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 and distributions of owners and profits that you have reinvested.
The balance sheet will always balance according to what is known as "the accounting equation": Assets = Liabilities + Owner's Equity.
Setting Up Your Balance Sheet
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 use 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.
The starting balance column includes net income (or losses) from prior periods. If you have selected a 'Retained Earnings Account' in your portfolio's settings, the prior period net income will be added to this account. A Retained Earnings line will also show on the balance sheet if you have not selected an account. If desired, income or losses can be journaled from the selected retained earnings account, for instance, to be distributed to partner capital accounts.
Incomplete Balance Sheets
Many investors rely on their CPA to track the value of their long-term assets and claim depreciation. Tax preparation software may also offer this functionality. In these cases, REI Hub can still be used to track your investments' profitability and cash flow, even if you do not enter the data necessary to complete your balance sheet.
Additionally, our Portfolio Value by Property will still show each property's estimated home equity based on the market value of your investments and outstanding loans.
To View Your Balance Sheet
1) Navigate to the Reports page and Click the Balance Sheet or Balance Sheet by Property
2) Select the appropriate date and report scope
3) View, filter, and export as desired
The Balance Sheet and Balance Sheet by Property can be exported into Excel or PDF, downloaded directly to a computer, or emailed.
Still have questions? Reach out to our Support Team via email at [email protected] or call us at (888)939-6865.