Owner’s Equity Your business’ owner’s equity (also called net assets) is the total value of your businesses’ assets minus the liabilities you owe. On your balance sheet you can include any “retained earnings” from the previous year. Retained earnings are the net profits from your business from the previous period’s balance sheet that you are keeping in the business in the next period to be reinvested in your business. For example you may carry over a portion of last year’s profits to buy new playground equipment or invest in your professional development. In your balance sheet take the total liabilities from one half of the balance sheet and subtract the total assets on the other half of the sheet. The result is your net assets. If you have done your balance sheet correctly your liabilities plus your net assets will equal your assets on the left side of the sheet. If the sheet does not balance out, check your math or consult with your accountant or financial advisor. Reviewing Your Balance Sheet With the information provided on the balance sheet financial advisors and lenders can make additional calculations that help determine the performance of your business and determine your businesses ability to take out loans to improve or expand your business. To get the most out a balance sheet multiple years’ worth of completed balance sheets will be needed.
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