A Balance Sheet is an accounting report required by all companies registered at Companies House and is useful for self-employed to see how their business is performing. It allows you to see a snap shot of your business on a given date, normally month or year end. It is also a useful tool for management to see the value of assets a business owns including equipment, bank balance and what it owes at any given time.
The report provides information that is useful when assessing the financial stability of a company. There are financial ratios that can be used to calculate the business's financial position; these include liquidity ratios and gearing ratios. They are used by banks and suppliers to work out if the can offer a loan, overdraft or credit facility.
A balance sheet shows the following information:
We have a free Excel Balance Sheet Template for you to download. It is not suitable for submitting to Companies House, but will enable a small business to produce a report for their year end. If you are a limited company, you will need to get your accountant to format a balance sheet as part of your accounts to submit to Companies House.
The report is formatted vertically showing the following:
Assets - Liabilities = Equity
The two sides of the equation must always balance.
Below is a typical example of a balance sheet, each link provides further details and how to account for them.
|Total Fixed Assets||900|
|Total Current Assets||1650|
Any business which runs accounting software will have the ability to create the report within the software. If you are running a manual system, then we have included a free Excel balance sheet template.
The sample report shows the following information.
The company owns £18500 in Assets. The company is owed £5500 of liabilities this includes £3000 from customers and £2500 in a loan. This is financed by share capital and retained profits from the profit and loss account.
Return from balance sheet to Accounting Basics page.