{"id":6785,"date":"2018-05-14T08:00:48","date_gmt":"2018-05-14T15:00:48","guid":{"rendered":"http:\/\/evergreensmallbusiness.com\/?p=6785"},"modified":"2018-05-03T09:14:05","modified_gmt":"2018-05-03T16:14:05","slug":"why-you-want-an-accurate-balance-sheet-for-your-small-business","status":"publish","type":"post","link":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/","title":{"rendered":"Why You Want an Accurate Balance Sheet for Your Small Business"},"content":{"rendered":"<p><a href=\"http:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-6787 size-medium\" src=\"http:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses-300x200.jpg\" alt=\"Picture of an accurate balance sheet of a financial report with spectacles\" width=\"300\" height=\"200\" srcset=\"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses-300x200.jpg 300w, https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses.jpg 724w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a>If you\u2019re a small business owner, you want an accurate balance sheet for your small business. You really do.<\/p>\n<p>An accurate balance sheet delivers several valuable benefits.<\/p>\n<h2>Accurate Balance Sheet Benefit #1: Obtaining a Loan<\/h2>\n<p>If your business needs or wants a loan in the future, the bank is likely going to want copies of full financial statements for your business. This includes both your income statement and your balance sheet.<\/p>\n<p>That means if you don\u2019t have an accurate balance sheet to provide your loan officer, it can upend your whole loan application.<\/p>\n<p>Just so you know? Loan officers don\u2019t always catch wacky-looking errors on balance sheets, but the underwriter certainly will.<\/p>\n<p>What\u2019s more, you\u2019ll almost certainly be considered responsible for giving the bank accurate information for the sake of approving the loan.<\/p>\n<p>And this awkward reality: Your accountant likely isn\u2019t going to have time to help you quickly fix errors in your balance sheet if you ask for this help when you\u2019re already midway through the loan application.<\/p>\n<h2>Accurate Balance Sheet Benefit #2: Protecting Yourself in a Legal Dispute<\/h2>\n<p>If you\u2019re a small business owner and you find yourself in a legal dispute, such as a divorce, the court is often going to expect a balance sheet for your small business as part of the process of figuring out your net worth.<\/p>\n<p>Balance sheet errors that overstate or understate your equity in the business are both really undesirable in this scenario, each for their own (hopefully obvious) reasons.<\/p>\n<h2>Accurate Balance Sheet Benefit #3: Selling the Business<\/h2>\n<p>Someday you might want to cash out by selling your small business.<\/p>\n<p>If you do, any sensible buyer is going to want an accurate statement that explains to them what assets they\u2019ll be buying, and possibly what liabilities they\u2019ll be assuming.<\/p>\n<p>You balance sheet provides this information in a commonly-understood, well-designed format.<\/p>\n<h2>Accurate Balance Sheet Benefit #4: Tracking Partner Capital Accounts<\/h2>\n<p>An awkward comment: Partner capital accounts are one of those things that\u2019s tempting to ignore in the books as years go by, since it\u2019s one of the more complicated aspects of partnership general accounting.<\/p>\n<p>Furthermore, most years most people seem to not really care what their partnership K-1 Box L says.<\/p>\n<p>This tends to change, however, at key milestone events in a partnership.<\/p>\n<p>For example, when a real estate investment partnership sells a property and calculates liquidating distributions, partners will care\u2014a lot\u2014about partner capital accounts.<\/p>\n<p>Unless the partnership has been using a dead-simple allocation formula, in our experience, often there\u2019s at least one partner who ends up unpleasantly surprised to find out how much less cash they\u2019re getting out of the deal than they thought.<\/p>\n<p>One way to prepare to deal with this issue? An accurate balance sheet that keeps partners informed of who really is entitled to what\u2014including correct liquidating distributions.<\/p>\n<h2>Accurate Balance Sheet Benefit #5: Finding Hidden Errors on the Income Statement<\/h2>\n<p>A final benefit of a good, accurate, up-to-date balance sheet: Sometimes visible errors on the balance sheet are how you can find errors in your income statement that aren\u2019t obvious on their own.<\/p>\n<p>For example, weird A\/R balances sometimes result from errors that also cause sales revenue to be misstated. And erroneous payroll liability balances sometimes result from errors that also cause payroll expense to be misstated.<\/p>\n<p>Finding errors on your income statement not only helps you run your business better by providing you with high-quality information about how much money your business makes; it also helps keep you out of trouble with the IRS.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019re a small business owner, you want an accurate balance sheet for your small business. You really do. An accurate balance sheet delivers several valuable benefits. Accurate Balance Sheet Benefit #1: Obtaining a Loan If your business needs or wants a loan in the future, the bank is likely going to want copies of [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":6787,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[8],"tags":[],"class_list":{"0":"post-6785","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-bookkeeping","8":"entry"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.3 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Why You Want an Accurate Balance Sheet for Your Small Business - Evergreen Small Business<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why You Want an Accurate Balance Sheet for Your Small Business\" \/>\n<meta property=\"og:description\" content=\"If you\u2019re a small business owner, you want an accurate balance sheet for your small business. You really do. An accurate balance sheet delivers several valuable benefits. Accurate Balance Sheet Benefit #1: Obtaining a Loan If your business needs or wants a loan in the future, the bank is likely going to want copies of [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/\" \/>\n<meta property=\"og:site_name\" content=\"Evergreen Small Business\" \/>\n<meta property=\"article:published_time\" content=\"2018-05-14T15:00:48+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"724\" \/>\n\t<meta property=\"og:image:height\" content=\"483\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Beth Nelson CPA\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@SeattleCPA\" \/>\n<meta name=\"twitter:site\" content=\"@SeattleCPA\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Beth Nelson CPA\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/\"},\"author\":{\"name\":\"Beth Nelson CPA\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#\\\/schema\\\/person\\\/85111873e184a3ae745c0c1f4a377a10\"},\"headline\":\"Why You Want an Accurate Balance Sheet for Your Small Business\",\"datePublished\":\"2018-05-14T15:00:48+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/\"},\"wordCount\":612,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/wp-content\\\/uploads\\\/2018\\\/04\\\/balance-sheet-and-glasses.jpg\",\"articleSection\":[\"Bookkeeping\"],\"inLanguage\":\"en\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/\",\"url\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/\",\"name\":\"Why You Want an Accurate Balance Sheet for Your Small Business - Evergreen Small Business\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/wp-content\\\/uploads\\\/2018\\\/04\\\/balance-sheet-and-glasses.jpg\",\"datePublished\":\"2018-05-14T15:00:48+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#\\\/schema\\\/person\\\/85111873e184a3ae745c0c1f4a377a10\"},\"breadcrumb\":{\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/#breadcrumb\"},\"inLanguage\":\"en\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/#primaryimage\",\"url\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/wp-content\\\/uploads\\\/2018\\\/04\\\/balance-sheet-and-glasses.jpg\",\"contentUrl\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/wp-content\\\/uploads\\\/2018\\\/04\\\/balance-sheet-and-glasses.jpg\",\"width\":724,\"height\":483,\"caption\":\"Balance sheet of a financial report with spectacles\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/why-you-want-an-accurate-balance-sheet-for-your-small-business\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Why You Want an Accurate Balance Sheet for Your Small Business\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#website\",\"url\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/\",\"name\":\"Evergreen Small Business\",\"description\":\"Actionable Insights from Small Business CPAs\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/#\\\/schema\\\/person\\\/85111873e184a3ae745c0c1f4a377a10\",\"name\":\"Beth Nelson CPA\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/84ad98bdcd4554a9760184216eb56ac63842b676295a7f0e321fbae15dcbadec?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/84ad98bdcd4554a9760184216eb56ac63842b676295a7f0e321fbae15dcbadec?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/84ad98bdcd4554a9760184216eb56ac63842b676295a7f0e321fbae15dcbadec?s=96&d=mm&r=g\",\"caption\":\"Beth Nelson CPA\"},\"url\":\"https:\\\/\\\/evergreensmallbusiness.com\\\/author\\\/elizabethnelsoncpa2014\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Why You Want an Accurate Balance Sheet for Your Small Business - Evergreen Small Business","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/","og_locale":"en_US","og_type":"article","og_title":"Why You Want an Accurate Balance Sheet for Your Small Business","og_description":"If you\u2019re a small business owner, you want an accurate balance sheet for your small business. You really do. An accurate balance sheet delivers several valuable benefits. Accurate Balance Sheet Benefit #1: Obtaining a Loan If your business needs or wants a loan in the future, the bank is likely going to want copies of [&hellip;]","og_url":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/","og_site_name":"Evergreen Small Business","article_published_time":"2018-05-14T15:00:48+00:00","og_image":[{"width":724,"height":483,"url":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses.jpg","type":"image\/jpeg"}],"author":"Beth Nelson CPA","twitter_card":"summary_large_image","twitter_creator":"@SeattleCPA","twitter_site":"@SeattleCPA","twitter_misc":{"Written by":"Beth Nelson CPA","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/#article","isPartOf":{"@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/"},"author":{"name":"Beth Nelson CPA","@id":"https:\/\/evergreensmallbusiness.com\/#\/schema\/person\/85111873e184a3ae745c0c1f4a377a10"},"headline":"Why You Want an Accurate Balance Sheet for Your Small Business","datePublished":"2018-05-14T15:00:48+00:00","mainEntityOfPage":{"@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/"},"wordCount":612,"commentCount":0,"image":{"@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/#primaryimage"},"thumbnailUrl":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses.jpg","articleSection":["Bookkeeping"],"inLanguage":"en","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/","url":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/","name":"Why You Want an Accurate Balance Sheet for Your Small Business - Evergreen Small Business","isPartOf":{"@id":"https:\/\/evergreensmallbusiness.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/#primaryimage"},"image":{"@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/#primaryimage"},"thumbnailUrl":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses.jpg","datePublished":"2018-05-14T15:00:48+00:00","author":{"@id":"https:\/\/evergreensmallbusiness.com\/#\/schema\/person\/85111873e184a3ae745c0c1f4a377a10"},"breadcrumb":{"@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/#breadcrumb"},"inLanguage":"en","potentialAction":[{"@type":"ReadAction","target":["https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/"]}]},{"@type":"ImageObject","inLanguage":"en","@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/#primaryimage","url":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses.jpg","contentUrl":"https:\/\/evergreensmallbusiness.com\/wp-content\/uploads\/2018\/04\/balance-sheet-and-glasses.jpg","width":724,"height":483,"caption":"Balance sheet of a financial report with spectacles"},{"@type":"BreadcrumbList","@id":"https:\/\/evergreensmallbusiness.com\/why-you-want-an-accurate-balance-sheet-for-your-small-business\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/evergreensmallbusiness.com\/"},{"@type":"ListItem","position":2,"name":"Why You Want an Accurate Balance Sheet for Your Small Business"}]},{"@type":"WebSite","@id":"https:\/\/evergreensmallbusiness.com\/#website","url":"https:\/\/evergreensmallbusiness.com\/","name":"Evergreen Small Business","description":"Actionable Insights from Small Business CPAs","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/evergreensmallbusiness.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en"},{"@type":"Person","@id":"https:\/\/evergreensmallbusiness.com\/#\/schema\/person\/85111873e184a3ae745c0c1f4a377a10","name":"Beth Nelson CPA","image":{"@type":"ImageObject","inLanguage":"en","@id":"https:\/\/secure.gravatar.com\/avatar\/84ad98bdcd4554a9760184216eb56ac63842b676295a7f0e321fbae15dcbadec?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/84ad98bdcd4554a9760184216eb56ac63842b676295a7f0e321fbae15dcbadec?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/84ad98bdcd4554a9760184216eb56ac63842b676295a7f0e321fbae15dcbadec?s=96&d=mm&r=g","caption":"Beth Nelson CPA"},"url":"https:\/\/evergreensmallbusiness.com\/author\/elizabethnelsoncpa2014\/"}]}},"_links":{"self":[{"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/posts\/6785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/comments?post=6785"}],"version-history":[{"count":0,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/posts\/6785\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/media\/6787"}],"wp:attachment":[{"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/media?parent=6785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/categories?post=6785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/evergreensmallbusiness.com\/wp-json\/wp\/v2\/tags?post=6785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}