How to Make a Balance Sheet for a Small Business

October 31, 2026

Balance Sheet Template Excel template
Balance Sheet Template Excel templateBalance Sheet Template

A balance sheet is a snapshot of your business on one date: what it owns, what it owes and what’s left for the owners. Banks ask for it, investors read it, and it tells you more about the health of a business than the bank balance does.

The equation

Assets = Liabilities + Equity

Everything the business owns was paid for either with borrowed money (liabilities) or the owners’ money and accumulated profits (equity). That’s why it always balances.

Assets

  • Current assets (turn into cash within a year): cash, accounts receivable, inventory, prepaid expenses.
  • Fixed assets: equipment, vehicles, buildings — minus accumulated depreciation.
  • Intangible assets: software, trademarks, patents.

Liabilities

  • Current liabilities (due within a year): accounts payable, short-term loans, accrued expenses, taxes payable.
  • Long-term liabilities: loans and leases due after a year.

Equity

  • Owner’s capital: money put into the business.
  • Retained earnings: accumulated profits kept in the business (minus losses and owner draws).

Step by step

  1. Pick the date (usually the last day of the year or quarter).
  2. List bank balances, what customers owe you, inventory value and prepaid items.
  3. List equipment at cost and the depreciation accumulated so far.
  4. List what you owe: supplier bills, loan balances, taxes, credit cards.
  5. Add capital and retained earnings.
  6. Check that total assets = total liabilities + equity. If not, something is missing.

Ratios that matter

  • Working capital = current assets − current liabilities (money to run day-to-day operations).
  • Current ratio = current assets ÷ current liabilities. Above 1.5 is usually comfortable.
  • Quick ratio = (current assets − inventory) ÷ current liabilities. Excludes inventory, which may be slow to sell.
  • Debt to equity = total liabilities ÷ equity. Lower means less reliance on borrowing.
  • Debt ratio = total liabilities ÷ total assets.

Healthy levels vary by industry; the trend from one year to the next is often more telling.

Compare two periods

Putting this year next to last year, with the % change per line, shows whether you are building cash, collecting faster, carrying more inventory or taking on debt.

Template

The Balance Sheet Template has the standard structure for two years, % change, an automatic balance check, five key ratios and a chart. To build the numbers through the year, keep your transactions in Small Business Bookkeeping.

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