The Benefits of a Balance Statement for Small Businesses

There are many different ways to track and report on a business or organization's financial status. For small businesses, determining the best way to track financial data and extract accurate information for administration purposes can be challenging. One of the best ways to get a good overall "snapshot" of how the business is doing at any given time is to use a Balance Statement or a Balance Sheet. This can be done by an accountant or bookkeeper, and there are many benefits to using the Balance Statement as part of your financial tracking.

The Balance Statement provides a one-page synopsis of the Assets and Liabilities. While this document may not make it possible for you to see all the cash flow, deposits and expenses in detail, it does give you an idea of how much you have in all the bank accounts, how much your assets are worth and what current liabilities you have including accounts payable, taxes, etc.

A Balance Statement also gives you a way to track any fixed assets you have, such as property ownership, building improvement projects, equipment and furnishings, etc. This information does not show up on an ordinary cash flow or account statement. Additionally, you can track equity and other investment information on the Balance Statement in order to have a good, basic overall picture of the financial situation of the business.

Keep in mind that a Balance Statement is only as useful as the information put into it, and only as accurate as the information as well. This means that in order to keep the Balance Statement honest and accurate, it needs to be updated. Account balances need to be checked and updated and information on liabilities, depreciation, assets, etc, needs to be updated periodically as well. Of course, this means taking the time to find out how the assets are depreciating or getting property periodically assessed for an accurate value.

Your accountant or bookkeeper should be able to provide you with a basic Balance Statement/Sheet template or you can find one online and adapt it to your business needs. It is possible to make the document unique to your small business but make sure to include the necessary information to make it fully functional and useful. The Balance Statement can be a good tool to use for investors, bank loans and annual reporting to show the overall fiscal health of the business.