Download Balance Sheet Excel Template

Accountants also take into account the building or equipment’s value when the item is worn out. The difference in these two values (the original cost and the ending value) will be allocated over a relevant period of time. As an example, assume a business purchased equipment for $18,000 and the equipment will be worth $2,000 after four years, giving an estimated decline in value (due to usage) of $16,000 ($18,000 − $2,000). The business will allocate $4,000 of the equipment cost over each of the four years ($18,000 minus $2,000 over four years).

• It’s decreased by any annual net losses and by any cash that you take out of the company for personal use, referred to as owner’s draws.
• These are the inflows to the business, and because the inflows relate to the primary purpose of the business (making and selling popcorn), we classify those items as Revenues, Sales, or Fees Earned.
• Let’s create the statement of owner’s equity for Cheesy Chuck’s for the month of June.
• In our balance sheet, we have shown profound details about assets, liability, and equity.

Another way to think of the connection between the income statement and balance sheet (which is aided by the statement of owner’s equity) is by using a sports analogy. The income statement summarizes the financial performance of the business for a given period of time. The income statement reports how the business performed financially each month—the firm earned either net income or net loss. This is similar to the outcome of a particular game—the team either won or lost.

What Is a Small Business Balance Sheet Template?

S corporations and C corporations list a few extra equity accounts on the balance sheet. Rather than “owner’s equity” or “partner capital,” the corporation’s accumulated net income is labeled as “retained earnings.” Net income increases retained earnings while net losses and stockholder dividends decrease it. The capital that stockholders have invested in the company is labeled as “paid in capital.” The equity section will also mention “common stock” or possibly “preferred stock,” which is capital the company received in exchange for issuing stock to stockholders. Each stockholder’s equity account usually isn’t labeled on the balance sheet but it may be broken down in the statement of equity if there are only a few owners.

These reporting classes need to be linked to each account in the trial balance and are included in column A on the AFS sheet next to the line items which are calculated based on the respective reporting classes. This printable small business pro forma balance sheet template serves as your business’s financial statement over the course of a specific timeframe. Enter line items to quickly calculate your current and long-term assets, current and long-term liabilities, and owner’s equity. Once completed, you can identify where to make adjustments to improve profit and net worth. In Describe the Income Statement, Statement of Owner’s Equity, Balance Sheet, and Statement of Cash Flows, and How They Interrelate, we discussed the function of and the basic characteristics of the statement of cash flows.

Step 4: Prepare Current Liabilities

The net result is that only the interest and income tax amounts which have actually been paid during the financial period are included in the cash flow statement. The provisions line items have been included on the FinInfo sheet because provisions are typically recorded in one account on the trial balance and then need to be separated into individual items for financial statement purposes. We have included three default items in the template and the description of each is included in the next section of the FinInfo sheet. These descriptions can be amended and you can add additional items if required.

Business owners may think of owner’s equity as an asset, but it’s not shown as an asset on the balance sheet of the company. Because technically owner’s equity is an asset of the business owner—not the business itself. We’ve compiled a collection of the most helpful free small business balance sheet templates for small business owners, accountants, and other stakeholders.

It is mostly the notes section of the financial statements which will be affected because all the pages before this section fit onto a single page and should therefore not be affected by any of your changes. The notes section contains headings which consist of the entity name, the notes section heading and the date for which the financial statements are compiled in three separate rows. The input cells with yellow cell backgrounds on the Setup sheet need to be completed in order to set the template up for your business. The business name is included as a heading on all the sheets and also as a heading on all the financial statement pages. It represents the owner’s claims to what would be leftover if the business sold all of its assets and paid off its debts. Using a balance sheet template will streamline the next step of the process, so that you don’t have to manually insert all of the fields yourself.

The sole proprietor withdraws money for personal use because he or she is not paid a salary or wages. As a result, the income statement for the sole proprietorship business does not include an expense for the owner working in the business. This means that the reported net income is the total return for the owner’s work and investment.

My Account

The default value may need to be changed after customizing the financial statements and determining the total number of pages which will be printed. The currency symbol is included below the year headings on the financial statements. The year-end month is used to determine the appropriate year-end date and previous year-end date which are included in a number of notes to the financial statements.

If your accountant generates periodic financial statements for your business, you may have noticed equity accounts on the balance sheet or seen a statement of equity. Put simply, they represent the assets you have invested in your business, so they’re important to understand and monitor. The profit before tax note is unique in that it does not affect the balancing of the financial statements and is not linked to the income statement in any way.

How to calculate owner’s equity

This printable template is the perfect tool for analyzing your business’s economic health. Foreign exchange losses are linked to other expenses on the income statement together with a number of other individual trial balance accounts. All of these accounts contain a code which starts with “I-08G” and are updated to other expenses in the income statement because the reporting code for that line item is “I-08G”.

Owner’s equity represents the owner’s investment in the business minus the owner’s draws or withdrawals from the business plus the net income (or minus the net loss) since the business began. The Balance sheet presents an account of where a company has obtained its funds and where it has invested them. A business has primarily two sources of funds which are shareholders and lenders. These funds are then invested in assets which helps the business in generating revenue. To have a more thorough look at how double-entry bookkeeping works, head to FreshBooks for a gallery of income statement templates.

If your trial balance has been compiled correctly, there should only be a prior year adjustment value reflected if an actual prior year adjustment has been posted against retained earnings. If no such adjustment has been made, you need to check your trial balance amounts to ensure that the retained earnings balances are correct. This section of the FinInfo sheet provides for items which are included with other items in trial balance accounts but need to be disclosed separately on the financial statements. If you therefore want to remove an item from the trial balance calculation and disclose it separately on the financial statements, you can include it in this section. If you need more than three line items for provisions, you can insert a new row below the last item, copy one of the existing rows, change the reporting class & description of the new item and replace the copied item’s balances with nil values.

The result is that the formulas in the amounts columns will automatically remove the interest received from where the trial balance class is included in the financial statements and include the interest received amounts in a separate line. Both lines are included in other income in this example so we have just included interest received in a separate line. The formulas in the rows with green or orange reporting classes are all the same and copying them will result in the correct calculations being included for the new reporting class. You also need to add the new reporting class to the AFS sheet to ensure that the appropriate amounts are included in your financial statements. The finance leases note works in much the same way as the loans note in terms of the reporting classes which need to be used for the non-current and current liability lines.

A balance sheet for a sole proprietorship is similar to a balance sheet for any other kind of business in that it shows how much the business entity owns and owes. Sole proprietorships are closely held businesses, so a sole proprietorship balance sheet format also reflects the interconnectedness of the business and the individual who owns it. The sum of the equity accounts on the balance sheet represents the dollar amount of equity in the company at a certain moment of time. The basic accounting formula is assets minus liabilities equal equity, which means that the equity section of the balance sheet represents the assets your company holds net of any outstanding liabilities.

Small Business Balance Sheet Template

We have included two lines in the note and also included the income from investments below the annual totals. Note that we have again included three interest received lines – refer to the other income note instructions for the reason why there are three lines and how to decide which of these to use and which to hide. The formula in column A on the FinInfo sheet need to be copied for all new items which are added to the sheet. Different formulas are used in the different sections of the sheet and you therefore need to copy the formula from one of the existing lines in the appropriate section. In some cases, the general ledger entries may not have been allocated in this way and can even have been allocated to one account which means that additional contributions and drawings may be grouped together and only one line would show a movement for the year. In terms of new and existing businesses and the addition of new columns, the same procedure that needs to be followed in order to add new columns to the TB sheet needs to be completed for the FinInfo sheet.

Owner’s equity can be negative if the business’s liabilities are greater than its assets. In this case, the owner may need to invest additional money to cover the shortfall. Horizontal format lists all liabilities on the left-hand side and all assets on the right-hand side of the balance sheet. A single entry present value of an annuity system is most suited to a cash basis accounting system, where revenues are recorded as cash is received, and expenses are recorded as payments are made. There is no attempt to track assets or liabilities, so there is no formal tracking of fixed assets, inventory, and so forth in separate journals.