How to use this balance sheet template
- Set the as-of date, usually the last day of a month, quarter or year.
- Replace the sample lines with your balances. Bank and loan statements are the best sources.
- Watch the balance check. If it's off, the message tells you which side is higher.
- Download Excel to keep a copy with working formulas, or CSV for Google Sheets.
The accounting equation
Assets = Liabilities + Owner's equityEverything the business owns was paid for either by borrowing (liabilities) or by the owners (equity, including profits kept in the business). That's why the two sides must match.
What goes where
| Section | Examples |
|---|---|
| Current assets | Cash, accounts receivable, inventory, prepaid expenses: things that turn into cash within a year |
| Non-current assets | Equipment, vehicles, property, less accumulated depreciation; long-term deposits |
| Current liabilities | Accounts payable, credit cards, taxes owed, the next 12 months of loan principal |
| Long-term liabilities | Loan balances due after the next 12 months |
| Owner's equity | Capital contributed, retained earnings, minus draws |
Reading the ratios
Working capital (current assets − current liabilities) is the cushion for day-to-day bills. Current ratio (current assets ÷ current liabilities) above 1.5 is comfortable, and below 1.0 means short-term bills exceed short-term resources. Debt-to-equity (total liabilities ÷ equity) under about 2 is typical for small businesses that borrow.
Balance sheet, P&L and cash flow
The balance sheet is a snapshot of one day. The profit and loss statement covers a period and shows whether you made money. A cash flow statement explains why the cash balance changed. Net income from the P&L flows into retained earnings here.
Common mistakes
- Mixing personal assets or debts into the business balance sheet.
- Putting the whole loan in long-term liabilities, when the next year's principal belongs in current.
- Counting receivables that will never be collected. Write off or reserve for them.
- Forgetting sales tax or payroll tax collected but not yet paid.