The balance sheet is a snapshot: what you own, what you owe, and the difference, on one date.
Three parts
- Assets: cash in the bank, money customers owe you, equipment.
- Liabilities: credit card balances, loans, taxes owed.
- Equity: assets minus liabilities. What you have put in, plus profits, minus what you have taken out.
Why it matters
- It is how you know your books are reconciled: the cash line must equal the bank statement.
- Loans, equipment and owner draws only appear here. Without it you cannot tell profit from cash.
- Lenders ask for it.
Opening balances
A balance sheet needs a starting point. On the Full Books plan, ProfitBooks sets opening balances from your first statements, reconciles every account monthly, and records equipment, loans and equity as journal entries so the sheet balances from day one.