Sample Balance Sheet and Income Statement for Small Business

To create a balance sheet format in Excel for the proprietorship business, we will show step-by-step procedures. Here, we discuss how to create assets sheet, liability, and shareholder’s equity sheet individually. If the total assets are equal to the combination of liability and shareholder’s equity, then our balance sheet for proprietorship will be completed.

Let’s create the statement of owner’s equity for Cheesy Chuck’s for the month of June. Since Cheesy Chuck’s is a brand-new business, there is no beginning balance of Owner’s Equity. The first items to account for are the increases in value/equity, which are investments by owners and net income.

Resources for Your Growing Business

Every time a company records a sale or an expense for bookkeeping purposes, both the balance sheet and the income statement are affected by the transaction. The balance sheet and the income statement are two of the three major financial statements that small businesses prepare to report on their financial performance, along with the cash flow statement. Another way to think of the connection between the income statement and balance sheet (which is aided by the statement of owner’s equity) is by using a sports analogy.

The default value may need to be changed after customizing the financial statements and determining the total number of pages which will be printed. The currency symbol is included below the year headings on the financial statements. The year-end month is used to determine the appropriate year-end date and previous year-end date which are included in a number of notes to the financial statements. It may also be known as shareholder’s equity or stockholder’s equity if the business is structured as an LLC or a corporation. One of the most important (and underrated) lines in your financial statements is owner’s equity. We have shown step-by-step procedures to create a balance sheet format in Excel for the proprietorship business.

  • The purchases of equipment amounts are calculated by deducting the new finance leases amounts from the additions to property, plant & equipment.
  • If it is a new reporting class, you need to add it to the appropriate location on the AFS sheet but if it is not a new class, it indicates that you may have deleted the row which included the reporting class code.
  • You then also need to add the new item to the note in the financial statements by inserting a new row below the last default item, copying one of the existing items and entering the new class code in column A on the AFS sheet.
  • All of these amounts do not represent actual cash flow movements and are therefore added back in the operating cash flow calculation.
  • In reality, businesses must invest cash to prepare the store, train employees, and obtain the equipment and inventory necessary to open.

The note also contains a line for bank accounts which are in overdraft and linked to the bank overdraft reporting class. The bank overdraft line is included in current liabilities on the balance sheet. Each account in the trial balance needs to be linked to one of the pre-defined reporting classes on the Classes sheet by entering or copying the appropriate class code into column B.

Step 7: Calculate Shareholder’s Equity

Most of the amounts which are included on the balance sheet are calculated in the notes to the financial statements. The only exceptions are the interest payable and the provision for taxation lines which are all calculated on the balance sheet based on the reporting codes included in column A. The last section on the FinInfo sheet basically includes all other non-trial balance related disclosures which need to be included in the financial statements. Refer to the matching reporting classes in column A on the AFS sheet to see where these items are included on the financial statements. The values on the FinInfo sheet will have no bearing on whether the financial statements balance or not – this aspect of the financial statements is entirely determined by the account balances which are included on the TB sheet. We have included control totals next to the financial statements in the profit or loss line.

Balance Sheet Format in Excel for Proprietorship Business

The exception to this rule is the owner’s equity lines which we’ve added to this sheet. We’ve designed the owner’s equity calculations which are included in the statement of changes in equity to calculate the annual movement in the additional capital and drawings lines to work off cumulative balances in the appropriate account groups. This means that the previous year’s closing balance is deducted from the current year’s closing balance to calculate the movement for the year. The items included in this section are typically included in one account on the trial balance but are required to be separated into multiple line items for financial statement purposes.

We have all of the ingredients (elements of the financial statements) ready, so let’s now return to the financial statements themselves. Let’s use as an example a fictitious company named Cheesy Chuck’s Classic Corn. This company is a small retail store that makes and sells a variety of gourmet popcorn treats.

The equity section can be the most difficult section to understand on the balance sheet. Hopefully, the explanation above will provide a bit more clarity so you can better understand how to read your business’s financial statements. The above equation means that at any point in time, a business’s assets should be equal to its liabilities and equity. The tax reporting for a sole proprietorship flows through the owner’s personal tax return, with a separate form used to itemize the major classes of revenues and expenses incurred by the business. There is no separate tax return for the business, since there is no separate business entity.

Sole Proprietorship Balance Sheet Equity

When compiling financial statements for a new business, you only need to include the account balances of the current financial reporting period on the TB sheet. All the amounts for the comparative financial year on the financial statements will be nil. The Error Status column checks whether all reporting class codes which have been linked to accounts on the TB sheet are included on the AFS sheet.

Second, we are ignoring the timing of certain cash flows such as hiring, purchases, and other startup costs. In reality, businesses must invest cash to prepare the store, train employees, and obtain the equipment and inventory necessary to open. In the example to follow, for instance, we use Lease payments of $24,000, which represents lease payments for the building ($20,000) and equipment ($4,000). In practice, when companies lease items, the accountants must determine, based on accounting rules, whether or not the business “owns” the item.

Types of Business Investors

The reporting year determines which annual period is used as the current reporting period in the financial statements. The comparative year is also determined based on the input in this cell and all the values included on the TB sheet and the FinInfo sheet are included in the automated financial statement calculations based on the year entered in this cell. After preparing the assets balance sheet, our next step is mainly based on the estimation of current liabilities of your company’s balance sheet.

If the total of all the account balances in a trial balance does not equal nil, it means that the financial statements will not be accurate and that the balance sheet will not balance. You should therefore always ensure that the trial balance for each annual period adds up to a nil value. After clearing all the class codes from column B, you need to refer to the Classes sheet in order to determine which accounts need to be linked to which financial statement reporting classes. Note that you do not need to use all the default classes if they are not required but it is imperative that each account is linked to a class. After completing the linking exercise, there should therefore be no blank values in column B. If your accountant generates periodic financial statements for your business, you may have noticed equity accounts on the balance sheet or seen a statement of equity.


If you want to add a tax calculation to these financial statements, we recommend adding it to the table of contents and adjusting your page numbering accordingly. We also recommend adding the tax calculation after the last note so that it forms part of the financial statements when printed or converted to a PDF document. This note consists of three items for raw materials, work in progress and finished goods. This note includes two revenue lines by default but you can add additional lines if required. It is mostly the notes section of the financial statements which will be affected because all the pages before this section fit onto a single page and should therefore not be affected by any of your changes.

Item descriptions are also populated based on the descriptions entered for the appropriate classes on this sheet. The first page which forms part of the financial statements is the cover page which is included at the top of the AFS sheet. The what are indirect materials definition and examples business name is specified on the Setup sheet and the registration number is included in the general information section of the financial statements. The cover page also includes a logo placeholder which can be replaced with your logo.

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