A balance sheet is a financial statement that provides a snapshot of your business at a given point in time. It is a summary of what your business owns or is owed – assets – and what it owes – liabilities – at a particular date.
There are three ways you can use a balance sheet:
Self-employed people, partners and partnerships are not required to submit formal accounts and balance sheets on their tax return. However, the returns do require the relevant financial details to be entered in a set format, so you may find it beneficial to prepare the figures in a balance sheet format.
Other key benefits of producing a balance sheet:
The balance sheet is most useful when it examined alongside profit and loss figures, as it provides the complete picture of your business. Using a balance sheet can help you to look at your business from a different perspective.