Sections of the Balance Sheet

One of the reports used by a small business to assess their financial story is the Balance Sheet. The Balance Sheet is a financial report listing the assets, liabilities, and owner’s equity (or net assets) of an organization.

Balanced Financial Scale

Assets = Liabilities + Owner’s Equity (Net Assets)

The balance sheet is important because it reports on what the organization owns, what it owes, and its net value.

The report may also be referred to as a Statement of Financial Position.

Calendar illustrating Financial Statment

The values reported on the Balance Sheet are as of a specific point in time.

Sections of the Balance Sheet

Assets – what a company owns

  1. Cash – in the bank now
  2. Accounts Receivable – money owed TO the organization
  3. Investments – savings, inventory, raw materials
  4. Fixed Assets – tangible property or equipment used in operations
  5. Other Assets – prepaid expenses

Assets can be further defined as either short term/current or long term/non-current. Short-Term assets can be easily converted into cash or are typically used within twelve months. Long-Term (non-current) assets have a “life” of longer than one year, either by use or conversion into cash.

Fixed assets are tangible items with a use of longer than one year. As the fixed assets are used, their value decreases. Depreciation is the calculation recorded to lower the holding value of the fixed assets. When an asset is sold, the amount received may not be equal to what is recorded in the books. Depreciation is an estimated calculation. Generally accepted tables and guidelines are available to help with these calculations.

Liabilities – what a company owes

  1. Debt – credit card, loans, money borrowed

  2. Sales Tax – collected from customers due to the government
  3. Payables – expense due, and not yet paid
  4. Customer Credit and Gift Cards
  5. Unearned Revenue

Owner's Equity (Net Worth or Net Assets)

The value left after Assets are reduced by the outstanding Liabilities. The amount that the owner could put into their pocket after settling their debts.

Assets – Liabilities = Owner’s Equity (Net Assets)


A Sample Balance Sheet

What the Financial Story?!? How Reports tell a Story about your Small Business

“I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant.” Alan Greenspan

brain with a text bubble

As a small business financial advisor, I aspire for my clients to experience business success. And one method to achieve success is for them to comprehend the financial side of their business.

From that paragraph did you get the message I intended, or did you just read:   “blah, blah, blah”

How about this statement:

I want you to be successful and understanding your business’s numbers helps you make smarter business decisions.


How Financial Reports help with your small business story

One way to tell the story of your small business is through Financial Reports. Reporting provides insights into what is happening with the business. How are sales trending, how about expenses, how is cash really being used?

When you look at your business’s financials does it look like this:

jumble mess of numbers
a jumbly mess of numbers



Or do you feel like your numbers look like this?

Happy numbers
These numbers are happy and orderly with a story to tell

How your Financial Advisor can Help

Your financial advisor is the one who helps to take your small business numbers from a jumbled mess to an orderly message.

 An orderly financial message is conveyed through various reports. Reports are used to understand the financial story of the business. This information helps you to make more informed decisions. And when you make informed decisions your business is more successful!

Some of the Most Common Financial Reports

  1. The Balance Sheet
  2. The Income Statement
  3. Cash Report
  4. KPI’s (Key Performance Indicators)
  5. Sales Reports
  6. Donor reports
  7. Variances of Budget vs Actual
  8. and on, and on…

Because each business is unique, the reports a business finds useful are unique.

In the next post we will leap into the Balance Sheet.

Share below if there is something financial about your small business you wish you knew more about.

Bookkeeper, Accountant or CPA

Do you need a Bookkeeper, Accountant or CPA?

What's the Difference? How to Choose?

If you spend too much time on data entry, feel unsure about the meaning of debits or credits, or you are wondering how you could be even more financially successful, you ought to seek the help of a financial professional.


Alicia sells Keys

Alicia sells key accessories. From keychains to key-hooks, she has a well-stocked inventory.  Her sales are strong, but Alicia really does not feel comfortable with the financial side of the business. Her cash flow varies, and she is not sure how to budget for the slow months. If she felt more comfortable with the financial side of the business, she wonders if her business would be more successful.

Laurence who runs a Non-profit focusing on saving fish from burning needs a different level of financial help.  He has a good understanding of the organization, its future and has even developed a plan to get there.  He just does not have enough time for the daily financial data entry.

Fishburn Prevention.Org

These business owners would benefit from hiring a supportive finance professional.

Data Entry for Financial Success

What’s the Difference between a Bookkeeper, Accountant and CPA?

Hire a bookkeeper if data entry is needed, recording general day-to-day transactions, bank reconciliations and compliance.  Bookkeepers supply limited analysis. Their main responsible is to record the financial transactions of the business.

The first step in understanding the financial success of your business is accurate data entry. When a bookkeeper is done the data pieces have been put into place.

Accountants are dependable strategic business partners. By looking for and highlighting trends they supply insight. They analyze, interpret, and guide. You will understand and feel confident with your financial decisions.

Accountants help you make perceptive financial decisions.

A CPA goes beyond bookkeepers and accountants.  After passing a rigorous exam and with proven experience they become licensed. To maintain their license, a CPA fulfills on-going continuing education requirements. They follow a code of ethics.

A CPA keeps up on the latest trend analysis, compliance issues and best business practices.

How to Choose

IF you want

  1. Info recorded and general compliance – BOOKKEEPER
  2. Insights into your data and how to take you to the next step of success – ACCOUNTANT
  3. You want all the above and extra confidence – CPA

Accountants and CPA’s both could provide you with a level of insight and knowledge, a CPA has gone the extra step.

Hiring a knowledgeable financial professional is not a guarantee of financial success, it is another step-in the direction of building success.

Based on what we just learned:


Alicia should hire an accountant, or a CPA. Alicia cares enough about the financial success of her business to realize she needs sound financial advice.


Laurence feels secure in understanding the financials of his organization, so a bookkeeper would be alright. Although, an accountant or CPA could prove to be a strong business partner. The CPA would deliver additional insights Laurence may have not yet thought of.

Financial Success
Hurray! Our books balance

What is a sound piece of financial advice you have received, or which you had known earlier?

Advisor, Consultant or Coach? What’s the Difference?


Advisors, consultants and coaches all exist to help you and/or your organization succeed. The relationship duration and focus varies. Consultants are project focused, an advisor guides and coaches support.


A consultant is called on to provide a solution to a specific short-term project. They have experience in solving for the problem you have.  Because of their experience, they’ve seen it/done it. Examples of consultant projects; developing a website, building out an accounting system, creating policies and procedures.

An advisor develops an on-going relationship and dispenses expert advice. Their expertise comes from skills and knowledge and experience. The depth of their subject knowledge is deep. They give advice and guidance through regular engagements. For instance, an advisor helps you to interpret and communicate financial results.

A coach teaches and guides you to develop or improve a skill. The successful coach knows how to nurture and hold you accountable.  Business Development and Sales, Employee Relations and management, are examples.

Is your current situation:

How to Engage an Advisor, Consultant or Coach

taking notes


Pre-meeting prep

First and most important: identify your needs, expectations, and your definition of a successful relationship. The more specific you are in your thoughts, the better the outcome.

  1. I have
    • a specific project to complete
    • a question on how to _________
    • a need to improve my _____ skills
  2. I expect this person to
    • Be available and responsive
    • Be approachable
    • Be knowledgeable
  3. I would define this relationship to be a success if ______________
  4. To be complete by_____
During the meeting:
  1. Are they focused and listening?
  2. Does it feel like a conversation, a discussion of ideas and solutions?
  3. How’s the chemistry? Are you in-sync and comfortable with their style?
  4. Often a skilled advisor, consultant or coach will listen to what is NOT being said and will follow through on those underlying emotions.
  5. Will they become a partner in helping you solve for success?
What are their credentials
  1. Do they have the expertise, training or experience for this situation?
  2. Trust is a key trait; without trust will you really follow through and be successful.
  3. Are they up on the current trends, and developments in the industry?


This relationship is one critical piece of your toolkit to success.

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