This is a freeview 'At a glance' guide to unincorporated businesses and preparing a balance sheet.

A balance sheet can be a useful report for all but the smallest of businesses. It provides a snapshot of the state of the business at its year-end. As part of the double-entry bookkeeping system, a balance sheet also provides evidence that the accounts balance, or that they have been made to balance.

A balance sheet also:

There is no legal requirement for an unincorporated business to prepare a balance sheet for tax or any other reason. It may also not be cost-effective to prepare one for a very small business. Conversely, some business owners will never understand the point of a balance sheet: many non-accountants struggle to read any meaning from one.

To decide whether to prepare a balance sheet consider:

If the business has fixed assets, debtors and creditors, a separate bank account or a cash control account, it is generally easier to create a balance sheet to reconcile and keep track of opening and closing balances.

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