A balance sheet represents the balance of your assets, liabilities and equities. The process of preparing it will give you a better understanding of your daycare center's finances. The balance sheet is often considered to be a "snapshot" of your company's state at a given time. By looking at it, you or an observer can understand where your company's financial position is at the time of reporting. However, it doesn't make any statements about your company's future.
List all of the assets of your daycare center, which are anything that you own that is worth money. Since your business primarily handles services, many of your assets will be facilities that you own and money that people owe you for your services. Start with assets that are more liquid, such as cash, and work your way to assets that aren't so liquid, such as prepaid business expenses (an intangible good).
List the value of each asset. These might such things as the money that people owe you for taking care of their children, computers, toys and shirts you sell with the daycare name on it. These are followed by any prepaid expenses.
List all of the liabilities of your daycare center, which are what you owe to others. Daycare centers will see such liabilities as paying back the investors, and money owed for utilities and wages for your secretary, teachers and babysitters. As with assets, list the more immediate liabilities first.
List all the equity of your company, which is money that is held within the company. As a small business owner, this would be the equity of any investors, as well as the ownership you put toward the company. At the end of the equity section, list all revenues and expenses.
Tip
Check your math. Your assets should be equivalent in value to the money received from outside sources that you have to pay plus the money that your investors put into the company. Checking this will help assure that your balance sheet represents the true state of your daycare center.
To follow general accepted accounting practices, list the most liquid/immediate assets, liabilities, and equities first, and work toward the more long-term elements.
