Balance Sheet Example + Free Template for Small Business

If the income statement tells you whether a business is profitable, the balance sheet tells you whether it's healthy. It's a snapshot of everything the business owns and owes on a given day, and it's one of the first things a lender or investor will ask for. This guide explains what a balance sheet includes, walks through a full worked example, and points you to a free template.

What is a balance sheet?

A balance sheet is a financial statement that shows a business's assets, liabilities and equity at a specific point in time — usually the end of a month, quarter or year. It's also called a statement of financial position.

Unlike an income statement, which covers a span of time, the balance sheet is a snapshot on a single date. It answers two questions at once: what does the business own, and who has a claim on it — creditors or the owners?

What does a balance sheet include?

A balance sheet has three sections:

• Assets — what the business owns. Split into current assets (cash, accounts receivable, inventory — things usable within a year) and non-current assets (equipment, vehicles, property — longer-term).
• Liabilities — what the business owes. Split into current liabilities (accounts payable, short-term loans — due within a year) and non-current liabilities (long-term loans and mortgages).
• Equity — what's left for the owners once liabilities are subtracted from assets. Includes owner's capital and retained earnings (accumulated profits kept in the business).

Balance sheet example

Here's a worked example for a small business, Acme Co., as at 31 December 2026:

Item	Amount (USD)
ASSETS
Cash	$40,000
Accounts receivable	$25,000
Inventory	$35,000
Equipment	$60,000
Vehicles	$30,000
Total assets	$190,000
LIABILITIES
Accounts payable	$20,000
Short-term loan	$15,000
Long-term loan	$54,000
Total liabilities	$89,000
EQUITY
Owner's capital	$60,000
Retained earnings	$41,000
Total liabilities + equity	$190,000

Notice that total assets ($190,000) equal total liabilities plus equity ($190,000) — the sheet balances. The $41,000 of retained earnings is the profit the business kept; in fact it's the exact net income from our income statement example, showing how the two statements link together.

Why a balance sheet must balance

Every balance sheet obeys one rule, the accounting equation:

The logic is simple: everything a business owns was paid for either by borrowing (liabilities) or by the owners' money (equity). So the value of the assets must always equal the two sources of funding behind them. If your balance sheet doesn't balance, something has been recorded incorrectly — which is exactly why it's such a useful check on your bookkeeping.

Balance sheet vs income statement

These two statements work together but answer different questions:

	Balance sheet	Income statement
Shows	Position at a point in time	Profit over a period
Answers	What do we own and owe?	Are we profitable?
Key figure	Assets = liabilities + equity	Net income

You need both to understand a business. Profit from the income statement feeds into retained earnings on the balance sheet, which is how a profitable year strengthens the company's financial position.

Free balance sheet template

You don't need to build one from scratch. Our simple small business bookkeeping template includes a ready-made balance sheet that totals your assets, liabilities and equity automatically — so you can see instantly whether it balances. It works in both Excel and Google Sheets.

You'll find it alongside income statement, budgeting and cash-flow tools in our spreadsheet templates collection. And if you'd rather not touch a spreadsheet at all, we can keep your books and prepare your statements for you.

Frequently asked questions

Related: our income statement example and bookkeeping spreadsheet templates, including the small business bookkeeping template. For US recordkeeping rules, see the IRS recordkeeping guidance.