Starting a new business? Get 40% off our accountancy services for 3 months! 😀


Our Accounting FAQs series covers important accountancy terms to help you understand what everything means. This time we’re covering what balance sheets are, why you need them, and what you’ll need to include on one.

What is a balance sheet?

A balance sheet is an important financial statement which shows a business’ assets, liabilities and shareholder equity. It provides a snapshot of exactly what the company owns and owes and shows the company’s financial position at the end of a specific date. You might also hear it referred to as a Statement of Financial Position.

It’s one of the four basic financial statements you’ll need to think about which includes:

These financial statements together provide a full picture of your company’s financial position and performance.

Why do you need a balance sheet?

Knowing exactly what assets and liabilities your business has is important for a number of reasons.

If you are looking for a business loan or investment, they will want to see a balance sheet to check the company’s financial position. The information on a balance sheet can help a creditor or investor determine risk, and make an informed decision on whether to grant finance.

 Startup business accountancy services

What should a balance sheet include?

There are three main components of a balance sheet – assets, liabilities and equity.

What are assets?

An asset is something the company owns. Examples of assets include cash, temporary investments, accounts receivable, stock, supplies, equipment or land.

They’re split into current and long-term assets.

What are liabilities?

Liabilities are the obligations of your business. This could be money you owe to creditors or suppliers. Liabilities include things like accounts payable, loans, salaries, interest, and taxes. These will typically be split into either current or long-term liabilities.

What is shareholder equity?

Shareholder equity is the value of the assets that are left once you subtract all of the liabilities.

Drawing up a balance sheet

You can use accountancy software such as our very own Pandle. Your accountant can help too, whilst also monitoring the overall health of your finances.

Our friendly team at The Accountancy Partnership provide online accountant services. Get an instant quote, or call for a chat on 020 3355 4047.

About The Author

Christopher Jones

Forensics graduate-turned copywriter and blogger. I love turning complex topics into easy to understand, yet engaging pieces of content.

More posts by this author
Inline Feedbacks
View all comments

Read more posts...

Umbrella Companies for Self-Employed Contractors

When you set up in business as a contractor you might either work as a sole trader or as a limited company….

Read More

Get Ready for Small Business Saturday UK 2022

Small Business Saturday started in the US in 2010, on the first Saturday following Thanksgiving. It aims to encourage shoppers to consider…

Read More

Architects and Tax

Architecture is a highly diverse sector when it comes to tax. It’s partly down to the type of businesses that carry out…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.


You only need this service if you want us to complete the bookkeeping on your behalf.

Would you prefer to complete your own bookkeeping?


Call us on 020 3355 4047 if you’re not sure.