Facts about the Small Business Balance Sheet template
- 1 Facts about the Small Business Balance Sheet template
- 2 What Is the Small Business Balance Sheet Used for?
- 3 Who Would Use the Small Business Balance Sheet?
- 4 When Should You Use the Small Business Balance Sheet?
- 5 What Are the Consequences for Not Using a Small Business Balance Sheet?
- 6 Steps for Filling Out a Small Business Balance Sheet Form
- 7 Quick Questions
What Is the Small Business Balance Sheet Used for?
The balance sheet helps evaluate firm assets against liabilities. This provides insight into the its financial strength and its overall value.
Broadly, it uses the equation:
Assets = Liabilities + Owner’s Equity
but you’ll also see it as:
Owner’s Equity = Assets Liabilities
which provides an accurate picture of equity.
Who Would Use the Small Business Balance Sheet?
The balance sheet efficiently shows the balance of incoming and outgoing funds. It reveals company health to determine its ability to expand. It also reveals operational information, including necessary collections to occur, inventory and bills paid.
When Should You Use the Small Business Balance Sheet?
You can calculate a balance sheet on a monthly, quarterly, semi-annual or annual basis. It’s recommended that you run it at least monthly and annually.
What Are the Consequences for Not Using a Small Business Balance Sheet?
While no organization hunts you down if you don’t complete your monthly balance sheet, it does benefit a business to generate one. If you took out a bank loan for your business, it may ask to see your monthly or quarterly balance sheets.
Steps for Filling Out a Small Business Balance Sheet Form
Although the categories remain the same on each firm’s balance sheet, the specifics differ from firm to firm. For example, inventory comes under current assets, but not all companies have inventory. A service-based firm would not have physical products.
1. Fill in the appropriate current asset blanks of the balance sheet. The common items under assets include current cash on-hand broken into accounts receivable and reserve for bad debt, inventory, prepaid expense and notes receivable.
2. Fill in the amounts for the appropriate fixed assets for your firm: vehicles, furniture and fixtures, equipment, buildings. Underneath each category, note the depreciation line. Fill in the accumulated depreciation for the item(s).
3. Fill in the amounts for the appropriate other assets for your firm. This includes items like its trademark and a line for amortization.
4. Fill in the amounts for the appropriate current liabilities for your firm: accounts payable, business credit cards, sales tax payable, payroll liabilities, other liabilities,current portion of long-term debt.
5. Fill in the amounts for the appropriate long-term liabilities for your company: notes payable, mortgage payable and the current portion of long-term debt.
6. Sum the current assets.
7. Subtract the depreciation from the appropriate fixed assets that you filled in during step two. Sum the remainders.
8. Subtract amortization from trademark.
9. Total the assets sub-totals
10. Sum the current liabilities.
11. Sum the long-term liabilities.
12. Total the liabilities.
13. Subtract the liabilities from the assets to obtain the current equity of the company.