Balance Sheet

Part 4: The Balance Sheet
Creating the Balance Sheet is the final step in completing the financial statements that you will need to include in your Financial Plan of the Business Plan. A Balance Sheet is a statement showing the book value of all of your assets and liabilities including your equity of a business, organization, or person at a specific date.

You need to know a few definitions if you have never done this before, these include:

  1. Assets are tangible objects of financial value that are owned by the company
  2. A Liability is a debt owed to a creditor of the company
  3. Equity is the net difference when the total liabilities are subtracted from the total assets.

Everything in your General Ledger is categorized in three groups; these groups include the assets, liabilities, or equity. The relationship between them is expressed in this equations: Assets = Liabilities + Equity.

For your business plan you’ll be creating a Balance Sheet intended to summarize the information on your Income Statement and Cash Flow Projection.

Businesses normally prepare a Balance Sheet once a year. Here is a guideline on how your balance sheet should look like for your Business Plan or when your business is up and running.

Your Company Name

Balance Sheet as at _____(Date)

Assets
Current Assets
Cash in bank
Petty Cash
Net Cash
Inventory
Accounts Receivables
Prepaid Insurance
TOTAL Current Assets:

Fixed Assets
Land
Buildings
Less Depreciation
NET Land and Buildings:

Equipment
Less Depreciation
NET Equipment:
TOTAL Assets:

Liabilities
Current Liabilities
Accounts Payable
Vacation Payable
Federal Income Tax Payable
Pension Payable
Medical Payable
PST PayableGST Charged on Sales
GST Paid on Purchases
GST Owing
TOTAL Current Liabilities

Long Term Liabilities
Long Term Loans
Mortgage
TOTAL Long Term Liabilities

Equity
Earnings
Owner’s Equity (Capital)
Owners Draws
Retained Earnings
Current Earnings
TOTAL Earnings
TOTAL Equity

TOTAL Liabilities and Equity

Remember this is only an outline and you may need to add or erase some categories depending on what type of business you are running. The Balance Sheet will reproduce the accounts you have in your general ledger.

Once you have completed the Balance Sheet section, you should be ready to write a brief analysis of each of the 3 financial statements. Remember when you are writing these brief analysis you want to keep them short and to the point. Cover the highlights and don’t write an in depth summary.

Now that you are finished you should be ready to start and run a business successfully. A Business Plan should show you if your business has a chance at becoming successful. It will also keep you organized throughout your planning.

Part 1: The Financial Plan of The Business Plan - Financial Statement
Part 2: The Financial Plan of The Business Plan - Income Statement
Part 3: The Financial Plan of The Business Plan - Cash Flow Projections

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