A balance sheet includes the financial statements of a business. Balance sheets indicate what your business owns and the amount of money that’s been invested by its owners – it can be difficult to understand how balance sheets work, which is why LJS Accounting is here to help and give expert advice.
Understanding your business’s financial position is essential, not only does it give you information about what you’ve spent, but it also allows you to stay updated with expenses. A balance sheet is made up of specific components, mainly consisting of fixed assets and total liabilities. To find out more about what a balance sheet is and how LJS Accounting Services can help your business, continue reading.
Put simply, a balance sheet refers to a financial statement or report of your business’s money-related affairs at a certain time, including total assets, payments, shareholder equity and liabilities. Other various financial statements can be found on a balance sheet, helping evaluate the capital structure of a company.
Balance sheets are great for when you need to see your current expenses and financial reports. There are three main financial statements that are used to help evaluate a business, and a balance sheet is one of them. Knowing what’s due to be owed and what you already own is essential in the world of finance.
Fundamental analysts take advantage of balance sheets when it comes to calculating financial ratios. When people are interested in working with your company, they like to have the necessary resources to be able to see your financial position. Balance sheet assets can be given to potential shareholders to show them where you’re at financially before negotiation.
Why are Balance Sheets Important?
A balance sheet is a financial document, showing essential information. Knowing your company’s financial standing is crucial, but many struggle to stay on top of finances because of other time-consuming aspects of their work life – this is why LJS Accounting Services do what they do.
Whether you’re a small business or a private limited company, it’s important to have a balance sheet. Many businesses struggle to notice that they’re in danger financially before it’s too late, this is why we encourage organisations to reach out to our professional team for help when they’re struggling to stay on top of their financial affairs.
If you’re not examining your balance sheet regularly, potential issues could go unmissed. Your business could be faced with trouble in the long run if your assets-to-liability ratio is less than one 1:1, with the added stress of knowing you could possibly go bankrupt.
Making some moves in your business strategy and aiming to improve the financial health of your business is a necessity if you’re not keeping up-to-date and reporting on your balance sheet. Our team of expert advisers have all the right knowledge and experience to keep your business afloat, especially in times of crisis.
Preparing Balance Sheets
Deciding who takes leadership of your balance sheet is up to business owners, but we encourage businesses to leave financial matters to the professionals, such as LJS Accounting Services. Having a reliable, hard-working bookkeeper prepare your balance sheet is something that many businesses benefit massively from.
Balance sheets need to be updated regularly, usually by a certain date – this is something that doesn’t happen in the workplace when other workloads take over. Accidentally providing the wrong information or using discrepancies could flag your balance sheet as suspicious during an audit check and lead to long-term debt.
How LJS Accounting Services Can Help
It can be tedious knowing where your business is going in terms of finance – we provide excellent services to our loyal customers at LJS Accounting Services to make sure businesses can stay on top of their workload whilst not having to worry about keeping their documents, such as balance sheets updated.
If you need assistance with the accompanying narrative to help produce a business plan, you might want to consider taking advantage of our Forecasts and Projections services. General bookkeeping and financial accounting duties can be dealt with by our team for those who choose to work alongside us.
We assist our clients to create a sustainable business strategy from the start, making sure they have everything set in place in other areas of their business before we take care of their balance sheet. Making sure you track your sales, stock and cash transfers is key – this is something our team can take off your hands if you’re doing it yourself.