Apr 24 ā¢ General discussion
What to put on your Balance Sheet š¤
In bookkeeping there are three financial reports you want to keep track of and keep current: the Balance Sheet, the Income Statement (also called a Profit and Loss or P&L), and the Cash Flow Statement.
Today youāre learning the purpose of the Balance Sheet and what actually goes on it.
So what is a Balance Sheet? The simplest way I can put it is think of it as a āsnapshotā of your businessās financial position. You wonāt get the full picture of everything thatās happened, but you will get an overall summary of the health of your business.
Now letās talk about what goes on it and where. Iām going to be completely transparent. I got so confused when I first learned about the Balance Sheet. So hopefully I can give you a much easier way to remember it.
Everything on the left side shows what you have. Think cash in your bank account, invoices clients still owe you, your laptop, your equipment, maybe a business vehicle. If your business owns it or is owed it, it goes on the left.
Everything on the right side shows who owns it. That breaks into two things: what you owe others like a credit card balance, a loan, or a vendor bill you havenāt paid yet, and what actually belongs to you as the owner. Whatever is left after all the debts are accounted for is your ownership stake in the business.
Hereās the part that makes it all click. Both sides have to equal the same number. That is literally why itās called a balance sheet. If they donāt match, something was recorded incorrectly and that is exactly why keeping your books current matters.
The good news is you donāt have to build this by hand. Your bookkeeping software like QBO or Zoho generates it for you automatically.
0
0 comments
What to put on your Balance Sheet š¤
powered by
skool.com/cash-flow-confident-2227
Tired of 3 am money stress? Get simple systems to manage your cash flow so you can sleep at night and focus on growing your business.
Suggested communities
Powered by