So I need to work up a Balance Sheet... How do you go about figuring what all your equipment (pans, tables, sink.... etc.) is all worth?
Also how do you figure out how much all your inventory is worth?? I have so many boxes and boards and so on, I'm not sure where to start?
Equipment is recorded on your balance sheet at initial book value, which is your cost to acquire the equipment (including installation and shipping fees). For capital, the value of the equipment on the BS is reduced over time via depreciation expense as the lifetime of the equipment is used up.
For inventory, raw materials (ingredients, boxes, boards) are also included on your BS at acquisition cost. For finished goods you would use the anticipated selling price, but you probably won't be keeping finished goods in inventory unless you bake products in bulk and freeze them.
Thanks Jason_Kraft! I have to say I love all your insight. I surf on here frequently and notice that you answer a lot of questions we all have 
I have been in business since 2008 and have never actually worked one up. So since I have had my equipment for years now and they have depreciated I am to just use the number that I currently file on my taxes?
As far as all my raw material... I just use the numbers from when I purchased them and not what I currently have in stock?
So since I have had my equipment for years now and they have depreciated I am to just use the number that I currently file on my taxes?
You would want to use the initial acquisition value with the depreciation taken out based on the usable life of the equipment.
So to use a simplified example, let's say you bought a $1000 mixer four years ago, and the mixer has a 10-year usable life. Assuming straight-line depreciation of $100/year ($1000 purchase price/10 years), the value of the mixer on the balance sheet is now $600. You are supposed to take $100/year in depreciation as a deductible expense every year so it can help offset your income and reduce your tax bill, I'm not sure if you can reclaim that deduction if you didn't take it in previous years (that would be a question for an accountant).
As far as all my raw material... I just use the numbers from when I purchased them and not what I currently have in stock?
For the raw material book value would be based on the initial purchase price. The value of raw material on your BS should be periodically adjusted whenever you take inventory (and when you receive shipments) to make sure it stays accurate. QuickBooks should be able to handle all this for you.
Okay, that makes sense. Yes, my equipment is depreciated on my taxes.
I currently use Cake Boss, while they have an area to enter expenses and materials, they do not have any sort of inventory control to help keep track of.
Thank you for the advice!
This is a great topic! I do not have a business background.. and have found myself thrust into it because this hobby that I have has grown... and now has lots of business potential. It is now my only source of income.. and since I am still young.. the "youth in business" organisation here on island is encouraging me to take it seriously. I can yet afford quick books, or cake box.. and so I have been working on an excel document.. all these financial statements that you need can be so confusing :S..
Thanks for your help.. i hope this thread grows
Quote by @%username% on %date%
%body%