As a business owner, you are entitled to checking on the financial status of your company, aside from overseeing its day-to-day operations. Various tools enable you to conduct such financial checkups, however, nothing is simpler and more effective than a handy monthly balance sheet.
A monthly balance sheet is a business document that shows the company’s assets, liabilities, and equity up to the current month following a standardized format. It helps business owners check on their spending, especially in the aspect of gaining profit and getting in debts as investments. Although a monthly balance sheet has indeed a form to follow, there exists a lot of customization options. Browse through this article to see the widest variety of these monthly balance sheet templates and format.
1. Company Name: Your company name is important to be indicated in your balance sheet to give a sense of identification for your document. Auditors who will pore over your financial statements will also be able to verify that the monthly balance sheet they are checking is indeed from your company organization.
2. Time Period: A balance sheet is made to show a company’s assets, liabilities, and equity on a certain point over a period of time. In the case of a monthly balance sheet, you will be displaying your company’s financial position covered over a month.
3. Assets: The assets in your monthly balance sheet represent all of the goods and resources that your company owns. Common forms of assets are cash, stocks, bonds, supplies, inventory, and prepaid expenses. The sum of your company’s assets should be equal with your company’s liabilities and owner’s equity.
4. Liabilities: The liabilities in your monthly balance sheet accounts for all of the debts incurred up until the current month. They can be short-term debts and long-term debts as long as they are due for pay from your company. Liabilities can be accounts payable, mortgages, and pension plan obligations.
5. Equity: The owner’s equity in your balance sheet represents the money invested to the company, from the owner’s money put in to the investors funding support. The sum of the equity and liabilities should be equal with the company’s assets.
1. Header: Using your favorite spreadsheet program, create a new file for your monthly balance sheet. Before delving into the numbers of your company, set up the header first at the topmost section of your document. Your header is composed of a label “Balance Sheet”, the name of your company or organization, and the effective month of the balance sheet.
2. Assets: There are two kinds of assets that you will be listing down in this part: current assets and non-current assets. Your current assets refer to the assets that can be converted to cash within a year. List them down according to how easily they can be converted into cash and determine their subtotal. Your non-current assets are long-term assets that can be used for more than a year. It can be a company’s property, equipment, or intangible goods. Also, list these things down and find out their subtotal. Add up the total amount of your assets and label this sum with “Total Assets.”
3. Liabilities: Just like assets, your liabilities also come in two kinds: current liabilities and fixed liabilities. Your current liabilities are those debts that are due within one year while your fixed liabilities are those debts that take more than a year to be settled. List down all your liabilities for each type, and come up with their sub-totals. Add these sub-totals together and you will have you “Total Liabilities.”
4. Equity: This section is shorter compared to the preceding two. The equity of your monthly balance sheet is the total capital expenditure of the company. This means that you have to add up the money the owner put in plus the total funding that the investors pooled in. Add this amount to your total liabilities and label their sum as “Total Liabilities and Equity.” This sum should be equal to your total assets. Should the otherwise happens, then go over your books and check if you have something missed out.
Monthly balance sheets can come in various formats, and different factors affect to how things are being listed down, such as the size of the business, the type of industry that the company belongs, and the number of items that need to be accounted for. However, there exist four common formats that accountants often use when creating a monthly balance sheet, and these are the following:
Intangible goods are non-monetary assets with no physical substance but can still yield the company income. Some examples of these intangible goods are patents, copyrights, and trademarks.
Your profit is the amount you gained after investing some money. To get this amount, get the sum of all of your costs, then subtract the total money you have.
Deferred revenue refers to money allocated for the next month or next fiscal year’s spending. It is common for non-profit budgets to have deferred revenues in the forms of grants and sponsorship that are received early, unspent portion of a multi-year grant, or subscription sales of the next charity season.
A lot of startup businesses lose control over their spending because they have lost their grip on their financial position. However, if you develop the habit of reading over your monthly balance sheet, you will have one less thing to worry about and keep your two feet standing on the ground, despite the potential shakeups that you might encounter in your business venture.