Using ChatGPT and my own knowledge I work out how to use Xero accounting for a Swiss legal entity.

Background

Xero, is a great example of a massively successful service (4.2 million+ subscribers) that has simplified and automated the tedious tasks of a profession, in this case accountants.

Accounting tasks such as book keeping, bank reconciliation, payroll and sales tax, that were outsourced to an accountancy firm have been simplified and automated to a point that a SME’s own staff can do them.

Leaving accounting firms responsible for more specialist tasks such as Corporation Tax, Statutory Accounts, Transfer Pricing etc.

In many countries, such as the United Kingdom, Xero provides specific functionality to connect with HM Revenue & Customs, so SMEs can easily submit their payroll tax filings and VaT returns.

However Xero does not have a specific version for Switzerland.

My blog today will explore the question, “Can Xero be used for accounting for a Swiss legal entity” and we will use ChatGPT to guide us.

Let’s Start

Armed with the basic fact that I gleaned from a colleague, namely that “Switzerland requires a specific chart of accounts”, I entered the following into ChatGPT:

I am going to use Xero accounting for a Swiss legal entity and I have been told that Switzerland requires a specific chart of accounts, can you tell me what that is and what I need to create in Xero?

I got a clear answer, key parts of which I show below.

A clear overview and what to do.

At the end, the next steps/question that we are used to now from ChatGPT.

Great, the promise of a CSV file to import and create accounts in Xero.

I replied with:

English and yes generate a Xero CSV file for me, note that my company is a SaaS company and will have both product and consultancy revenue from global customers

And I got an overview and a CSV file to download.

VAT

Often we believe that using ChatGPT is as simple as that; one or two prompts and we have what we need.

However that is never the case for a non-trivial task and a back & forth Q&A is crucial to get to what you need.

The last part of the prior response:

Of-course that got me thinking about VAT.

Before I create this, would like to know more about VAT, what are the reduced rates and special rates for? And am I likely to need these for a software company

And the key part of the response:

Interesting, makes sense.

I am not going to show all the back & forth next, but suffice to say that after learning that VAT registration is required when turnover exceeds CHF 100,000, I decided to dispense with this for now, but asked ChatGPT to create me a VAT Guide pdf document to save and use in future.

Onwards.

Chart of Accounts

Ok, can you now give me the simplified chart of accounts CSV

Which came back with:

Great, but before importing data, I like to be sure, so I asked ChatGPT to double-check that the file complies with Swiss regulations.

It did that, we had one back & forth on AG/Gmbh and SA, which is too boring for words and then I asked the question that concerned me.

before I import this chart of accounts, should I delete the default chart of accounts in Xero?

At this point, ChatGPT responded with:

So, it recommended that I delete all accounts except for “Retained Earnings” (which is protected, locked by Xero).

Actually, logging into Xero, I could see that there were many more protected accounts, so to truncate the back and forth with ChatGPT, I downloaded these into a CSV and uploaded to ChatGPT and told it that these were the locked accounts that could not be deleted.

Progress.

The next decision point was account codes and account names.

A code for an account is the key index, while name can be edited.

In the end, based on information from ChatGPT and my own thinking, I decided that for:

• locked accounts, we should keep the codes that XERO has, but include the Swiss KMU code in the name,
• delete all other accounts in the Xero default chart of accounts
• import the new CSV with codes as per Swiss KMU standard and also include the code in the name

After doing the above, an extract of the Xero Chart of Accounts shows:

• 610 is a protected account for Accounts Receivable , with Xero’s code and we have used the standard KMU code 1100 in brackets in the Name field.
• 6170 is the KMU code for Legal & Registration Fees and we have used this as the Code and in the Name

This felt like progress and a good decision.

Bank Reconciliation

Now, I was ready to enter a few transactions into the Xero as Purchases or Spend/Receive transactions against the correct accounts to record activity for the first month.

After doing that, the next task is Bank reconciliations.

In the UK, this is easy as there are Bank feeds that automatically bring in bank statements, allowing a user to easily match transactions against statement lines and reconcile the balance for each account.

There are no such readily available feeds for Swiss Banks, but it is easy to manually upload bank statements into Xero in csv format.

So I logged into my bank website and downloaded a CSV, which with the help of ChatGPT and some simple editing, I got into the format required to import into Xero.

After which it was a simple case of matching the first months transactions with lines on the statement.

Job done.

Reports

Now that we have opening balances and one months of transactions entered and reconciled with a bank statement, we can run Reports in Xero.

Let’s do that for the Balance Sheet.

Simple and we can see the KMU codes in brackets for each account.

Making it easy for year end, as that time we can export such reports (Balance Sheet, PL Statement, Trial Balance) and send to a firm of Swiss Accountants to do the Tax Computations and Statutory Account Filings.

I could go on, but that is enough accounts for today.

(I would have liked to explore paying employees, as I expect it is a complex process with tax deductions and reporting requirements, but that is a task for another day).

Thoughts

While Xero does not have a Swiss version, with a little effort it can be used for Swiss compliant accounts.

Armed with some prior knowledge of accounting and Xero, I was able to use ChatGPT to act as a guide.

After some back and forth, I learn’t what I needed to know and ChatGPT created an appropriate chart of accounts for me to import into Xero.

This saved me a lot of time and expense in finding a firm of Swiss accountants to engage them to do the accounts or provide advice on how to set-up my accounting system.

I could not have done this without prior knowledge of accounting and Xero.

And I could not have done it without ChatGPT.

An example of LLM’s improving the productivity of someone with relevant expertise, as opposed to helping a junior with no prior expertise performing an entirely new task.

In Summary

• Question: Can I use Xero for Swiss Accounts?
• Answer: Yes, while there is no Swiss specific version of Xero, with some upfront thought, Xero can be used for accounts for Swiss entities, as the steps in the above blog show.

• Question: What are the pre-requisites for using Xero for Swiss accounting?
• Answer: Prior knowledge of accounting and ideally use of Xero for another jurisdiction (e.g. UK). Then use ChatGPT (or another LLM) to create a standardised Swiss Chart of Accounts (KMU-Kontenrahmen), customise this to be appropriate for your business and for Xero requirements and then import this into Xero, deleting the non-protected default accounts and re-naming the protected ones to include the KMU codes.

• Question: What are the limitations of using Xero for Swiss accounting?
• Answer: Generally the lack of automation and integration to Swiss banks or Swiss State and Federal Governments means that tasks such as VAT (Sales tax) and Employee Payroll, need to be completed outside the system and then manually reflected in Xero.