Simple vs. Double-Entry

Understand the differences between simple and double-entry bookkeeping and choose the right method.

Simple vs. Double-Entry Bookkeeping

Lumabill offers two bookkeeping modes: simple bookkeeping (known in Switzerland as "Milchbuechli") and double-entry bookkeeping. Which method is right for you depends on your legal form, revenue, and reporting needs. This guide helps you make the right choice.

What Is Simple Bookkeeping?

Simple bookkeeping -- sometimes called cash-book accounting -- is a straightforward method where you record income and expenses in chronological order. At the end of the year, you get an income/expense statement (profit & loss), but no balance sheet.

In Lumabill, this means:

  • You record invoices (income) and expenses
  • Lumabill automatically calculates your profit or loss
  • There is no chart of accounts and no debit/credit postings
  • Reports are limited to an income/expense overview

What Is Double-Entry Bookkeeping?

Double-entry bookkeeping is the standard accounting method for businesses. Every transaction is recorded in at least two accounts -- once as a debit and once as a credit. This produces both a profit & loss statement and a balance sheet showing assets and liabilities.

In Lumabill, this means:

  • You work with a full chart of accounts (Swiss SME standard -- Kontenrahmen KMU)
  • Invoices and expenses automatically generate journal entries
  • You can also create manual journal entries for any transaction
  • You get balance sheet, profit & loss, and additional reports

When Is Simple Bookkeeping Sufficient?

Swiss law (Code of Obligations, Art. 957 para. 2) permits simple bookkeeping for:

  • Sole proprietorships and partnerships with less than CHF 500,000 annual revenue
  • Associations and foundations not required to register in the commercial register

Tip: Even if you are legally allowed to use simple bookkeeping, double-entry may still make sense -- for example, if you need to present financial reports to investors or banks.

When Do You Need Double-Entry?

Double-entry bookkeeping is legally required for:

  • GmbH (LLC) and AG (Ltd.) -- regardless of revenue
  • Sole proprietorships with more than CHF 500,000 annual revenue
  • Cooperatives and registered associations/foundations

Comparison at a Glance

Feature Simple Double-Entry
Track income/expenses Yes Yes
Chart of accounts No Yes
Debit/credit postings No Yes
Balance sheet No Yes
Profit & loss statement Basic Full
VAT reporting Yes Yes
Suitable for sole prop < 500K Yes Yes
Suitable for GmbH/AG No Yes

Switching Modes in Lumabill

You select the bookkeeping mode during initial profile setup. You can switch from simple to double-entry later -- Lumabill will migrate your existing data. However, switching from double-entry back to simple is not supported, as journal entry details would be lost.

Tip: If you are unsure, start with double-entry. Lumabill makes double-entry as easy as possible -- journal entries are automatically generated from your invoices and expenses.

What's Next?

Chart of Accounts