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Preparing a Balance Sheet: Explanation & Guide 2024Bookkeeping & DATEV
Accounting3 min read

Preparing a Balance Sheet: Explanation & Guide 2024

Your balance sheet for the completed financial year provides a clear overview of your assets, liabilities, and profit. Combined with the profit and loss account, it produces a detailed picture of your financial position. At the same time, the tax office uses the data to calculate your taxes.

ByKarsten Guhr · Managing Director & Tax AdvisorVerified article
#Balance Sheet#Preparation#2024

The balance sheet is therefore an indispensable document — ensure that all figures are correct and comply with the statutory requirements! The German Commercial Code (HGB) governs balance sheet preparation to a large extent; § 266 HGB, for example, sets out the standardised structure. Also make sure that you carry out depreciation, value adjustments, and similar items in accordance with commercial and tax law requirements. Leave balance sheet preparation to experienced tax advisers!

With the balance sheet, you provide a well-founded account of your current financial position. This involves presenting your assets alongside your liabilities. Ideally, you will show a high equity ratio!

Assets include, among other things:

- Cash holdings

- Stocks of goods

- Machinery and equipment

- Vehicle fleet

- Buildings / land

- Receivables

In the balance sheet, you classify your assets into intangible assets, tangible fixed assets, and financial assets. It is important that you assign the correct value to each individual asset!

Liabilities include, among other things, the following balance sheet items:

- Debt financing

- Liabilities as a supplier

- Trade payables (liabilities from deliveries and services)

When you prepare the balance sheet for 2024 or any other year, one point is particularly important: assigning a transparent and legally compliant value to your assets!

Asset values can decrease over time; for items such as a company car or a computer, this is obvious. Pay attention to the depreciation rules! The value of your fixed assets decreases in line with standardised useful life schedules.

You may also need to make a value adjustment for receivables from business partners. This is carried out as either a general or an individual adjustment. A value adjustment documents an increased probability of default. If a debtor does not have the required creditworthiness or willingness to pay, you may no longer record the relevant receivable at 100% of its value as an asset.

Above all, it is these depreciation charges and value adjustments that make balance sheet preparation a complex undertaking. Get the support you need — your Guhr Steuerberatung will prepare your 2024 balance sheet as well as the profit and loss account!

The annual balance sheet preparation concludes the double-entry bookkeeping for the financial year. Complete and professionally maintained bookkeeping throughout the business year facilitates this task, yet it remains a complex undertaking nonetheless. Do you want to relieve yourself comprehensively of this administrative burden? Engage your established tax advisory firm for the self-employed and businesses!

How does one prepare a balance sheet?
In a balance sheet, you present your assets alongside your liabilities. You also determine your earnings using the profit and loss account. The German Commercial Code (HGB) prescribes a largely standardised format for these documents. Your assets are divided, for example, into tangible fixed assets, financial assets, and intangible assets.
Can you prepare a balance sheet yourself?
In theory, this is possible. Bear in mind, however, that balance sheet preparation requires a sound knowledge base and experience. First, you must enter all balance sheet items correctly. Second, commercial and tax law require you to value all items at a realistic amount. For outstanding receivables, this means taking the probability of default into account. This complexity is why many business owners have their balance sheets prepared by tax advisers!
What do you need for a balance sheet?
Conscientious bookkeeping for the relevant financial year is the central prerequisite for preparing a balance sheet. Keep all receipts and contracts! Balance sheet preparation also requires a stock-take (Inventur). Retailers and wholesalers, for example, check their stock of goods in order to state their actual assets. The cash audit is also an important part of this stock-take. Your tax advisory firm requires the results when preparing a balance sheet on your behalf!
What does preparing a balance sheet mean?
A widely used synonym is "balance sheet preparation" (Bilanzierung). Whether you call it preparing a balance sheet or Bilanzierung: you are providing information about your financial position in a standardised format. The juxtaposition of assets and liabilities reveals your creditworthiness. Key figures such as the equity ratio can be calculated from your balance sheet figures.

About the author

Karsten Guhr · Managing Director & Tax Advisor

Founder of the firm. Advising entrepreneurs and holding structures on tax planning, structuring and succession for 15+ years.

Full profile →

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