How to Create a Balance Sheet in QuickBooks Online

Cody Cromwell
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What Is a Balance Sheet?

A balance sheet is a financial statement that shows a business’s current assets, current liabilities, and current owner’s equity (stockholder’s equity). Two formulas called the –balance sheet equation” and the –net working capital equation” yield the values that are used to come up with those numbers.

The balance sheet equation is as follows:

  • Assets ” Current Assets + Long-term Assets
  • Owner’s Equity ” Stockholder’s Equity + Long-term Debt + Owner’s Capital
  • Current Liabilities ” Current Liabilities + Long-term Liabilities

The net working capital equation is as follows:

  • Current Assets ” Current Liabilities + Working Capital
  • Working Capital ” Current Assets – Current Liabilities

The balance sheet and net working capital equations show an entrepreneur’s current holdings, and the current assets and current liabilities are recorded liabilities that represent cash and/or assets that are expected to be realized within one year. Given those two formulas, a balance sheet can be created and analyzed to figure out an individual’s current financial position.

Why Is the Balance Sheet Important?

One of the keys to running a successful business is to make sure your’re always in the black. This is easiest through good bookkeeping which can help you better understand your finances and helps you keep track of your expenses so you can see any areas that may need to be improved or adjusted.

The first step in a business’s financial success is keeping detailed, accurate financial records. At the end of the day, that’s what this accounting stuff is all about.

Business owners rely on the goodwill created by their product or service, and their customers look to them in order to make a decision to buy or not to buy. A solid financial statement will help you establish credibility and instill trust in your customers, and keep them coming back for more.

If you’re thinking of starting a business, whether it’s a small neighborhood bar, a bakery, or a dry cleaning business, you simply can’t afford to mangle your bookkeeping. You need a firm financial footing right from the start, and the first step is creating your balance sheet.

The balance sheet is a portrait of your assets, liabilities, net worth, and the equity you have in your company.

Example of the Components of the Balance Sheet

When preparing a balance sheet, QuickBooks Online will automatically list each asset, liability, and equity item on the sheet. The corresponding activity in the liability or equity accounts will then need to be linked with that item. Otherwise, the activity won’t happen when the balance sheet is posted.

The first part of our Balance Sheet is on the left side with the assets. In QuickBooks Online, the asset list is organized by the asset type, and only those assets that have been currently classified can be the source of information for the balance sheet.

To get the asset list for the assets that have been flagged as inactive, use the Assets & Liabilities command. This will open a dialog with the Lists & Reports drop down box. Choose the Accounts & Debits view and then select the posting preferences. Select the check box that says Dispatch journal entries when all adjustments are posted to the balance sheet. For our balance sheet, this will ensure that all inactive balances are shown at the bottom of the balance sheet.

Once the balance sheet is posted, all of the inactive values will automatically adjust to zero and be sold, given away, or charged to other accounts.

Section A: Assets

Section B: Liabilities

Section B of the QuickBooks balance sheet records the value of assets, as well as the debts and liabilities of the business. The assets of a QuickBooks business record lines that are found on the balance sheet for any type of business, including even sole proprietorships. A few of the various types of assets include receivables, inventory, prepaid expenses and property, plant and equipment.

QuickBooks provides a general ledger balance sheet in the chart of accounts when you create a business to record the value of assets (to record the value of inventory of goods, for example).

What you need to know:

In addition to assets, the balance sheet also records the value of liabilities, which are debts owed. QuickBooks can also use the liability section to record the value of the owner’s salary. QuickBooks also accommodates for the liability section to record the owner’s loans. You may also use the liability section to record the business’s cash advance payments.

Lines that are added to the balance sheet include accounts payable, which are simply a credit balance, and notes payable. The notes payable credit balance is for the unpaid accounts payable of the business.

Section C: Equity

If you understand how to create a balance sheet and use an equity account to track your starting equity, the balance sheet is basically ready to go. This means that the other section of the balance sheet, in which you move value from the non-owner investment accounts over to your owner investment account, is the only part of the balance sheet that requires some thought. At the end of this section is a quick summary of how to move each type of account to its owner investment account. Once you’re done with this section, you’re good to go!

But as mentioned above, only if you know how to generate a balance sheet and use an equity account to track your starting equity, you can also use the balance sheet to create financial statements.

For example, after you’ve created your balance sheet, you can go to the statement of cash flow window, click on the grid row for Equity Accounts, and click on the Create Statement button. This will then open your statement of cash flows, which will show your income and expense transactions from your equity accounts and what they did to your equity.

How to Run a Balance Sheet in QuickBooks

If you’re running a business, you’ll want to know the balance sheet of your company. This set of accounts helps you identify your assets, liabilities, and net worth, which can be a critical component to making positive, planned decisions.

However, creating a balance sheet is not as simple as you’d think. The steps are fairly straightforward, but in online accounting, there’s usually a bit of a twist. So to give you a jump-start, we’re providing you with a comprehensive set of instructions to help you create your balance sheet in QuickBooks.

These instructions include:

Step 1: Enter the Ownership Information for Your Company

Step 2: Identify Your Business Type

Step 3: Compile Your Balance sheet

Step 4: Identify Your Liabilities

Step 5: Identify Your Assets

Step 6: Determine Your Net Worth

Step 1: Enter the Ownership Information for your Company

When you start, you’ll need to enter a few pieces of information about your business. If you don’t know your company’s name or tax identification number, then just leave the fields blank.

Create a New Balance Sheet

This step covers how to quickly create a balance sheet from the Business Manager. Business Manager is a feature in QuickBooks Online that lets you perform tasks like importing customer information from Sales Force and updating your inventory. Below is a shortened video clip of the process.

Balance sheet templates include a common balance sheet, a cash flow statement, and a custom balance sheet. To learn how to use a custom balance sheet, check out QuickBooks Online Skills: Balance Sheet (Part 3) on YouTube.

Set Options for the Balance Sheet Report

When you print a Balance Sheet report, QuickBooks prints a summary of your Balance Sheet at the bottom of the report. If you’ve recently started using QuickBooks, you may have received a sample Balance Sheet report from Intuit as part of the QuickBooks Tutorial.

In the sample Balance Sheet report, you can see that QuickBooks printed the names category wise in the report. So when you created the categories, you instructed QuickBooks to print the Balance Sheet report alphabetically, not category wise.

You can change the default report layout in QuickBooks.

After you have added your balance sheet category names, right click on the Balance Sheet report and select Customize report.

Click on the Balance Sheet button in the Customize a report window.

Select the Report layout tab and then click on the Balance Sheet button.

Click on the Balance Sheet button to allow QuickBooks to create a report that prints the balance sheet category wise.

That’s it! Now you can easily print two Balance Sheet reports like the sample report you received from Intuit or your own Balance Sheet report and see the accounts listed alphabetically and the names in bold face.

Customize Your Balance Sheet Further

Creating a balance sheet is a quick and easy process in QuickBooks. But if you’re looking for more control, you can edit your balance sheet and customize it further:

The only two elements on a balance sheet you can edit and customize are the income statement and the balance sheet. By rearranging the dates or repeating a field, you can create your own balance sheet template.

You can also customize other areas of your QuickBooks accounting records as well, such as your profit and loss statement, balance sheet, purchase orders, and invoices. To customize an accounting record, select the cell in the accounting grid where you’d like to customize it. Then, click Edit in the toolbar. If no accounting field is selected, the Edit menu will display all of the fields that you can customize.

You can also move the date a particular accounting record. To do this, first click the cell in the accounting grid where you’d like to move the date. Then, click Edit in the toolbar. In the window that appears, you’ll find the date fields that can be moved. Click the arrow to move the date from the original date format to the new date format.

To save a custom template for any QuickBooks accounting record, select the cell in the accounting grid where you’d like to save your new template.

Print or Email Your Balance Sheet

Since you can’t print a balance sheet from online, and if you don’t want to rely on your QuickBooks balance sheet feature, there’s only one option: Printing a QuickBooks balance sheet.

Once you have downloaded your QuickBooks balance sheet to your computer, go to the Print tab on the ribbon and choose Balance Sheet.

The Print balance sheet window also allows you to print a company-wide balance sheet.

TIP: You can also click and view your entire balance sheet with key financial metrics in one page for a better understanding of your business’s overall financial standing.

Printing your balance sheet allows you to keep your balance sheet on your desk and quickly get an idea on how your company’s finances are looking. You can also e-mail a QuickBooks balance sheet to your accountant directly, to reduce the need to send written reports.

Wrap Up

By collecting all your income and expense data in one central place, you can keep track of your business finances and make the necessary adjustments to help fine tune your business. This process is known as the balance sheet, and QuickBooks Online has an easy to use balance sheet creator that allows you to start creating it right away.

QuickBooks Online Balance Sheets and Profit & Loss Statements

If you’re doing all your bookkeeping in the cloud, it makes sense to create your balance sheets and profit and loss statements online as well. In QuickBooks Online, you can create balance sheets and profit & loss statements in a number of different ways.

You can set up multiple income and expense accounts and use one of the pre-built balance sheet or profit & loss statements as a starting point. Or you can create your own balance sheets and profit & loss statements by using a Trial Balance as a baseline and then adding the expenses and income you’ve processed.

Whatever option you choose, you’ll be able to view your balance sheet and profit & loss statement on a weekly, monthly or yearly basis.

To create your balance sheet and profit & loss statement in QuickBooks Online, you’ll need to have a financial year set up. First, open the Year View window then open the All tab and click the Financial Year button. Update the Start date and Finish date and then click OK.