Opting Out: What SMEs need to know about the auditing firm
Jun 18, 2025
The audit obligation represents an administrative challenge for many Swiss SMEs. However, the law offers an attractive alternative for smaller companies with Opting Out. This option allows stock corporations and LLCs, under certain conditions, to forgo an auditor.
The role of an audit firm for stock corporations and LLCs
The auditing entity is an independent control body that operates in stock corporations (stock corporation) and limited liability companies (LLC). Its main task is to audit the annual financial statements in accordance with statutory requirements.
Core tasks of the auditing body:
Review of bookkeeping for legality
Control of the annual financial statement
Preparation of the audit report
Reporting of legal violations
Distinction between types of audits
There are two types of audits: the ordinary audit and the limited audit.
Ordinary Audit
The ordinary audit is not mandatory for all companies in Switzerland. However, under the following circumstances, the company is obliged to do so:
It concerns a public company
Two of the following sizes have been exceeded in two consecutive financial years: (1) Balance sheet total: CHF 20 million (2) Sales revenue: CHF 40 million or (3) 250 full-time positions on average
Companies that are required to prepare consolidated financial statements
In an ordinary audit, a comprehensive examination of the business books is carried out, detailed reporting is required, and higher qualification requirements apply to auditors.
Limited Audit
The limited audit is the standard for small and medium-sized enterprises in Switzerland. In this type of audit, less extensive auditing actions are performed, focusing mainly on significant business transactions, with reporting in a reduced form. The depth of examination is less than that of an ordinary audit, which better meets the needs of smaller companies. The auditor mainly conducts interviews, analytical audit actions, and appropriate detailed examinations.
This form of audit offers a balanced relationship between control effort and security. The qualification requirements for auditors are also less stringent than for the ordinary audit, which positively affects costs for companies. Despite the reduced scope, the limited audit still ensures an appropriate review of the business books and provides stakeholders a basic assurance of the correctness of the annual financial statement.
Opting Out for SMEs: Requirements and Procedure
Opting Out refers to the voluntary waiver by a stock corporation or LLC of the limited audit according to Article 727a of the Swiss Code of Obligations. This option allows SMEs to be exempt from the statutory audit obligation, meaning no limited audit needs to be conducted.
Basic requirements for Opting Out
Opting Out is possible if the following criteria are met:
Less than 10 full-time positions on average
Consent of all shareholders or partners
No statutory obligation for an ordinary audit
Practical implementation of Opting Out
In case of new incorporation
During the formation of a company, the founders can forego an audit entity from the start. This waiver must be explicitly recorded in the publicly notarized formation deed. It is required that all founders agree to this waiver. The declaration is then directly included in the incorporation documents and submitted to the commercial register.
Depending on the canton, different formal requirements exist. Some cantons additionally require a separate Opting-Out declaration alongside the formation deed. This declaration confirms in writing that the company meets the legal requirements to waive the audit and all involved agree with it.
It is therefore advisable to clarify the specific cantonal requirements in advance of the incorporation or consult an expert to ensure a smooth formation process and avoid unnecessary delays.
For existing companies
Existing companies must register the Opting Out with the commercial registry office, signed by the authorized representatives. The general meeting must decide this by majority vote. The cantonal requirements differ. Most cantons require an Opting-Out declaration signed by all shareholders or the board of directors. A prior review of the specific cantonal conditions is recommended to avoid delays.
Legal consequences
After successful Opting Out:
No external audit of the annual financial statement
Possibility to reintroduce an audit at any time
The company must permanently meet the requirements for Opting Out. If thresholds are exceeded, immediate adjustment is required.
Benefits of Opting Out for SMEs
Opting Out offers significant economic benefits for SMEs:
Direct cost savings
The elimination of annual audit costs, which usually range between CHF 2,000 and 5,000, represents a substantial financial benefit. Additionally, companies benefit from a significant reduction in administrative effort, as no time-consuming preparation of documents for external auditors is required.
Increased operational freedom
Decision-making is significantly accelerated by eliminating external auditing bodies, while internal processes are simplified at the same time. This allows companies to focus more on their core business and use their resources more efficiently.
Reduced administrative burden
The reduced administrative burden is particularly evident in the simplified documentation requirements and a leaner organizational structure. Companies can thus deploy their existing resources much more efficiently and concentrate on essential business processes. This leads to optimized workflows and allows for more flexible adaptation to changing market conditions.
Conclusion
Opting Out presents a viable option for many SMEs to optimize their operations and reduce costs. The ability to forego an audit function offers not only financial advantages but also enables a leaner organizational structure and greater entrepreneurial flexibility. However, companies should carefully consider the decision to Opt Out and ensure that they meet the legal requirements. An effective internal control system remains of great importance for sustainable corporate management, even without external review.
These benefits allow SMEs to shape their business activities more agilely and cost-effectively. The saved resources can be directly invested in business development. Jurata is happy to assist you with all questions and concerns regarding Opting Out during incorporation or for already registered companies.
