Balance Sheets

Again, it’s nothing to do with acrobatics – but we liked the picture!!

The balance sheet is the second-most-important financial statement that an accounting system produces, after an income statementA balance sheet reports on a business’s assets, liabilities, and reserves at a particular point in time

  • The assets shown on a balance sheet are those items that are owned by the business, which have value and for which money was paid
  • The liabilities shown on a balance sheet are those amounts that a business owes to other people, businesses, and government agencies
  • Reserves are the amounts that the charity has generated over the lifetime of its existence

As long as you understand what assets and liabilities are, a balance sheet is easy to understand and interpret

Trial Balancing

No, it’s nothing to do with acrobatics!

A trial balance is a useful tool and the essential first step in developing your financial reports.

What is a ‘Trial Balance’?

Basically, a trial balance is a worksheet prepared manually or generated by your computer accounting system that lists all the accounts in your General Ledger at the end of an accounting period (whether that’s at the end of a month, the end of a quarter, or the end of a year).

If you’ve been entering transactions manually, you create a trial balance by listing all the accounts with their ending debit or credit balances. Then, you total the debit and credit columns. If the totals at the bottom of the two columns are the same, the trial is a success, and your books are in balance.

WARNING – A successful trial balance is no guarantee that your books are totally free of errors; it just means that all your transactions have been entered in balance. You still may have errors in the books related to how you entered your transactions

PAYE Forms: P45

The P45 is a certificate which contains earnings and tax payments over the financial tax year up until when an employee leaves a job, and it is issued to employees by the employer. Form P45 shows how much tax has been paid on their salary for the current tax year.

You must give all employees a P45 when they stop working for you. You can either:

You can’t download blank P45 forms

Lost P45

You can’t get a replacement P45.  Instead, you can use a ‘Starter Checklist’ (link below) or ask your employee for the relevant details about their finances to send to HM Revenue and Customs (HMRC)

Use this form if you’re an employer and need to record information about a new employee for PAYE