licences)	CHF 3'600
Telephone / Internet	CHF 1'200
Training (course + conference)	CHF 1'800
Travel costs (public transport pass, business share 60%)	CHF 1'500
Office supplies and consumables	CHF 400
Professional liability insurance	CHF 650
Daily sickness allowance insurance	CHF 2'100
Depreciation MacBook Pro (40% declining balance on CHF 2'800)	CHF 1'120
Depreciation monitor (40% declining balance on CHF 800)	CHF 320
Total expenses	CHF 18'090

Profit Calculation

Item	Amount
Total revenue	CHF 147'500
Total expenses	−CHF 18'090
Net profit (= taxable income)	CHF 129'410

Marco's net profit of CHF 129'410 is declared in his tax return as income from self-employed activity. He pays income tax (federal, cantonal, municipal) and OASI/DI/APG contributions on this amount.

06How Does Profit Flow into the Tax Return?

As the owner of a sole proprietorship, there is no separation between business and personal taxes. Your business profit is your personal income. Here is how to correctly declare it in your tax return:

Prepare the income-expense statement

Prepare your annual accounts (revenue minus expenses = net profit). For sole proprietorships under CHF 500'000 annual turnover, simple bookkeeping per OR Art. 957 Para. 2 is sufficient.

Complete Form 9 (or cantonal equivalent)

Most cantons require a separate form for self-employed activity (e.g. 'Questionnaire for self-employed persons'). Here you enter revenue, expenses, depreciation and net profit.

Declare net profit as income

The net profit is entered in the main tax return as income from self-employed activity. Any other income (side income, interest, rental income, etc.) is added.

Declare business assets

In addition to profit, you must also declare your business assets (fixed assets, debtors, bank balances) in the tax return. These are considered for wealth tax.

Private withdrawals are not salaryAs a sole proprietor, you do not pay yourself a salary. What you withdraw from the business (private drawings) is tax-irrelevant. The entire net profit is always taxed — regardless of how much you actually paid out to yourself.

07Tips for Legal Profit Optimisation

You can legally reduce your taxable profit by utilising all permissible deductions. Particularly effective are depreciation on fixed assets:

Record all operating expenses: Every forgotten receipt means real money you pay too much in taxes. Consistently record all business expenses — even small amounts add up
Use depreciation: Depreciate fixed assets at the maximum permissible ESTV rates (e.g. 40% declining balance for computers). This reduces profit more in the initial years
Contribute to pillar 3a: The maximum amount for self-employed persons without BVG is up to 20% of earned income in 2025/2026, maximum CHF 36'288. This amount is fully deductible from taxable income (DBG Art. 33 Para. 1 lit. e)
Voluntary BVG contributions: Self-employed persons can voluntarily join the 2nd pillar. Contributions are also deductible and reduce your taxable income
Correctly calculate the home office share: If you work from home, you can claim a proportionate share of apartment rent, utilities and internet costs as a business expense
Plan investments: Make larger purchases (computer, furniture, software) shortly before year-end to still depreciate them in the current year

Keep track of profit at all times with einzlyWith einzly, you continuously record income and expenses and see your current profit in real time — not just at year-end. This way you make better decisions and have the tax return under control.

08Frequently Asked Questions about Profit Calculation

Yes. As a sole proprietor, you are not separate from the business. Your business profit (net profit) is your taxable income from self-employed activity. There is no separate 'company salary' as with a GmbH.

Yes. The entire net profit is taxed — regardless of whether you leave the money in the business account or pay it out to yourself privately. Private drawings are tax-irrelevant.

OASI/DI/APG contributions for self-employed persons total 10.0% on income from CHF 58'800 in 2025/2026. With lower income, a declining scale applies (from CHF 9'800: 5.371%). The contribution is calculated on the net profit minus half the OASI contributions.

Turnover is the sum of all revenue, without deductions. Profit is what remains after you have deducted all operating costs and depreciation. Example: CHF 120'000 turnover minus CHF 30'000 costs = CHF 90'000 profit.

Yes, entertainment expenses with a demonstrable business purpose are deductible as operating expenses. You must be able to document the business purpose (e.g. note on the receipt: client, occasion). Purely private meals are not deductible.