Balance sheet
While the profit and loss tells you how your business performed over a period, the balance sheet tells you where your business stands right now. It's a snapshot of what you own, what you owe, and what's left over.
The three sections
- Assets — what your business owns: cash in the bank, inventory on the shelves, money customers owe you (accounts receivable), equipment, fixtures
- Liabilities — what your business owes: bills from distributors you haven't paid yet (accounts payable), sales tax collected but not yet remitted, loans
- Equity — the difference between assets and liabilities. This is the owner's stake in the business.
The formula is always: Assets = Liabilities + Equity. If your balance sheet doesn't balance, something is wrong in your records.
Running the report
- Go to Accounting → Reporting → Balance Sheet.
- Set the date — this report shows balances as of a specific date (today, end of last month, end of last year).
- The report generates with assets, liabilities, and equity sections.
What to look for
| Line item | What it tells you |
|---|---|
| Bank accounts | How much cash you have on hand |
| Accounts Receivable | Money customers owe you for invoices not yet paid |
| Inventory | The cost value of product sitting on your shelves and in your safe |
| Accounts Payable | Money you owe distributors and vendors for bills not yet paid |
| Sales Tax Payable | Tax you've collected from customers but haven't remitted to the state yet |
The inventory number on the balance sheet is the cost of your inventory, not the retail value. If you have $50,000 worth of firearms and ammo at retail, the balance sheet shows what you paid for them — maybe $35,000. This is normal. The difference between cost and retail is your potential gross profit.
When you need it
- Tax time — your accountant needs the year-end balance sheet
- Applying for a loan — banks want to see your balance sheet to assess your financial health
- Renewing your FFL — some applications ask about the financial status of the business
- End of month — a quick check to make sure nothing looks off (accounts receivable growing too fast, inventory value dropping unexpectedly)