How to Create Balance Sheets in QuickBooks Online
- Benchmark Ledger Solutions
- Feb 10
- 9 min read
Understanding your business's financial position is fundamental to making sound decisions, and the balance sheet provides the clearest picture of where your business stands. A balance sheet is a financial statement that shows the financial position of a company at a specific point in time. Unlike the profit and loss statement that tracks performance over a period, the balance sheet answers a more immediate question: what do I own, what do I owe, and what's left over for me?
QuickBooks Online simplifies the process of generating this essential report, but understanding how to create, customize, and interpret your balance sheet ensures you extract maximum value from this powerful financial tool.
What the Balance Sheet Represents
The balance sheet operates on a fundamental accounting equation that must always hold true: Assets equal Liabilities plus Equity. A balance sheet shows what your business owns, what it owes, and what's left over. This equation provides the framework for understanding your entire financial position.
Assets represent everything your business owns or is owed by others. This includes cash in bank accounts, money customers owe you through accounts receivable, inventory waiting to be sold, equipment you use in operations, and any other resources under your control. Current assets includes bank accounts, savings accounts, accounts receivable, and other assets that can be converted into cash within 12 months. Fixed assets include longer term items like vehicles, equipment, and buildings that depreciate over time.
Liabilities show what your business owes to others. Accounts payable tracks bills from vendors you haven't paid yet, credit cards capture outstanding balances, loans represent money borrowed that must be repaid, and various accrued expenses reflect obligations you've incurred but haven't yet satisfied.
Equity reflects the residual value belonging to business owners after subtracting all liabilities from all assets. The total for equity includes your company's net income for the financial year to date. This means your current year profit automatically flows into equity, showing how owner value has changed during the year.
Accessing Your Balance Sheet Report
To create a new balance sheet in QuickBooks, choose Reports in the left menu bar and then click on Balance Sheet under Business overview. QuickBooks generates the report automatically based on all the transactions you've recorded in your system.
Before proceeding, verify which user view you're working in. QuickBooks has two user views: Business View and Accountant View, and your left side navigation menu may look different depending on the user view you are in. The Accountant View provides access to the full range of accounting features and makes reports easier to locate.
To check your current view, click the cogwheel icon at the top right corner of your QuickBooks dashboard. If you see a button that says Switch to Accountant View, you're currently in Business View. Click this button to switch, and within seconds your left sidebar menu will display the complete accounting navigation that makes accessing reports more intuitive.
Setting Basic Report Parameters
Once you access the balance sheet, you'll see several fields at the top of the screen that control what the report displays. Set the report period by choosing the period for which you're preparing financial statements, either selecting a predefined period from the dropdown or entering start and end dates for a custom period.
For balance sheets, you typically select a single date rather than a date range. The balance sheet shows your financial position as of that specific moment in time. Common dates to run balance sheets include month end, quarter end, or year end, though you can generate a balance sheet for any date you need.
The accounting method selection significantly impacts what appears on your balance sheet. Cash basis records transactions when money is exchanged, while accrual basis records them when invoices or bills are created. Most businesses should use accrual basis for balance sheets, as this method captures all obligations and receivables regardless of whether cash has changed hands. This provides a more complete and accurate picture of your financial position.
Customizing Display Columns
By default, the balance sheet will have a single column for the balances at the end of the reporting period, but you can choose to display additional columns for interim balances, such as quarterly, by clicking the drop-down box. Comparative columns help you identify trends and changes in your financial position over time.
You can also display additional columns to separate balances by customer, vendors, classes, locations, or other categories. This segmentation proves valuable for businesses with multiple divisions, locations, or profit centers. Seeing how assets and liabilities break down across different parts of your business reveals which areas are strong and which need attention.
The side by side comparison of different periods makes trends immediately visible. Placing them side by side helps you understand how the business is changing over time and makes trends easier to spot. You can quickly see whether your cash position is improving, if receivables are growing too fast, or if debt levels are increasing beyond what's sustainable.
Advanced Customization Options
Click the Customize button on your balance sheet to access additional formatting and filtering options. The general section provides formatting choices that make your report cleaner and easier to read. Options include the ability to report numbers in thousands of dollars, omit cents from your balance sheet, and choose a format for negative numbers.
Reporting in thousands works well when sharing balance sheets with investors, lenders, or board members who don't need precise cent amounts. Omitting cents similarly streamlines the presentation for audiences focused on big picture financial position rather than exact figures.
The rows and columns section gives you control over what appears in your report and how it's organized. You can select columns you want to include in your report and change the order of the columns, plus the percent of column option helps you analyze how your total assets are allocated among each asset account. This percentage analysis quickly reveals whether your asset mix is appropriate for your business type.
Filters let you narrow the report to show only specific information. QuickBooks offers multiple filter options including filtering by class, location, customer, vendor, or other dimensions you track in your system. These filters become essential for multi-location businesses or companies that need to analyze different profit centers separately.
Understanding Balance Sheet Sections
Your QuickBooks balance sheet organizes information into clearly defined sections that tell your financial story systematically. The assets section appears first, typically divided into current and fixed assets based on how quickly they can be converted to cash or how long they'll serve your business.
Current assets includes bank accounts, savings accounts, accounts receivable, and other assets that can be converted into cash within 12 months. This section shows your most liquid resources including checking and savings balances, money customers owe you, inventory available for sale, and prepaid expenses that provide future benefit.
Fixed assets includes vehicles, equipment, land, buildings, and other long term assets that depreciate over time. QuickBooks tracks accumulated depreciation separately, showing both the original cost of assets and how much value has been written off over time. The only time you would remove them from QuickBooks is when you sell or dispose of the assets.
The liabilities section follows assets and is similarly organized into current and long term categories. Current liabilities include accounts payable showing bills you owe vendors, credit card balances, sales tax collected but not yet remitted, and any other obligations due within one year. Long term liabilities capture mortgages, equipment loans, and other debts extending beyond twelve months.
The equity section completes your balance sheet. It includes owner investments, retained earnings from prior years, and current year net income. Your year to date profit or loss flows directly into this section, automatically updating your equity balance as you earn income or incur losses.
Ensuring Your Balance Sheet Balances
The fundamental equation must always hold: assets must equal liabilities plus equity. If your balance sheet isn't balancing correctly, you can troubleshoot the issue by selecting each account in the report to see the transactions related to the balance of each account. QuickBooks provides drill down capability that lets you click any line item to see the underlying transactions.
Common causes of unbalanced balance sheets include unreconciled bank accounts, transactions posted to incorrect account types, or opening balance equity problems. When troubleshooting, start by checking accounts with unexpected or unusual balances.
Look for negative balances in accounts where they shouldn't exist. A negative balance in accounts receivable typically indicates customer overpayments or credits recorded incorrectly. Negative balances in liability accounts may represent prepayments that should be reclassified as assets. These anomalies signal transactions that need investigation and correction.
Saving and Managing Your Reports
You can add your balance sheet or other frequently used or important reports to the Favorites tab for quick access in the future by clicking on the star icon next to the report. This eliminates the need to navigate through menus every time you want to check your financial position.
QuickBooks remembers your customization settings when you save reports to favorites. The date ranges update automatically, but your formatting choices, column selections, and filters remain as you configured them. This consistency ensures you're always viewing reports in the format that works best for your analysis needs.
Export options let you share balance sheets with stakeholders who don't have QuickBooks access. Export to Excel when you need to perform additional analysis, create charts, or combine data from multiple sources. Save as PDF for formal presentation to lenders, investors, board members, or tax professionals. Email reports directly from QuickBooks to send updates to advisors or partners who need regular financial visibility.
Connecting Balance Sheet to Other Reports
Since the net income in the equity section of your balance sheet should agree with the net income on your Profit and Loss statement, be sure to prepare both statements using the same reporting period. This reconciliation ensures your financial statements tie together properly and provide a complete, consistent picture of your business.
The balance sheet and profit and loss statement work as complementary documents. The profit and loss explains how you generated your net income through revenue and expenses. The balance sheet shows where that income went, whether it increased cash, was invested in inventory or receivables, or was used to pay down debt.
If you notice receivables rising on your balance sheet, you can take action before it affects cash flow, such as chasing up overdue payments. This integrated view helps you spot problems early and make informed decisions before small issues become significant problems.
Visual Learning Resources
For those who prefer step by step visual instruction, QuickBooks expert Candus Kampfer offers excellent video tutorials on understanding and generating balance sheets in QuickBooks Online. Her tutorials provide detailed walkthroughs of accessing reports, customizing displays, and understanding what your balance sheet reveals about your business's financial health.
Candus emphasizes keeping QuickBooks simple while recognizing that understanding your numbers is vital for business success. Her teaching style focuses on practical application, showing you exactly where to click and what each section means for your specific situation. You can find her balance sheet tutorials at canduskampfer.com/balancesheet, where she also provides downloadable PDF guides to reference while working in your own QuickBooks account.
Using Your Balance Sheet for Financial Analysis
Generating the balance sheet is only the first step. The real value comes from analyzing what the numbers reveal and taking action based on those insights. Compare balance sheets from different dates to identify trends. Is your cash position strengthening or weakening? Are accounts receivable growing faster than sales, suggesting collection problems? Is inventory accumulating beyond what you need to serve customers?
Calculate key financial ratios that reveal important insights about your financial health. The current ratio, found by dividing current assets by current liabilities, shows whether you have adequate liquid resources to cover short term obligations. A ratio below 1.0 indicates potential cash flow challenges that need immediate attention.
The debt to equity ratio shows how much your business relies on borrowed money versus owner investment. Calculate this by dividing total liabilities by total equity. Higher ratios indicate greater financial risk but can also accelerate growth when managed appropriately. Understanding where you stand helps you make strategic decisions about financing expansion or paying down debt.
Working capital, calculated as current assets minus current liabilities, shows the cushion available for daily operations. Adequate working capital ensures you can pay bills, meet payroll, and handle unexpected expenses without crisis. Declining working capital over multiple periods signals that operations are consuming more resources than they're generating.
Mobile Access Considerations
You can view your balance sheet using the QuickBooks mobile app, though in the app, the balance sheet is only as of today, and to see a different date range, sign in to QuickBooks Online from your web browser. Mobile access provides convenient ability to check your financial position on the go, though the full range of customization options requires accessing QuickBooks from a computer.
The mobile app works well for quick financial position checks when you're away from the office. You can review current cash levels, verify recent transactions posted correctly, and confirm overall financial health. However, for detailed analysis, comparative reporting, or customized views, plan to use the desktop version.
Common Mistakes to Avoid
Don't ignore accounts with unusual balances. Every account on your balance sheet should make sense in the context of your business. Significant balances in accounts you don't actively use, negative balances where they shouldn't exist, or numbers that seem disproportionately large all warrant investigation.
Avoid running balance sheets without first reconciling your bank accounts. Unreconciled accounts often contain errors, missing transactions, or timing differences that distort your financial picture. Reconcile monthly before running financial statements to ensure accuracy.
Don't mix up the balance sheet date with the reporting period for profit and loss statements. The balance sheet shows a point in time, while profit and loss covers a span of time. Understanding this distinction prevents confusion when the numbers don't seem to match expectations.
Your balance sheet provides a comprehensive snapshot of your business's financial position at any moment in time. By learning to generate, customize, and interpret this essential report in QuickBooks Online, you gain the insights needed to manage cash flow effectively, make informed strategic decisions, and communicate your financial position clearly to lenders, investors, and advisors. The time invested in understanding your balance sheet pays dividends through better financial management and stronger business performance.
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