sole trader, do i need a balance sheet

eld

Hi all, getting a little confused on sorting out my accounting spreadsheets atm.

Wondering if I need what's called a "balance sheet". I only started as self-employed on the 6th of March 2016.

My income every month will be from the same source (a website called Patreon) into my business account.

I transfer money from my business account to my personal account for personal spending. The only money left in my business account is for national insurance, and expenses (website hosting).

My spreadsheets right now just list the income and expenditure each month and add it up/take it away and show profit/loss. That way I have easy figures to quote in the tax returns.

I also have a Drawings sheet showing the money amount and date taken out to my personal account for my "wages".

Do I really need a balance sheet? I've looked up an example here: http://www.smallbusiness.co.uk/article_assets/articledir_41/20738/balance_sheet.pdf and I am not dealing with any of this, there's no loans, debt or anything.

tebthereb

A sole trader does not need to maintain a balance sheet, or statutory accounts.

If you are keeping records of your income and expenses that will be sufficient for your tax return. Drawings/wages to yourself do not come into it for tax purposes.

You could of course maintain a balance sheet for your own records should you wish though although if you have no creditors/debtors and a business bank account then it feels a bit pointless.

antrobus

eld wrote: »

....Do I really need a balance sheet?....

No, you don't need a balance sheet. All you need for tax purposes is an income and expenditure sheet.

The only point of completing a balance sheet would be to check that everything, well, balances. If you can't get it to balance, it means you've made a mistake somewhere. Sometimes knowing this can be quite useful.:)

s_b

hi eld get into the habit straight away of keeping receipts for everything related as its easy to forget at the early stages of self employment
also try to keep them in order even if you only use a monthly folder