How to Prepare a Company's Balance Sheet in 4 Easy Steps
The balance sheet is a summary of the company's assets at a given moment. Among other things, it makes it possible to evaluate the company in question, to determine its solvency and to carry out various internal analyzes. This is why the preparation of the balance sheet, must appear in the interests of the leaders and associates. What are the 4 steps to build your balance sheet?
THE 4 STEPS TO ESTABLISH THE BALANCE SHEET
For simplicity, four steps are necessary to draw up the balance sheet: the choice of an accounting software, the entry of the accounting entries, the revision of the accounts and finally the publication of the balance sheet.
1. CHOOSE AN ACCOUNTING SOFTWARE THAT IS APPROPRIATE FOR THE ACTIVITY AND SIZE OF YOUR BUSINESS.
2. ENTER THE ACCOUNTING ENTRIES
Sale Entries
The entry is made at the same frequency as the establishment of sales invoices.
Provide more details in the writing label (invoice number, customer name ...).
Use detailed customer accounts.
Purchase Writes
The entry is made at the same frequency as the receipt of purchase invoices.
Provide more details in the writing label (invoice number, supplier name ...).
Use detailed customer accounts.
Payroll Entries
The seizure is done monthly for the wages and quarterly for the social charges.
Provide more details in the writing of social charges (number and date of the bill ...).
VAT Return Entries
The seizure is done according to the same periodicity of the declarations (annual, quarterly or monthly according to the adopted VAT regime).
Loan Entries
Maturities are entered at the same frequency as their appearance on the bank statement.
Provide more details in the writing text (loan reference, maturity period ...).
Depreciation Writes
Depreciation is entered at the end of the year.
Before entering, the depreciation method must be defined and calculated.
Stock Entries
A physical inventory (raw materials, goods, finished products ...) on a date defined as the closing date, is necessary to quantify the stock.
The seizure of stocks is done at the end of the year.
Supply Writes
We must distinguish between provisions for trade receivables and provisions for risks.
The seizure is done in two stages: the identification of the risk and the moment of the observation of the loss.
3. REVISION OF THE ACCOUNTS
Is done at least once a year (at the time of closing) by checking balances of all accounts.
4. EDITION OF THE REPORT
Automatically done by the accounting software. That said, the intervention of an accountant is essential for the edition of the appendix (document containing all the information necessary for understanding the balance sheet).