Personal financial statements for business owners can be created.
The business itself is one of the assets owned by the person, so personal financial statements differ from business ones.Your personal financial statements can be used to reconcile the assets and liabilities of your business.The personal balance sheet and the revenue section of the income statement are where ownership in and earnings from the business will be found.
Step 1: Put together a balance sheet.
The first step in creating personal financial statements is to create a Balance Sheet, which shows your net worth at a specific point in time, such as the end of the year.The assets and liabilities are listed in columns on the balance sheet.To start your balance sheet, open a new sheet in a spreadsheet program.Start with a column labeled "Assets."You will list your assets under this heading.To the left of their values, write the asset categories.Two side-by-side columns will split up your assets.If you apply for a loan, you may be required to provide a personal financial statement.To get the proper document, be sure to fill it out as instructed.
Step 2: The value of your liquid assets should be determined.
Liquid assets can be easily turned into cash.Current balances of personal cash reserves, checking account, and saving account are included.Money market account balances should be recorded in this category.You can find your total liquid assets by summing up the balances of these accounts.If you are creating your own balance sheet, you can include all of them under one category.Liquid assets are often referred to as cash and cash equivalents.You can list this amount as "notes receivable" if you are personally owed money.
Step 3: Find out how much your investments are worth.
Investments can be held in investment or brokerage accounts.The cash value of your life insurance policy is included.The date of balance sheet creation is when these assets should be recorded.You can check online or call to see your balance.Again, you may want to list these assets in categories, like securities for stocks, bonds, and mutual fund holdings and a separate line for your life insurance policy.
Step 4: Make a list of your fixed assets.
The most difficult assets to liquidate are fixed assets.Fixed assets include your home, other properties, and vehicles.Any valuable collections, artwork, antiques, or other valuables are considered fixed assets.These are sometimes called large assets in the context of personal financial statements.The assets should be listed at their market value.
Step 5: Put your assets in a better place.
Put the total value of all of your assets under the last asset category.To record the total value to the right, create a line for "Total Assets" on the left.To use the SUM function in excel, you need to type "SUM(" into the total assets value cell, select the cells containing your assets values, and then close the parentheses and press enter.The values should be summed up by the program.
Step 6: The second column should be called "abilities."
Underneath your "Total Assets" cell, type in "Liabilities" and skip a row.All of the amounts that you owe will be listed here.The amount owed should be listed.The most up-to-date information can be found in your bills or account statements.
Step 7: By type, tally your liabilities.
Take a look at the list of loan balances, credit, and bills you owe.Just like you did with your assets, separate out each category of liabilities and list their value to the right.You might include notes payable.Money is owed to an individual or business.Personal bank loans are outstanding.Unpaid bills.There are auto loan balances.There are mortgage balances.State and federal taxes are not paid.There are loans against your life insurance policy.There are credit card balances.
Step 8: Be sure to sum up your debts.
"Total Liabilities" is a category on the left that you can type in when you've listed all of your liabilities.Put the added up value of your liabilities to the right.To make sure you didn't miscalculate the total or exclude any liabilities, double check your work.
Step 9: Take your total assets and liabilities.
Your net worth is the result.Next to the "Net Worth" cell, list this total.If you were forced to sell all of your assets and pay off your debts, your net worth is how much you would have left.
Step 10: You can make a box labeled "Net Worth".
You should put this cell underneath your "Total Liabilities" cell.The net worth is the difference between what you own and the debt you owe.Business bankers look for this figure in entrepreneurs' personal financial statements.If your assets are equal to the sum of your liabilities and net worth, you have a balanced balance sheet.
Step 11: The income statement should be on a separate sheet.
Your personal income statement is a record of your money coming and going over a period of time.This statement shows how much you make and where it goes.The income statement is similar to the balance sheet.Income and expenses are shown instead of assets and liabilities.The result of creating an income statement is your "net income," which shows your personal "profit" or loss for the period.Your income statement can show non-cash income, such as appreciation and returns on investment accounts.When reporting this type of income, follow the lender's specific requirements.
Step 12: A column called "Income" is needed.
Start by creating a category in the lefthand column on your income statement spreadsheet.All of your sources of income will be listed here.The amount of income received from each source will be listed to the right.You will probably have a category for your salary.The amount you earned from your primary occupation would be entered to the right of this cell.
Step 13: Find your total income from all the different sources.
The categories for your income will be based on how it was earned.All cash or value from the period will be included in this list.There is an extra cell for "Total Income" and the sum of your different incomes for the period at the bottom.You can change the list of income sources to suit your needs.There are tips andcommissions.Freelancing is self-employment income.Investment returns and income.There is interest income.There are distributions.Retirement income and pension distributions.There is child support and alimony.Social Security benefits.Other income.
Step 14: The second column should be called "expenses."
You can create a place for "expenses" under your "Total Income" cell.You can see your expenses in this column.Everything you paid for is included in your expenses.You can sum up your total expenses by leaving room for a "Total Expenses" cell at the bottom.Mortgage/rent payments might be included in your expenses.There are utilities.Car loan payments.Insurance premiums.Fees and investment contributions.Court-ordered payments include alimony or child support.Food.Discretionary spending includes entertainment, hobbies, meals out, etc.Medical expenses.There are other expenses.
Step 15: Take your total income and total expenses into account.
The total is your net income.Immediately after the expenses column, write the total down.A positive net income means that you earned more than you spent, while a negative one means the opposite.If necessary, use your net income as a starting point.
Step 16: Analyze the columns in the two documents.
Financial statements can be used to assess the financial health of a business.The same applies to personal financial statements.You can compare your assets to your debts.Think about how you can increase or decrease your assets over time.You can find areas in your income statement where you can increase income or decrease expenses.Excess cash can be used to increase your assets or decrease your debts.
Step 17: You should work with a financial planner.
A CFP can help you create a neat and organized set of financial statements.Contact one with positive reviews if you search online for CFPs in your area.If questions arise during your sit-down with the CFP, keep your receipts and other statements ready.If you have any legal questions or concerns, it's a good idea to consult with a business organizations attorney when creating your personal financial statements.
Step 18: Prepare to talk to bankers.
Personal financial statements can be used to apply for a loan.The bank can assess your financial situation with the statements.If you haven't already done so, you can create a neat copy of your personal financial statement snapshot by entering the figures into a spreadsheet application.Financial statements need to be clearly labeled and filled out.
Step 19: Print, file and wait for the statement from the bank.
This is usually turned in with your loan application.If you are applying for a loan with a business partner, general partner or other large shareholder, they will need to create and submit their own personal financial statements.