General Ledger Template for Small Business
Updated on December 29, 2022 | by Samara Davis
The capacity to view the larger picture is useful in almost every aspect of life. However, it’s critical to take a comprehensive approach when it comes to your business. General Ledgers can help with this. A general ledger acts as your book’s primary sheet. It keeps track of all of your transactions from the beginning of your company to the present.
Your accounting system’s foundation and the primary document is the general ledger. It’s made up of accounting journal entries you’ve made. Accounting journal entries are created in chronological order for every financial transaction your company does. The general ledger separates the entries from the accounting journal, stated in debits and credits, into their respective accounts. Depending on the size and complexity of your company, you may additionally have sub-accounts on your Chart of Accounts and general ledger.
The Importance of a General Ledger
The general ledger performs various responsibilities in your company’s financial operations. Consider it a catch-all bucket. It contains all of the financial data you’ll need to prepare your company’s financial statements, and it’s built around a source document with at least one journal entry for each financial transaction. An invoice or a canceled check that shows you paid the receipt might be used as a source document.
Here are five reasons why the general ledger is so crucial to your company:
If your company requests a loan, lenders will almost always request a range of financial information. Your general ledger can assist you in quickly locating and pinpointing any information you want.
A general ledger allows you to arrive at a trial balance. This will help you balance your books.
If you are audited by the Internal Revenue Service (IRS), preparing for the audit will be simple since all of your financial data are in one location.
Because it is simple to go through and comprehend, it makes it easier to discover fraud or any other issue with your records.
Internal and External Communication
The general ledger template contains all the data required to compile financial statements for internal (management) and external (investor or customer) purposes.
How to Make a General Ledger (GL):
Make the Accounts for General Ledger.
In a table like the one above, five accounts are significant to the general ledger. These are the accounting for assets, liabilities, equity, revenues, and costs. For each account, make a table similar to the one above.
Make a Transaction Transfer General Journal Entry.
Transfer all financial transactions from the general journal to the relevant general ledger accounts in full detail.
Keep Track of the Transactions.
Put the number of the journal transaction on the general ledger account in the “number” field. This enables cross-referencing.
The Credits and Debits.
Make the necessary debit and credit transactions.
Keep a running total of the debits and credits so you can see if the account will balance after all of the transactions are entered.
The general ledger subsequently becomes your company’s principal financial document, containing columns for transaction names, debits and credits, dollar amounts, and a running balance.
There are several accounting software systems available today that make it simple to move journal transactions into general ledger accounts.
Small Business General Ledger
The following are the most typical accounts in a small business ledger:
Items that offer value to your small business are assets. Assets can be either tangible (physical) or intangible (intangible) (non-physical). Your company’s assets might include property, automobiles, trademarks, and patents, to name a few. Existing obligations owed by your company are known as liabilities. Liability is generally money due to another company, vendor, organization, employee, or government agency. Loans, mortgages, and incurred costs are all instances of liabilities. The amount of ownership you have in your firm is known as equity, also known as net assets, net worth, and owner’s equity. Subtract your entire liabilities from your total assets to determine equity. Revenue is the total amount of money received by your company over a given time period. Main business operations and activities, such as sales, generate operational revenue. Non-operating revenue is earned through activities that aren’t directly connected to your business (renting a building). Expenses are the expenditures connected with running a firm. Fees, equipment, supplies, rent, and utilities are probably all part of your company expenditures.
Sub-Accounts in the General Ledger
Sub-accounts, often known as sub-ledgers, provide information about the transactions in your general ledger. Sub-accounts allow you to divide down your accounts even more so you can see where your money is coming from and going. Sub-accounts can be found beneath each primary account.
Double-entry bookkeeping is required to post to the ledger. Every transaction should be recorded twice in double-entry accounting. The first entry is a debit, whereas the second is a credit.,Every transaction should have a debit and credit record in your general ledger. In your overall record, your charges and credits should continuously adjust. There’s an issue with your overall record in the event that they don’t match., Divide each record (e.g., resource account) into two segments while creating an overall record. Your charges should go in the left segment, while your credits should go on the right. Place your resources and costs on the record’s left side. You’ll track down your commitments, value, and income on the right. For your record to adjust, the two sides should have equivalent qualities.