The Balance Sheet
The Balance Sheet is one of the fundamental reports in accounting. It tracks the book value of all business assets and liabilities, as well as the capital contributions/distributions of owners and profits that you have reinvested. It will always balance according to what is known as "the accounting equation": Assets = Liabilities + Owner's Equity. The columns shown are each accounts' starting balance, ending balance, and reporting period change.
Setting Up Your Balance Sheet:
In order for your balance sheet to properly reflect the value of your assets, liabilities, and equity, you must book all transactions touching these accounts. This means that if you find yourself using the 'Ignore' option for imported transactions from your bank feed, the account balance according to your bank will not match the account balance from your balance sheet because there will be gaps in your recorded activity.
Establishing a correct balance sheet also means setting the proper opening balances for accounts as you begin your bookkeeping in REI Hub, recording all new property purchases using a journal entry, and entering depreciation expenses. Note: providing the current loan balance while setting up a loan does not automatically create an opening balance journal; this must be entered separately or as part of the property purchase journal to establish the loan value on the balance sheet.
Net Income and Retained Earnings:
When viewing your balance sheet, the net income (or loss) from the selected reporting period is included as a line in the owner's equity section. Net income (or losses) from prior periods is also included in the starting balance column. If you have selected a 'Retained Earnings Account' in your portfolio's settings, the prior period net income will be added to this account. If you have not selected an account, a Retained Earnings line will also show on the balance sheet. If desired, income or losses can be journaled from the selected retained earnings account, for instance to distribute them to partner capital accounts.
Incomplete Balance Sheets:
Many investors rely on their CPA track the value of their long-term assets and claimed depreciation. Tax preparation software may also offer this functionality. In these cases, REI Hub can still be used to track the profitability and cash flow for your investments, even if you do not enter the data necessary to complete your balance sheet. Additionally, our Portfolio Value by Property will still show the estimated home equity of each of the properties in your portfolio based on the market value of your investments and outstanding loans.
To view your Balance Sheet:
1) Navigate to the Reports page
Click on Reports from the left side menu, then click All.
2) Click on the Balance Sheet or Balance Sheet by Property
3) Select the appropriate Date and Report Scope
4) View, filter, and export as desired
5) Reach out to us with any questions!