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Shape Up Your Business with an Online Balance Sheet

By Belinda Gadd

3 min read

Aside from being an excellent documentation tool, a balance sheet can help you organise your business finances and ease your administrative responsibilities. What’s more, a quality balance sheet should be user-friendly, be easy to understand and create an overview of your business.

Why Use a Balance Sheet?

For large and listed companies, balance sheets are essential to assist with the annual auditing and sign-off process. However, small to medium companies and other entities (such as organisations, associations and trusts) can also practically benefit by using accurate and intuitive balance sheets.

If you apply for a loan, a lender will want to ascertain your business turnover and performance. Likewise, if you’re looking to buy or sell a business, your due diligence will necessitate a clear balance sheet in order to evaluate the business’s performance and promise.

A balance sheet can also be a valuable tool if you’re required to report to stakeholders, or if you’re setting short- and long-term goals for your business. What’s more, balance sheets can help identify trends, resources and opportunities – such as gaps and niches in the market.

With an efficient method of recording and exporting financial data, you’ll have more time to focus on your business and financial goals.

Assets

Your balance sheet should provide a summary of your assets at a particular date. These include both your tangible and intangible assets.

Tangible or fixed assets can include cash savings, bank interest, furniture, office equipment, vehicles and property. Intangible assets can include intellectual property, investments and credit notes or IOUs.

Liabilities

Itemised liabilities are an important element of a balance sheet because they signify areas that a business may need to recover from or write off in order to improve. For example, old or forgotten debts may need to be written off at tax time or pursued more actively in the next financial year.

In addition, if your balance sheet shows current debts but a strong asset and equity base, you may want to consider obtaining cash-flow finance to improve the momentum of your business.

Equity

Just like in real estate, businesses can access equity to borrow against, trade and invest. Equity can exist in property assets, goodwill or ownership in a business or its related companies.

By including equity on your balance sheet, you can ensure a thorough snapshot of your business’s financial position.

Depreciation

If you maintain a business asset pool for tax depreciation purposes, then itemising the depreciation value on the balance sheet can assist with accurate calculations at tax time. What’s more, online balance sheets like QuickBooks Online enable you to pool assets and calculate depreciation in a few clicks.

Forecasts

Forecasts provide accurate projections based on past performance and future events. They are not numbers plucked from the sky: they should set realistic and attainable goals to help shape your business, drive performance and engage investors.

Turnover (totals)

Reconciliations provide a summary of a business’s financial performance after taking into account all assets, liabilities and equity. They can help determine many factors, such as whether the business has capacity to invest in more assets (like staff), and whether the business is ultimately turning a profit or a loss.

The Benefits of an Online Balance Sheet

When it comes to maintaining an up-to-date balance sheet, the secret is in the detail. An ad hoc approach to documenting one’s finances is not going to provide an accurate balance sheet, and could actually disadvantage a business by providing false or misleading data about performance.

Online balance sheets are useful because they enable you to collect and record data with just a few clicks, wherever you are. They can also be shared with other departments to ensure that data reporting is consistent and streamlined across the company.

QuickBooks Online makes it easy to create your balance sheet. It features a pre-installed balance sheet template, which allows you to organise and review your financial data anytime and anywhere.

With a clearly itemised and intuitive online balance sheet, you can get the most out of your business, knowing exactly where you stand.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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