subject: Balance Sheet of Martial Arts Business [print this page] Balance Sheet of Martial Arts Business Balance Sheet of Martial Arts Business
The Balance sheet is, simply put, a financial statement of what you own and what you owe. The statement uses accounting language to describe this and every martial arts business owner must learn to use this language. When you talk like an entrepreneur, you are probably one step closer to being one.
The items listed on our balance sheet that fall under the category of the things we "own" are what we call assets, and the items that fall under the area of what we "owe"are called liabilities.
Assets include things like money in the bank, money people owe us (trade debtors), our stock (inventory) and furniture and equipment.
Liabilities includes any money we owe including bank loans, credit card debt and loans from others, money we have collected through GST that we will have to pay the Australian Taxation Office (ATO) called GST Liabilities, money we owe in relation to wages or payroll (Payroll Liabilities) which includes superannuation, and income tax (PAYG), any credit notes your business
may have issued customers and bills or accounts you have not paid (Creditors). Credit notes may simply be a written statement of credit a customer has with you for goods returned or a refund that has not yet been given.
The Liabilities (what you owe) are subtracted from the Assets (what you own) to give your Nett Assets or Total Equity.
Your total equity is a true and accurate number that is the value or worth of your martial arts business at that time. So what we are saying here is that, should you decide to sell the business, the value listed on the balance sheet gives some very credible information towards assessing what value might be placed on the business.
The balance sheet is something that must be looked at every week at least in order to keep abreast of key things like cash at bank, debtors and creditors. As we mentioned earlier, "cash is king" and there is no way of telling how much cash you have and who you owe cash to unless you look at your Balance sheet.
