• Calla Norman

How to Write a Balance Sheet for your Small Business


Noble Pies

One of the documents that most lenders ask for when you apply for a loan is a balance sheet for your business. This document helps lenders gauge your financial health by looking at the balance of assets and liabilities that you have for your business. If you're looking for some templates to help you on your way, you can find them here. Here are some easy steps on how to write your balance sheet.

The formula of a balance sheet


To put it simply, a balance sheet is an easy formula:


Assets = Liabilities + Shareholder’s Equity


Your assets are the things you own that have some kind of a value. It’s the cash you have on hand, your property, inventory, accounts receivable, and any big pieces of equipment or vehicles that you use in your business.


Your liabilities are any debts you might have as well as your expenses. This include accounts payable, bank loans, credit card debt, and.


Shareholder’s equity is basically if you were to liquidate all your assets and pay off all your debts, it’s what’s left over.


Also, a balance sheet should always balance. This means that your assets should exactly equal your liabilities plus shareholder’s equity.


1: Choose a Reporting Period


A balance sheet is like a snapshot of a period of time for your business - so you need to determine what that period is. It could be a month, quarter, or year, or really any other metric you want to use. For a Honeycomb loan application, we ask for the last three years of balance sheets (or if your business is younger than three years old, whatever you’ve got).


2: List Your Assets

As we mentioned before, your assets are things your business owns that have some kind of value. In this step, list out your assets and how much they’re worth. You can have current assets, which are assets that are either currently liquid or are easily made liquid such as cash, short-term investments, inventory, etc, and non-current assets, which include big things like property, long-term investments, goodwill, and other intangible assets. You should form these lists separately, subtotal them, then put them together.


3: List your Liabilities


This step is pretty similar to the previous one, except it’s with your liabilities, or what you owe. You also have current liabilities (accounts payable, accrued expenses, current payments of long-term debt) and non-current liabilities (long term debt, long-term lease obligations, etc). Create these lists subtotal them, and add them up.


4: List your Shareholder’s Equity


Balance sheets for large, public businesses often have shareholder’s equity in the form of stocks, but for a small business, your equity is most likely going to be your retained earnings. As we said before, this is basically what’s left over after you’ve sold off all your assets and paid off all your debts.


5: Look for Balance


Now, it’s time to add up your liabilities and shareholder’s equity and see if it matches up with your assets. If it doesn’t add up, you likely have a data point wrong - maybe you forgot an asset, or accidentally recorded it twice. Take a closer look at it - it should add up.


Now that you have your balance sheet, your small business loan doesn’t need to be a balancing act


Applying for a crowdfunded loan with Honeycomb is simple and as painless as a loan application process can get. Click here for the whole application checklist, and when you’re ready to go, fill out the form below for more information.