A balance sheet is a financial statement that shows a business's assets, liabilities and equity at a specific point in time, providing a snapshot of its financial position. In the UK, it forms part of the statutory accounts filed with Companies House and HMRC.
What the Balance Sheet shows
The Balance Sheet gives you a snapshot of what your business owns, what it owes and the value left over for the owner or shareholders at a specific point in time. It pulls together your assets, liabilities and equity into a single view so you can see the overall financial position of your business at the end of any chosen period.
Unlike the Profit and Loss report, which covers activity over a date range, the Balance Sheet is always a position "as at" a single date.
Who needs to use it
Different users will rely on the Balance Sheet in different ways:
- Sole traders can use it to keep track of business assets, money owed by customers and outstanding supplier bills, even where a formal balance sheet is not strictly required for self-assessment.
- Landlords may use it to monitor property-related assets, mortgages and loan balances alongside rental income.
- Small businesses and limited companies will need balance sheet figures to support statutory accounts and corporation tax filings.
- Accountants can review client positions, spot reconciling items and prepare year-end adjustments directly from the report.
Understanding the sections
Assets
Assets show what your business owns or is owed. They are usually split into two groups:
- Fixed assets – longer-term items such as equipment, vehicles, fixtures and property, shown net of accumulated depreciation.
- Current assets – shorter-term items including bank balances, cash in hand, stock, prepayments and amounts owed to you by customers (trade debtors).
Liabilities
Liabilities show what your business owes to others, grouped by when they fall due:
- Current liabilities – amounts due within a year, such as trade creditors, VAT, PAYE, accruals and short-term loans.
- Long-term liabilities – amounts due after more than a year, such as longer mortgages and loans.
Equity
Equity (sometimes called capital) is the residual value belonging to the owner or shareholders. Depending on the business type, you may see entries for capital introduced, drawings, share capital, retained earnings and the current period's profit or loss.
Heads up - Total assets should always equal total liabilities plus equity. If they do not, there is usually an unposted or unbalanced journal somewhere in the underlying data.
Changing the view
You can tailor the Balance Sheet to suit how you want to review the numbers:
- Comparison period – add a prior period column to compare the current position with an earlier date.
- Level of detail – switch between a summary view and a detailed view that shows every nominal account.
- Rounding – choose whether to display figures to the nearest pound or with pence.
- Include or exclude draft transactions – decide whether unposted items should appear in the totals.
Drilling down into figures
Every total on the Balance Sheet is clickable. Selecting a figure opens a breakdown of the underlying nominal accounts, and clicking again takes you to the individual transactions that make up that balance. This is the quickest way to investigate an unexpected number or to check what is sitting in a control account.
- Click any balance on the report.
- Review the list of contributing accounts.
- Click an account to see the transactions in date order.
- Open a transaction to edit, attach evidence or add a note.
Exporting and sharing
Once you are happy with the report, you can:
- Export to PDF for filing or sharing with clients.
- Export to Excel or CSV for further analysis.
- Print directly from the browser.
- Share with your accountant by granting access through the user permissions area, so they can view the live report rather than working from a static copy.