123 Summer School Session 2: Balance Sheet for Small Business

Most small business owners either ignore the balance sheet or have no idea what they're looking at... and honestly? That makes total sense! The terminology is confusing, and it doesn't feel as urgent as your P&L.

But in this Summer School session, we're breaking it all the way down so you actually understand what a balance sheet is, why it matters for YOUR business, and what to look at when you open it up.

In this episode, you'll learn:

• What a balance sheet actually is (and how it's different from your P&L)
• The ALOE acronym that makes it all click: Assets = Liabilities + Owner's Equity
• The most common asset types you'll see as a small business owner
• What liabilities and equity really mean in plain language
• How often you should actually be reviewing this report
• Why the balance sheet is a sneaky great place to catch errors

Key Takeaways:

The balance sheet is a snapshot in time, not a summary of activity. While your P&L shows how your business performed over a period, the balance sheet shows where things stand at one specific moment. These two reports work together, and you really do need both!

Everything on a balance sheet falls into one of three buckets: assets (what your business owns or is owed), liabilities (what your business owes to others), and equity (what's left over for you as the owner). Remember ALOE!

Even if you're a service-based business without a lot of physical assets, you still need to review your balance sheet. It's actually one of the best places to spot miscategorized transactions before they become a bigger problem.

Resources mentioned:

Grab the free playlist to find the episodes that match where you are in your bookkeeping journey: https://erikamillard.com/podcast-playlist-bundles

Next week: Summer School Session 3 drops next week, so stay tuned!