The Balance Sheet lists assets, liabilities and the equity of the business. That is what you owe Vs what you own. The difference between these two numbers is your equity. Assets are what you own. It may be physical things like equipment or vehicles but it also includes all the money in your bank accounts and what your customers currently owe you (also called Accounts Receivable). Liabilities are what you owe. These include loans, credit cards and amounts you owe your suppliers (or Accounts Payable). It also includes all amounts you owe the tax man for GST, PAYG you have deducted from employees wages, Employees Superannuation and Income tax. These are also called Payables. In this industry, one of the biggest no-nos we see is businesses not putting money aside for Payables. You can’t spend the tax man’s money, he always wants it back. The best advice you can ever get is to open a separate bank account to hold all these payable amounts, move money to it regularly and never use it to pay anything else.
