What is a Balance Sheet, and where can you find it in FreeAgent?
A Balance Sheet shows everything that your business owns, its assets, and everything that it owes, its liabilities, as at a given moment in time.
Here's what it might look like.
Assets
Assets might be large items such as the business's machinery, computers, and cars. These are sometimes called fixed assets, or capital assets.
Assets also includes money the business holds in its bank and cash accounts, money tied up in stock that it owns, and money owed to the business, perhaps by customers who haven't yet paid their invoices. These assets are called current assets. Money owed by customers who haven't yet paid is also known as accounts receivable, or trade debtors.
Liabilities
Liabilities are divided into long-term and short-term liabilities. Short-term liabilities are money that the business will have to pay out soon, such as money owed to staff, or to HM Revenue as VAT or PAYE. Another short-term liability is money that the business owes to its suppliers for unpaid bills. This is also known as accounts payable, or trade creditors.
Long-term liabilities will usually fall due for payment in more than a year's time. This might include part of some bank loans, or hire purchase deals.
Capital
The Balance Sheet also shows the amount of capital that the owners have put into the business.
If your business is a sole trade or partnership, this will be represented by actual money invested.
For limited companies, capital is represented by purchased shares. Companies also show on the balance sheet reserves of profit that has been made in previous years.
Why "Balance" Sheet?
Because of the way double entry bookkeeping works, the Balance Sheet should always balance.
FreeAgent will handle all the double entry bookkeeping of the transactions you enter during the year, such as posting of bills, invoices, bank receipts and payments, so that your Balance Sheet should always balance.
Where can I find my business's Balance Sheet in FreeAgent?
To look at your business's Balance Sheet, from the Accounting menu, choose Reports, then Balance Sheet.
You can filter the Balance Sheet by date using the drop-down menu at the top left. A Balance Sheet is always shown as at a given date, because it shows the balances of what the business owns and owes at that date. The Opening Balance view is useful when you are making sure you have put in all your opening balances correctly.
You can check the figures for the year so far, or look at the full year, which is useful if you want to see what the Balance Sheet might look like including liabilities for the whole year, such as payroll costs.
What's in these totals on the Balance Sheet?
If you want to see what makes up any of the figures on the Balance Sheet, simply click on it...
...to drill down and look at the transactions that figure includes.
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