Free balance sheet template

A balance sheet is a financial document that gives you a snapshot of your business’s assets, liabilities, and owner’s equity at a moment in time. The balance sheet’s purpose is to show whether a business can cover its debts or whether it has gained or lost value over time. When used with other financial statements (like the profit and loss statement, and cash flow statement) it’s a great way to judge a business’s financial health and an excellent input into your business decisions.

The balance sheet formula is assets = liabilities + owner’s equity. True to its name, a balance sheet should balance – the final figure (assets) should equal the sum of the business’s liabilities (what it owes) plus the owner’s equity. If there are discrepancies, your data might be incorrect or missing.

A balance sheet is usually made up of three main components: assets, liabilities, and owner’s equity. Assets are what the business owns. The balance sheet typically lists them in order of liquidity – that is, how easily they’re converted into cash. Liabilities are what the business owes, and are usually ordered by the date due to be paid. Owner’s equity is the capital invested by the owner into the business, plus any retained earnings (profits you haven’t distributed as dividends). It’s the value remaining in the business after you’ve subtracted your liabilities from your assets.

Before you start filling in the template, make sure you have accurate figures for the three key components of a balance sheet: assets (what your business owns, like cash or equipment), liabilities (what the business owes, such as debts or expenses), and owners equity (retained earnings, if any). The balance sheet is only as accurate as your data, so use reliable sources like your business’s bank statements, loan agreements, and asset valuations. Ask your accountant for help if you need to.

Begin by listing all business assets. The template lists your assets in order of liquidity, with cash – always the most liquid asset – at the top. Separate your assets into two categories according to the template: current assets and non-current assets. Current assets are those you expect to convert into cash within a year, such as shares. Non-current assets are long-term holdings, like property.

Next, record all liabilities in the template – these are your business’s financial obligations. Like assets, liabilities fall into two categories: current liabilities, which are due within a year, and non-current liabilities, which cover long-term debts or obligations.

Owner’s equity is the money remaining in the business after liabilities are subtracted from assets. For sole traders, this includes any capital you've invested, plus profits retained in the business, minus drawings – money you've taken out for personal use. For businesses, equity typically consists of shareholders’ capital and retained earnings – profits that haven’t been distributed as dividends. To calculate equity, use the formula: total assets – total liabilities = owner’s equity.

Finally, review all entries and calculations to ensure they’re accurate. If you’ve done this right, your balance sheet will reflect the correct totals between assets, liabilities, and equity. Regular balance sheet reconciliation keeps your financial records up to date. Make sure totals align, and update your balance sheet periodically – or whenever there’s a major change in your financial situation.

Incomplete records can cause imbalances. Regular balance sheet reconciliation ensures everything consistently adds up.

Incorrectly categorising an item distorts your balance. Learn what goes where to keep everything accurate.