What is a company balance sheet?

What is a company balance sheet?

A company balance sheet is a financial statement summarising everything that your company owns (assets), money you owe (liabilities) and shareholder’s/owner’s equity.

It’s a great tool for enabling you to get a good view of your company’s net worth and overall financial health.

Assets, liabilities and equity

As mentioned, a company balance sheet includes three sections – assets, liabilities and equity:

Assets
Assets are categorised into two types – fixed and current.

Fixed assets, otherwise known as non-current assets, are things that are likely to last the long term and are not expected to be sold within the current financial year.

Current assets are the opposite and can be easily ‘converted into cash’ in one year or less.

Liabilities
Similar to the assets section of your balance sheet, liabilities can also be divided into short-term costs, such as broadband bills or subscriptions, and long-term costs, such as mortgages.

Equity
This will often be referred to as shareholder or owner’s equity on a balance sheet and is the value left after subtracting liabilities from assets.

Do I have to keep a company balance sheet?

A company balance sheet is only mandatory for publicly-trading companies, however, even if you don’t have to have one, it can be useful.

By having this detailed view of your company’s finances, you’ll be able to see how it performed in the past as well as the present, which could give you an idea of its future performance.

This will be particularly handy should you be interested in attracting investors or stakeholders.

Do I need an accountant to file my company balance sheet?

No, you don’t need an accountant to file a company balance sheet, however, many businesses will choose to hire an accountant to ensure that their accounts are completed correctly.

An accountant will be able to help with keeping you on top of your financial liabilities and deadlines, ensuring you remain compliant, and they’ll also be able to provide you with the type of useful financial advice that you might not otherwise be aware of, which could potentially save you money in the long run.

If you already have an accountant and you’re not happy with them, take a look at our Is it Easy to Switch Accountants? page for help and advice.

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