Welcome to the Fit Small Business Xero training course! In this lesson, we’re going to cover how to create a balance sheet report in Xero.
You can follow along on your own Xero account. If you don’t have one already, click here to sign up for a free 30-day trial and follow along below.
To complete this lesson, you can either watch the video below, read through the step-by-step instructions, or do both. Let’s begin!
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Why It Is Important To Create A Balance Sheet Report?
The balance sheet report shows the assets, liabilities and owner’s equity of your business as of a point in time, (e.g. as of December 31, 20XX). The balance sheet report provides you with the net worth of your company which, in other words, shows what your business owns (assets) versus what you owe to others (liabilities).
Depending on the results of this report, you may be able to:
- Attract potential investors
- Secure a business loan from your bank/financial institution
Why You Should Review Your Balance Sheet Monthly
Similar to the Income Statement, which we discussed in the previous lesson, your Balance Sheet will only be as accurate as the information you have entered into Xero. Therefore, you must do a good job of entering all invoices, bills, credit notes and banking transactions into Xero in a timely manner; we recommend at least monthly if not more often.
By staying on top of entering all of your business transactions, you will always have an up-to-date balance sheet report that you can review monthly and provide to potential investors. Reviewing your balance sheet on a monthly basis has the following advantages:
- Identify assets, liabilities or equity transactions that have been categorized to the wrong account.
- Catch missing assets or liabilities which could cause inaccurate financial statements.
- Take proactive steps to improve your overall net worth.
Below is a sample Balance Sheet report for our fictitious company, Acme Web Pros Plus.
How Do I Create A Balance Sheet Report
Follow the steps below to create a balance sheet report in Xero.
Step 1 – Navigate to Reports
From the Xero Dashboard, click on Reports and select All Reports as indicated below.
Step 2 – Select the NEW Balance Sheet Report
The Balance Sheet report is located in the Financial section as indicated in the screenshot below.
Note: Notice that there are two Balance Sheet reports. Xero has redesigned several reports and the Balance Sheet is one of those reports. For the purposes of this lesson, we will discuss the New Balance Sheet report which has the “New” button located next to it.
Note: You can add a report to your favorites by clicking on the star to the left of the report name. We have done this for the Balance Sheet report so that the next time it will be available directly on the Reports menu.
Step 3 – Select the Report Date
In the next screen, you can select the date that you would like to run the report for as indicated in the screenshot below.
- Date Range: From the dropdown, you can select a preset date range (i.e. End of Last Financial year, Today) or you can select a date from the calendar.
- Update: Once you have selected the date range, click the “Update” button to refresh the report.
Below is a sample Balance Sheet report for our fictitious company, Acme Web Pros Plus.
The Balance Sheet report can be exported to PDF, Excel or Google Sheets. Scroll down to the very bottom of the report and click the “Export” button as indicated in the screenshot below.
You can also save the report as a draft, published or custom report.To do so, scroll down to the bottom of the report and click the “Save as” button as indicated in the screenshot below.
- Draft – This option allows you to create a balance sheet report that you or someone else can make changes to later on. You might create several draft balance sheet reports before you are ready to publish them.
- Published – This option is used to save reports when you are finalizing the books for the month or the year. A published report will not change if for some reason the information in the system has changed or updated in some way. You can only publish reports if you have the Advisor user role.
- Custom – Use this option if you want to save the format of the balance sheet report so that you don’t have to recreate it each time you run the report. Xero will ask you if you would like to make this template your default. We will show you how to save a custom report format in the next section.
How To Modify Report Settings
Similar to the Income statement, there are 3 primary ways you can make changes to the Balance Sheet report:
- Change Report Title
- Change Report Settings
- Change Layout & Format
We will walk through how to do each of these next.
Change Report Title
You can change the title of most reports in Xero. To do this, just hover your mouse over the title of the report and you will see “Edit Title” appear to the far right as indicated in the screenshot below. Click on that link and make the necessary changes to the report title.
In the example below, we changed the title of the report from Balance Sheet to Balance Sheet Report.
Change Report Settings
The options available in report settings will depend on the type of report you are running. You can find the report settings option located directly to the right of the date range for every report, as indicated in the screenshot below.
Below you will find the report settings available for the Balance Sheet report along with a brief description of each.
- Compare with – If you would like to compare your report to a previous month, quarter or year, select the number of periods from the dropdown.
- Accounting Basis – In general, most businesses use the cash method of accounting. However, Xero allows you to use either method (accrual or cash) to run your reports. Note: The default reports are run using the accrual accounting method.
- Numbers – If you prefer not to have decimals show on your report, simply remove this checkmark.
- Region – If you have set up tracking categories, then you can filter this report to show all tracking categories you have set up or just certain ones.
- Update – Be sure to click the “Update” button so that the report will refresh with any changes you have made.
Change Layout & Format
The edit layout designer tool allows you to customize your reports as follows:
- Add rows or columns to track totals or notes.
- Revise account groupings.
- Rearrange rows and columns by dragging and dropping them.
- Change formulas
How to Modify a Balance Sheet Report: Example
Acme Web Pros Plus would like to add the following footer to the bottom of their Balance Sheet report: “The figures in this report use the cash basis accounting method.”
Listed below are the steps to add the footer and save report as a custom report so that it will include the footer each time the report is run.
Step 1 – Launch Edit Layout
Scroll down to the bottom of the report and click on the “Edit Layout” link as indicated in the screenshot below.
Below is a screenshot of Edit Layout Designer.
- In this section, you can use the toolbar to change text, add a schedule to the bottom of a report, add a column or add a row to the report.
- In this section, you will be able to see the changes that you make to the report in real time.
- In this section, you will be able to create a formula which we will do next to add a Total column to this report.
Step 2 – Make Modifications to Report
To add a footer, click on the footer icon located in the toolbar as indicated in the screenshot below.
The footer will open up and you can type directly in the box, make the text bold and even highlight it as you can see in the screenshot below.
Below is the updated sample balance sheet report for our fictitious company, Acme Web Pros Plus.
Step 3 – Save the New Report Settings
Scroll down to the bottom of the report and click the “Save” as button and select Custom as indicated in the screenshot below.
Indicate the name that you would like to use to save the report in the next screen.
Note: If you would like this report to replace the default Balance Sheet report, be sure to put a checkmark in the box as indicated in the above screenshot.
Wrap Up: How To Create A Balance Sheet Report
That wraps up the section on how to create a balance sheet report. The next lesson in our Xero Training Course will be how to create a cash flow statement. In this lesson, we will discuss the importance of reviewing your cash flow statement and walk you through how to create and customize the report. To access this lesson or any of the others in the series, click here. For a free 30-day trial of Xero, click the link below.