In this extension, you will complete a “projected balance sheet” to outline your business’s
expected finances for the end of your first year in business.
A balance sheet shows your business’s financial position at a specific point in time by calculating
net worth, or what your business is worth based on cash and the equipment you own.
A “projected balance sheet” lists assets -- or capital, such as cash and property -- and
liabilities -- or debts and expenses.
It finds “net worth,” or “owner’s equity” by subtracting liabilities from
assets.
To complete your balance sheet, you will: Set up your spreadsheet,
Add assets and liabilities to your spreadsheet, And use functions to calculate net worth.
To begin, make a copy of the starter project and rename it.
Then, add your business name, the current date and the date for your projected balance
sheet.
Next, read the “Notes on Preparation” to learn more about how to project your balance
sheet.
List your beginning and projected “current assets.”
These are assets that change often.
This includes current cash, inventory of your product, and prepaid expenses such as insurance
premiums, website hosting, or other future expenses that you’ve paid in advance.
Include any additional assets in the “other” category.
Review your “total current assets.”
This is calculated by the SUM function.
Then, add “fixed assets.”
The value of these assets doesn’t change often, such as machinery and equipment, furniture
and fixtures, improvements to rented space, or real estate.
Some fixed assets, such as machinery and equipment, may decrease in value over time.
This is known as depreciation.
Include the amount that your assets will depreciate by adding a negative number.
Search for the current value of your equipment to determine how much it has depreciated.
Review your “total fixed assets,” which are also calculated by a SUM function.
List “other assets,” such as lease and utility deposits, as well as things of value
like patents, trademarks, and special certifications.
Many new businesses will only list deposits.
Then, review the total sum of your current, fixed, and other assets.
Next, add your current and long-term liabilities.
Current liabilities include accounts, taxes, and debts you will pay off within one year.
Long-term liabilities include debts owed beyond one year, such as bank loans and payments
to investors or shareholders.
Review the totals for current, long-term, and total liabilities.
These are also automatically calculated by the SUM function.
Add owners’ equity.
This is how much you have personally invested in the business and paid yourself in salary.
Totaling your assets, liabilities, and equity automatically calculates your net worth.
This is how much your business is worth after subtracting liabilities from assets.
Finally, go to your business plan and add a link to your worksheet under your financing
information section.
Now, it’s your turn: Make a copy of the projected balance sheet
and rename it, List your assets and liabilities,
Review total assets, total liabilities, and net worth,
And add a link to your spreadsheet in your business plan.