Good morning and welcome to another edition of always up to date. I’m Denise and this is Yahweh, uh, where the coal owners have always Edmonton Bookkeeping. Uh, if you’re just joining us, uh, we’re just here to, to share a little bit with you. If today the topic that we’re going to be sharing is what should be on your balance sheet. Uh, if you don’t know how we do these videos, we like to start with a quote and a statistic, uh, and then just a little story and then, um, just ask some questions and, and we’ll try to answer them as best as we can. Uh, so the quote that we have today, uh, is from Michael Gerber, who is the author of E myth. And his quote is with no clear picture of how you wish your life to be, how on earth are you going to live it?
What is your primary aim? Where is the script to make your dreams come true? What is the first step to take? And how do you measure your progress? How far have you gone and how close are you to getting to your goals? Uh, this statistic that we have is from CB insights, CB insights, reviewed essays from failed entrepreneurs. And most of the entrepreneurs listed multiple reasons for failure. 42% of entrepreneur preneurs who failed report, no market for the service or product as one of the reasons for failure. 29% of entrepreneurs who failed report running out of cash as one of the reasons for failure. And 23% of entrepreneurs who’ve failed, reported not having the right team as one of the reasons for failure. So these were the three most common reasons reported and all of the other reasons were reported less frequently. So things like pricing and cost, timing, location, things like Edmonton Bookkeeping.
Um, so lots of times we see clients that come in and they have so many different accounts on their balance sheet and they just don’t know how to read it. And um, sort of like our quote, if you don’t have a goal or if you don’t know where you’re at with your small business, how are you going to succeed? You just, um, you know, so we’re going to talk about the ballot seat and how it should be organized and what kind of things should be on there, just to make it a little bit easier to read and to kind of get the information off it that you need. So I have some questions that you might want to ask yourself when you’re, uh, reading the balance sheets. So first the, as, um, what does the balance sheet tells us? Yeah. So the balance sheet is going to give us sort of a little view of, um, where we’re at with our assets, what type of assets we have, what we owe other people, what other people owe us, and, and just kind of, um, the equity that’s in our small Edmonton Bookkeeping.
Uh, what should be on the balance sheet. Yeah. So on the balance sheet, um, we have our assets. So you’re going to have current assets, like your cash accounts. Um, you’re going to have, um, your, your, um, longterm assets like, uh, like if you have cars or, um, equipment, um, that’s going to be depreciating over a certain amount of time. Things like that. You have any loans on there? Um, that includes a shareholder loan, uh, loans to the bank, things like that. Um, you have your payables, so like your credit cards and um, yeah. Yeah. Um, how should the balance sheet be organized? Yeah. So at the top of your balance sheet, um, you’re going to have your assets, your current assets first. Um, so we look at these at as, um, what’s the, the quickest ones to make it into liquid funds, right? So of course your cash in your bank, that’s first, um, always cash is the easiest to get to.
So we have that first, then we have accounts receivable. And just going back to the assets, um, lots of people just kind of, um, put, you know, it’s not just their checking account for the corporation, but any savings accounts you have, any, um, corporate and corporate investments. Yeah. Things like that. Um, yeah. And then you have the accounts receivable. So those are the accounts that, uh, people are PA, you’ve done the work for them and your client hasn’t paid you yet. So those are next. Um, and then we have the, um, [inaudible] we have the, the assets, the, um, things like the computers, the equipment, any kind of, um, anything really that you need to, to run your business, that’s going to help you earn income. Um, that’s going to depreciate to any property plan on a piece of equipment. There are some few exceptions where you would have any intangible assets like Edmonton Bookkeeping?
It’ll be, um, on that part of balance sheet as well. Yeah, exactly. Yep. Then you have your liabilities, your accounts payable. So credit cards, um, payroll liabilities. So those are, um, like your payments, your source deductions that need to go to birth CRA, um, things like that. And, um, and then after your liabilities, you have your, um, your equity. Um, so what bank accounts should a corporation have? Yeah, so I think we’ve talked about this on another video, but really a corporation really only needs, um, uh, corporate checking account that you use for your day to day business. Um, and you might want, you might have, um, a savings account. Really, you don’t need a whole lot of accounts in your business. Just the, the main one is the operating account. Um, what is the accounts receivable. So accounts receivable are, um, that’s telling you what other people owe you from Edmonton Bookkeeping.
Like I said earlier, it’s basically, um, you’ve done the work for somebody and they just haven’t paid you yet. So you send them an invoice. Once you’ve created that invoice, it goes into accounts receivable. Once the person, the client pays you, then it leaves the accounts receivable and goes into your, your income. Um, what are the assets? Accounts? Yeah, so like we talked about the asset accounts or anything that you can, um, use that you use for business buildings. So if you buy a building that you work out of, that’s an asset. Um, if you drive a vehicle, we had an interesting conversation the other day, uh, with the rest of our staff about vehicles. Uh, we had a client that had a, um, like a $200,000 luxury car and wanting to know if they can put it as an asset. And so we had a discussion about whether is that really an asset for the corporation or not.
So you have to kind of look at it as if, um, what, what is that person doing? What is their business? I mean, if they, if they drive around high end clients and their job is to to entertain them to, you know, take them to the red carpet or something like that. Maybe a $200,000 ADI is actually useful in your corporation and you actually do use it for your corporation. So it could be an asset if you’re a doctor or a lawyer and you just drive to your place of business and you’re, it’s not really a corporate asset. You’re not able to get income from use of that vehicle. And just to remind your to that with a vehicle, um, you can only claim up to 30,000. Yeah, that’s right. Yeah, that’s right. Um, some of the other things that go into the, um, the assets are, is computers, um, furniture and fixtures.
All that kind of stuff goes into there. So I think there’s, um, a couple of criteria for what to put as your asset. Um, one of them is who actually owns the asset. So that’s one of them. If the corporation owns the asset as opposed to the person actually owning gas. So that should be in your balance sheet. Um, second one is the length of time that the asset was, um, is being used. If it’s a one off, it could be an expense, for example, uh, repairs. Um, if you would look at our repairs and it’s not, um, it’s just a onetime costs cost to repair your asset. It wouldn’t be added to the cost of your asset or to the value of the asset. And again, if it’s a better and meant cause the third criteria would be, um, the benefits that you would get from the asset Edmonton Bookkeeping.