As a small business owner, it is vital to the success of your business to stay on top of your finances. This can be difficult if you are trying to do it on your own. Luckily, there are several systems that can be put in place so that you know where you stand, financially speaking. A balance sheet is one document that you want to make sure you have and know how to use to your benefit. Mark Dicus & Company is here to talk about what a balance sheet is, and why it is so useful for small business owners and large business owners alike.
Understanding What a Balance Sheet Is
A balance sheet can be an extremely helpful tool when you’re trying to make plans for the future of your business. This is one of the reasons why it is vital that small business owners know what the balance sheet is. Some people refer to a balance sheet as a statement of net worth for a business. It shows what the company’s assets, liabilities, and investments are. This is actually one of the three financial statements that a company is required to have by law. The other two are income statements and cash flow statements. Let’s take a closer look at what a balance statement actually includes:
– Assets: These are resources that the company has that are valuable. It might be cash, inventory, or money that is owed to the company. It could even be properties that are owned by a company. These are things that could be converted into cash should the need arise.
– Liabilities: This will be the opposite of an asset. The liabilities that a company has are things that the company owes to someone else, usually money. They are divided into two different categories of short-term liabilities and long-term liabilities. Short-term liabilities are things like salaries and rent. Long-term liabilities would include loans, mortgages or leases.
– Net Worth: If a company had to liquidate all of its assets and pay off debts, what would be left over is the net worth of a company. This usually is made up of stocks and other retained earnings. It would also include capital investments. This is a key in determining the financial well-being of a company.
Importance of a Balance Sheet
Not only are balance sheets important for business owners, but they are important for potential investors as well. Business owners can use the balance sheet to quickly determine the financial position that they are in.
Bookkeepers, Accountants & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
An important part of keeping all of your financial documents up to date is to have the right accountant working for you. At Mark Dicus & Company, we will take care of all the financial records for your company and help you prepare for your financial future as well as taxes for your business. We want to help you find success. Call us today!