Balance sheets can be done at any point during your business operations. When seeking a loan from a bank to expand your business presenting a complete, accurate balance sheet can help the lender determine your business’ eligibility for a loan. To get the most out of a balance sheet complete one every year for the same time frame. This will allow you to look at trends in the performance of your business over time and provide more information to lenders to determine your eligibility for loans. A Balance Sheet Template includes formulas that will automatically complete some of the functions detailed below. Assets Assets are things your business owns that can be converted to cash. Assets include such things as cash, equipment, property and money owed to you (also known as accounts receivable). When completing your balance sheet order your assets, top-to-bottom, in categories based on how quickly they will be used or converted to cash. There are two types of assets, current assets and fixed assets. Current assets are assets that are turned into cash, sold, or used quickly and often (less than a year). For a child care business this will usually be cash on hand, money owed to you by clients or pending program reimbursements. Fixed assets are long-term assets like equipment that will be used by your business for more than a year and are not as easily turned into cash. This may include playground equipment, furniture, vehicles and property. A Note on Depreciation Over time equipment is used up and depreciates in value. You can subtract a portion of the cost of the equipment from your fixed assets. This give you a more realistic view of the value of your assets and can have beneficial tax consequences. Please consult with your accountant or financial advisor for more details, advice and instructions. See also page 24 above on use of Internal Revenue Code Section 179.
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