How to write a balance sheet

Figures used to compile the balance sheet are taken from the previous and current balance sheet as well as the current income statement. The income statement is usually attached to the balance sheet. The following text covers the essential elements of the balance sheet.

At the top of the page fill in the legal name of the business, the type of statement and the day, month and year.

Assets

List anything of value that is owned or legally due the business. Total assets include all net values. These are the amounts derived when you subtract depreciation and amortization from the original costs of acquiring the assets.

Current Assets

• Cash-List cash and resources that can be converted into cash within 12 months of the date of the balance sheet (or during one established cycle of operation). Include money on hand and demand deposits in the bank, e.g., checking accounts and regular savings accounts.
• Petty cash-If your business has a fund for small miscellaneous expenditures, include the total here.
• Accounts receivable-The amounts due from customers in payment for merchandise or services.
• Inventory-Includes raw materials on hand, work in progress and all finished goods, either manufactured or purchased for resale.
• Short-term investments-Also called temporary investments or marketable securities, these include interest- or dividend-yielding holdings expected to be converted into cash within a year. List stocks and bonds, certificates of deposit and time-deposit savings accounts at either their cost or market value, whichever is less.
• Prepaid expenses-Goods, benefits or services a business buys or rents in advance. Examples are office supplies, insurance protection and floor space.

Long-term Investments

Also called long-term assets, these are holdings the business intends to keep for at least a year and that typically yield interest or dividends. Included are stocks, bonds and savings accounts earmarked for special purposes.

Fixed Assets

Also called plant and equipment. Includes all resources a business owns or acquires for use in operations and not intended for resale. Fixed assets may be leased. Depending on the leasing arrangements, both the value and the liability of the leased property may need to be listed on the balance sheet.

• Land-List original purchase price without allowances for market value.
• Buildings
• Improvements
• Equipment
• Furniture
• Automobile/vehicles

Liabilities

Current Liabilities

List all debts, monetary obligations and claims payable within 12 months or within one cycle of operation. Typically they include the following:

• Accounts payable-Amounts owed to suppliers for goods and services purchased in connection with business operations.
• Notes payable-The balance of principal due to pay off short-term debt for borrowed funds. Also includes the current amount due of total balance on notes whose terms exceed 12 months.
• Interest payable-Any accrued fees due for use of both short- and long-term borrowed capital and credit extended to the business.
• Taxes payable-Amounts estimated by an accountant to have been incurred during the accounting period.
• Payroll accrual-Salaries and wages currently owed.

Long-term Liabilities

Notes payable-List notes, contract payments or mortgage payments due over a period exceeding 12 months or one cycle of operation. They are listed by outstanding balance less the current position due.

Net worth

Also called owner's equity, net worth is the claim of the owner(s) on the assets of the business. In a proprietorship or partnership, equity is each owner's original investment plus any earnings after withdrawals.

Total Liabilities and Net Worth

The sum of these two amounts must always match that for total assets.

MONTHLY CASH FLOW PROJECTION

Name of Business Owner Type of Business Prepared by Date

Pre-start- 1 2 3 4 5 6 Total up position Columns 1-6

Year Month

1. Cash on hand (beginning month)

2. Cash receipts

3. Total cash receipts

(2a+2b+2c=3)

4. Total cash available

(before cash out) (1+3)

5. Cash paid out

1. purchases (merchandise)
2. Gross wages (excludes withdrawals)
3. Payroll expenses (taxes, etc.)
4. Outside services
5. Supplies (office and operating)
6. Repairs and maintenance
7. Advertising
8. Car, delivery and travel
9. Accounting and legal
10. Rent
11. Telephone
12. Utilities
13. Insurance
14. Taxes (real estate, etc.)
15. Interest
16. Other expenses (specify each)
17. Miscellaneous unspecified)
18. Subtotal
19. Loan principal payment
20. Capital purchases (specify)
21. Other start-up costs
22. Reserve and/or escrow (specify)
23. Owner's withdrawal

6. Total cash paid out (5a

through 5w)

7. Cash position (end of

month) (4 minus 6)

_________________________________________________________________

INSTRUCTIONS FOR MONTHLY CASH FLOW PROJECTION

1. 1. Cash on hand (beginning of month) -- Cash on hand same as (7),
   Cash position, pervious month
2. 2. Cash receipts-
   1. Cash sales-All cash sales. Omit credit sales unless cash is actually received
   2. Gross wages (including withdrawals)-- Amount to be expected from all accounts.
   3. Loan or other cash injection-Indicate here all cash injections not shown in 2(a) or 2(b) above.
3. 3. Total cash receipts (2a+2b+2c=3)
4. 4. Total cash available (before cash out)(1+3)
5. 5. Cash paid out -
   1. Purchases (merchandise)--Merchandise for resale or for use in product (paid for in current month).
   2. Gross wages (including withdrawals)--Base pay plus overtime (if any)
   3. Payroll expenses (taxes, etc.)-- Include paid vacations, paid sick leave, health insurance, unemployment insurance, (this might be 10 to 45% of 5(b))
   4. Outside services-This could include outside labor and/or material for specialized or overflow work, including subcontracting
   5. Supplies (office and operating)--Items purchased for use in the business (not for resale)
   6. Repairs and maintenance-Include periodic large expenditures such as painting or decorating
   7. Advertising-This amount should be adequate to maintain sales volume
   8. Car, delivery and travel-If personal car is used, charge in this column, include parking
   9. Accounting and legal-Outside services, including, for example, bookkeeping
   10. Rent-Real estate only (See 5(p) for other rentals)
   11. Telephone
   12. Utilities-Water, heat, light and/or power
   13. Insurance-Coverage on business property and products (fire, liability); also worker's compensation, fidelity, etc. Exclude executive life (include in 5(w))
   14. Taxes (real estate, etc.)-- Plus inventory tax, sales tax, excise tax, if applicable
   15. Interest-Remember to add interest on loan as it is injected (See 2© above)
   16. Other expenses (specify each)

_______________________________________________

_______________________________________________

Unexpected expenditures may be included here as a safety

factor________________________________________

Equipment expenses during the month should be included

here (non-capital equipment)__________________________

When equipment is rented or leased, record payments here

Essential operating data (non-cash flow information)--This is basic information necessary for proper planning and for proper cash flow projection. Also with this data, the cash flow can be evolved and shown in the above form.

THE BUSINESS PLAN - APPENDIX 3: INFORMATION RESOURCES

U.S. Small Business Administration (SBA)

The SBA offers an extensive selection of information on most business management topics, from how to start a business to exporting your products.

This information is listed in "Resource Directory for Small Business Management." For a free copy contact your nearest SBA office.

SBA has offices throughout the country. Consult the U.S. Government section in your telephone directory for the office nearest you. SBA offers a number of programs and services, including training and educational programs, counseling services,

financial programs and contract assistance. Ask about

• Service Corps of Retired Executives (SCORE), a national organization sponsored by SBA of over 13,000 volunteer business executives who provide free counseling, workshops and seminars to prospective and existing small business people.
• Small Business Development Centers (SBDCs), sponsored by the SBA in partnership with state and local governments, the educational community and the private sector. They provide assistance, counseling and training to prospective and existing business people.
• Business Information Centers (BICs), offering state-of-the-art technology, informational resources and on-site counseling for start-up and expanding businesses to create business, marketing and other plans, do research, and receive expert training and assistance.

For more information about SBA business development programs and services, call the SBA Small Business Answer Desk at 1-800-U-ASK-SBA (827-5722).

Other U.S. Government Resources

Many publications on business management and other related topics are available from the Government Printing Office (GPO). GPO bookstores are located in 24 major cities and listed in the Yellow Pages under the "bookstore" heading. You can request a "Subject Bibliography" by writing to Government Printing Office, Superintendent of Documents, Washington, DC 20402-9328.

Many federal agencies offer publications of interest to small businesses. There is a nominal fee for some, but most are free. Below is a selected list of government agencies that provide publications and other services targeted to small businesses. To get their publications, contract the regional offices listed in the telephone directory or write to the addresses below:

The CIC offers a consumer information catalog of federal publications.

The USDA offers publications on selling to the USDA. Publications and programs on entrepreneurship are also available through county extension offices nationwide.

DOC's Business Assistance Center provides listings of business opportunities available in the federal government. This service also will refer businesses to different programs and services in the DOC and other federal agencies.

Drug Free Workplace Helpline: 1-800-843-4971. Provides information on Employee Assistance Programs.

National Institute for Drug Abuse Hotline:

1-800-662-4357. Provides information on preventing substance abuse in the workplace.

The National Clearinghouse for Alcohol and Drug Information:

1-800-729-6686 toll-free. Provides pamphlets and resource materials on substance abuse.

The EPA offers more than 100 publications designed to help small businesses understand how they can comply with EPA regulations.

U.S. Food and Drug Administration (FDA)

FDA Center for Food Safety and Applied Nutrition

The FDA offers information on packaging and labeling requirements for food and food-related products.

For More Information

A librarian can help you locate the specific information you need in reference books. Most libraries have a variety of directories, indexes and encyclopedias that cover many business topics. They also have other resources, such as

In addition to books and magazines, many libraries offer free workshops, lend skill-building tapes and have catalogues and brochures describing continuing education opportunities.

End