A balance sheet is a snapshot of your business’s financial position at a single point in time. It shows what you own, what you owe, and what’s left over. 

In other words your Assets minus your Liabilities is your Equity.

💡 Why It Matters

A balance sheet helps you understand your business’s true financial health. It can reveal whether you're building value or piling on debt, and it’s essential for lenders, investors, and your own decision-making.

📊 The 3 Parts of a Balance Sheet

1. Assets

   - These are things your business owns that have value.
  - Includes: cash, A/R, inventory, equipment, buildings.
  - Think of assets as your business’s resources.

2. Liabilities

   - These are things your business owes.
  - Includes: credit card debt, loans, unpaid bills, payroll owed.
  - This is what your business is on the hook for.

3. Equity

   - This is what’s left over for the owner after liabilities are subtracted from assets.
  - Includes: owner’s capital, retained earnings, and any contributions or draws.
  - It’s your business’s net worth.

🧮 The Formula

The balance sheet is based on a simple equation:

    Assets = Liabilities + Equity

This always has to balance (hence the name), and if it doesn’t, something’s off in your books.

✅ What It Tells You

- Do I own more than I owe?
- Is my business building value or sinking in debt?
- How leveraged am I (how much debt vs equity)?
- Can I cover short-term obligations with available assets?

🔍 Bottom Line

Your balance sheet is one of the most important tools to understand the health of your business. It helps you see where you stand financially, spot problems early, and make strategic decisions with confidence. It’s not just for accountants—it’s for any business owner who wants to stay in control.