Due to the increasing demand of Li-ion batteries in automobiles and home applications due to their high volumetric energy density, high gravimetric energy density, low self-discharge and high efficiency. However, due to their high energy carrying capability, they tend to be more unstable compared to other batteries like lead acid batteries and hence need extensive monitoring to make sure they are operating within their specified safe operating limits; failing to do so may result in fire hazards and explosions. Hence this creates a demand for sophisticated Battery Management System (BMS) which will not only optimize power draw from the batteries but also keep them operating within safe limits, thus not putting the users at risk. This research paper begins with battery modelling using passive components and discusses the major factors which are important while designing an effective BMS. It also provides simulation to help better understand the functioning of a BMS. © 2021 Institute of Physics Publishing. All rights reserved.