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How Do I Prepare a Balance Sheet for Business Startup?


Question: How Do I Prepare a Balance Sheet for Business Startup?
A balance sheet is a business statement that shows what the business owns, what it owes, and the value of the owner's investment in the business. The balance sheet is calculated at a specific point in time - at business startup; at the end of a month, a quarter, or a year; or at the end of the business. Preparing a balance sheet is complicated, and you may want to get a CPA to help with this exercise. A balance sheet is shown in two columns, with assets on the left and liabilities and owner's equity on the right. The total assets must equal total liabilities + total owners equity; that is, the totals must balance.

To Prepare a Business Startup Balance Sheet
All the calculations in this spreadsheet are done as of the date of startup.

  1. First, list the value of all the assets in the business as of the startup date. This includes cash, equipment and vehicles, supplies, inventory, prepaid items (insurance, for example), value of any buildings or land owed. (Usually accounts receivable are included as an asset, but since the business has not started, there should be no amounts owed to the business).
  2. Include any depreciation on equipment or vehicles (you will need the assistance of a CPA to help you determine depreciation.
    Show the amount of the total assets on the left side.
  3. Next, list all liabilities (amounts owed by the business to others), including business credit cards, any loans to the business at startup, any amounts owed to vendors at startup. Add up the total liabilities.
  4. The difference between assets and liabilities is shown on the right side of the balance sheet as "Owner's Equity" (for an unincorporated business) or "Retained Earnings" (for a corporation). This amount is your investment in the business.

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