How to Make a Projected Balance Sheet

If you are operating a business, including businesses run out of your home, knowing how to make a projected balance sheet can help you obtain financing and plan future purchases. Actually, it is not as complicated to make a projected balance sheet as you may think. You can create projected balance sheets in a relatively simple format for a small business using any spreadsheet software so there is not need to purchase accounting software specifically for this project. How do you make a projected balance sheet?

Things You'll Need

• Current balance sheet
• Inflation/cost increase projections
• Spreadsheet software

Instructions

1. 

   Look at the business checking and savings account to estimate cash on hand for the coming year to place on the left side of the projected balance sheet. If your cash balance fluctuates, use an average for the 12-month period. Multiply the average number by the expected rate of inflation for the coming year unless you have specific knowledge about cash changes. If you have specific knowledge about cash changes that will occur, use your information to create the cash total for the projected balance sheet.

2. 

   Consider the assets owned and whether you intend to purchase any major assets, sell, or dispose of any assets in the next year. If no major changes are expected, subtract one year of depreciation from the assets and write the number on the left side of the balance sheet under cash. You may group these assets as tools, equipment, building, and machinery or split them out into categories, long-term assets, and intermediate-assets. Make projected amounts separately for each category if you choose to split them using the same procedure.

3. 

   Total the assets listed on the left side of the projected balance sheet. Write the word "total" and the projected total at the bottom, still on the left side.

4. 

   Determine the projected expenses or liabilities to write on the right side of the projected balance sheet. Make a separate list of all of your expenses for the business. If you have been advised of specific increases, like utility or rent increases for example, use the numbers you have been given. If you know of purchases that will increase liabilities or sales that will decrease liabilities use those as well. All other expenses should be multiplied by projected inflation percentages. When you have arrived at the total, write the word "liabilities" on the right side of the balance sheet and your total. To get more specific you can split liabilities into short-term (less than one year), intermediate (2 to 5 years), and long-term liabilities but still project numbers the same way.

5. 

   Subtract liabilities from total assets. The number you end up with is owners' equity. Write the words "Owners' Equity" under the liabilities on the right side of the balance sheet and the number you just calculated beside it.

6. 

   Add the liabilities and the owners' equity and write the word "total" and the number on the bottom right side of the balance sheet. This number should be exactly the same as the total on the left. Your projected balance sheet is complete.

Tips & Warnings

• If costs change more than your projections, print a revised projected balance sheet.

• If an exceptional event caused an asset or liability account to be significantly higher or lower than average do not use the exceptional amount in your projections.

• Remember that projections are estimates and unexpected cost changes do occur like gas prices fluctuated in 2008.

• Write the word Projected at the top of the Balance sheet and a date in case there are future revisions.

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