CA Satish Sarda
Can you answer these questions easily? What is your net worth? How much you have invested in Immovable Property? What is your share holding? What is your loan outstanding? How much have you advanced to your friends and relatives? How much and from whom have you borrowed ? What is your yearly insurance premium? How much you have invested in precious metals? And the most important How much is your cash in hand? Most of the Individuals will answer in negative!!!
Generally Balance Sheet is prepared by business concerns like Proprietorship Firm, Partnership Firm, Company, LLP, Co-operative Society. It is prepared for following reasons : to know the Financial condition , status of the concern , to calculate different taxes , for business deals , for different stake holders such as Shareholders, Bankers , Financial Institutions, Vendors , clients etc. Mostly they prepare financial statements such as Balance Sheet, Profit & Loss Account, Cash Flow Statements for the financial year i.e. April to March.
But Individuals generally do not maintain their accounts and as such do not prepare their Balance Sheets. A balance sheet can give an exact positions of one’s Assets , Liabilities, Capital , Income , Expenses etc. You can be a Businessman, an employee, an Investor, A sportsman, a Singer, An Artist, A Politician any one. You may be having income from any source such as Salary , Business, Profession, Vocation, Investment etc. and have to spend on various issues such as Purchasing a house, Vehicles, Marriages ,Education , medical ,Food, entertainment , travel, Investment etc. To keep a track of all these is very difficult task. But all these can be very conveniently recorded through accounting and preparation of periodical Balance Sheet.
You can keep accounts manually or through accounting software. An individual can easily maintain accounts manually by regularly writing cash and banking transactions in a cash book. And from it they can prepare ledger accounts. Individuals having large number of transactions can take help of a CA , Tax Consultant or part time accountants to maintain their accounts.
Information pertaining to an Individual is required on various occasions such as obtaining a loan from bank, providing guarantees , filing of income tax ,wealth tax returns, family partitions, drafting and execution of wills etc. If you are not preparing your balance sheet then you give such information on very csula or estimate basis which may lend you in trouble.
In case of Income tax investigations like scrutiny, survey , search by Income tax department you have to provide correct information regarding your assets , Investments ,income, expenditure etc. You may have to pay a heavy price if you fail to satisfy their queries . You can very easily answer their questions if you have your balance sheets with you.
It is said that We all are born with our janam kundali…right or wrong I do not know but we can have our Jeevan Kundali by way of Balance Sheet !!
So know thy self….!! And let the world know…!! ( financially atleast ) . Prepare your Balance Sheet.
(Author is a Past Chairman-Nagpur Branch Of ICAI)
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Very nice important article for balance sheet preparation. Recently, We are also providing the best Gen Balance sheet software to prepare your balance sheet. Our software gives a complete solution to users who want to prepare a balance sheet for office use.
Could you please provide an excel based personal accounts balance sheet so that it will be helpful for us to maintain our records. Thanks – See more at: https://taxguru.in/finance/personal-accounts-balance-sheet.html#sthash.sPAvCH4i.dpuf
Could you please provide an excel based personal accounts balance sheet so that it will be helpful for us to maintain our records. Thanks
Sir,
Thanks for the valuable information but can you please provide the appropriate format of individuals income statement and balance sheet.
We can use tally or some other accounting software
Very very important concern raised in a effective manner
Thank you
A personal Balance Sheet & personal accounting is useful mainly because over a period of time one cannot rely on memory alone. A written record that too in proper manner will be very beneficial in the long run.
where are the personal BS format pl share
An individual can be more organised if he or she maintains proper books of accounts and can also comply to requirements of statutory authorities etc. This is good awareness article and can also generate business opportunities for CA’s and even semi qualified accountants.
Few questions –
1. Is it mandatory for individuals to submit personal balance sheet in ITR? I guess not because so many ppl dont even know how to make one.
2. When you ask people to prepare one – is it okay just to make one and keep with oneself, or should one submit it part of the the ITR also?
3. What software is availble for making personal balance sheet? Preferably free software.
many may not know how to prepare individual balance sheet. a proforma must be prepared for online entry and final balance sheet must be displayed for copying and saving.