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Completing a projected balance sheet is an essential step in forecasting your business’s financial status at the end of its first year. A balance sheet illustrates your business’s financial position at a specific point in time, focusing on calculating net worth, which represents the value of your business based on assets like cash and equipment. To construct this balance sheet, you’ll need to set up a spreadsheet, add both assets and liabilities, and use functions to calculate net worth. Start by making a copy of the starter project, renaming it, and adding your business name, the current date, and the date for your projected balance sheet. Read the Notes on Preparation to better understand how to project your balance sheet. Begin by listing your beginning and projected current assets, which are assets that frequently change, such as cash, inventory, and prepaid expenses like insurance premiums and website hosting. Add any other assets in a separate category and use the SUM function to review your total current assets. Proceed to add fixed assets, like machinery, equipment, furniture, and real estate. Account for depreciation in assets like machinery by including a negative number that reflects the decrease in value, ensuring you search for the current value of your equipment for accurate depreciation rates. Review your total fixed assets, also calculated by a SUM function, and list other assets such as deposits, patents, and trademarks.
The next step in completing your projected balance sheet involves adding your liabilities, both current and long-term. Current liabilities encompass debts and expenses due within a year, including accounts, taxes, and short-term debts. Long-term liabilities cover debts that extend beyond a year, such as bank loans and investor payments. Utilize the SUM function to review the totals for current, long-term, and overall liabilities. Additionally, incorporate owners’ equity, which includes personal investments and salaries paid to yourself. The combination of total assets, liabilities, and equity will automatically calculate your business’s net worth, providing insight into its value after subtracting liabilities from assets. To finalize your balance sheet, add a link to your worksheet in the financing information section of your business plan. Now, it’s time to take action: replicate the projected balance sheet, list your assets and liabilities, review the totals for assets, liabilities, and net worth, and integrate this crucial information into your business plan.