Set up a balance sheet

The balance sheet provides a picture of the financial health of a business at a given moment in time. It lists all of your business's assets and liabilities. You can then find out what your net assets are at that time.

A balance sheet can also help you work out your:

• working capital – money needed to fund day-to-day operations
• business liquidity – how quickly you could pay your current debts.

For each year, you need to fill in actual or estimated figures against each of the below items. If you use estimated costs, make sure to label them clearly.

You also need to clearly state on your balance sheet whether your figures are GST inclusive or exclusive.

Current assets

Current assets are assets that you can convert into cash within one year or less. This includes:

• cash
• petty cash
• inventory
• pre-paid expenses.

Fixed assets

Fixed assets are long-term assets that a company owns and uses in its operations. This includes:

• leasehold
• property and land
• vehicles
• equipment and tools
• furniture and renovations.

Total assets

Calculate total assets by adding all current and fixed assets.

Current liabilities

Current liabilities (or short-term liabilities) are liabilities that are due and payable within one year. This includes:

• credit cards payable
• accounts payable
• interest payable
• accrued wages
• income tax.

Long-term liabilities

Long term liabilities are liabilities that are due after a year or more. This includes loans.

Total liabilities

Calculate total liabilities by adding all current and long-term liabilities.

Net assets

Calculate net assets by subtracting total liabilities from total assets.