Balance sheets: the basics

Limited companies and limited liability partnerships must produce a balance sheet as part of their annual accounts for submission to Companies House, HM Revenue & Customs and shareholders.

A balance sheet must include:

• fixed assets - long-term possessions
• current assets - short-term possessions
• current liabilities - what the business owes and must repay in the short term
• long-term liabilities - including owner's or shareholders' capital

A balance sheet can also be used as a tool to help you analyse and improve the management of your business. For example, you can look at:

• internal and external comparisons
• trade debtors comparisons
• borrowing as a percentage of overall financing