Balance sheet doesn't balance — step-by-step fix
The Core Rule
The fundamental rule of double-entry bookkeeping is that your Balance Sheet must balance. In WeFile, this means the 'Total Net Assets' figure must exactly equal the 'Total Capital and Reserves' figure. If there is even a £1 difference, you cannot proceed.
Check 1: Corporation Tax Provision
The most common mistake is forgetting to list the Corporation Tax you owe for this period as a liability. If WeFile calculated your tax as £5,000, you must add £5,000 to the 'Creditors due within one year' section.
Check 2: Retained Earnings
Your 'Profit and loss account' balance in the Capital and Reserves section must reflect the accumulated profit or loss. It is calculated as: [Last year's closing balance] + [This year's profit/loss AFTER tax]. If you calculated it before deducting this year's tax, it will not balance.
Check 3: Dividend Payments
If you paid dividends during the year, they must be deducted from your retained earnings. Dividends are paid out of post-tax profits. Ensure your Capital and Reserves figure reflects these cash outflows.
Check 4: Rounding Errors
Tax calculations and accounting entries sometimes result in pence. However, annual accounts are typically rounded to the nearest whole pound. Ensure you have rounded your assets and liabilities consistently so the final totals match perfectly.
Step-by-Step Debugging
If you are stuck, look at the discrepancy amount. If you are out by exactly £1,000, look for a missing £1,000 asset or a forgotten £1,000 invoice. Tracking the specific difference often points directly to the missing entry.