Entering initial balances for an existing company

When you start a forecast in LivePlan, initial balances act as the starting point for an already-established business. These balances represent the assets, liabilities, and equity at the beginning of the forecast period. 

In this article:

Initial balances are only relevant for existing businesses. If your plan is for a new venture, you don't need to set initial balances in the forecast. However, if you already have an established business, it's important to provide your total asset, liability, and equity balances as of the start of your LivePlan forecast. These initial balances will be used as a starting point for your forecast calculations to ensure that your future performance is accurately reflected.

Note: Initial balances are how LivePlan represents past performance in your forecast. If you'd like your business plan to include more past performance detail than this, we offer some options for Representing past performance in LivePlan.

There are two ways you can enter initial balances in LivePlan:

  • If you're currently using QuickBooks Online or Xero for your day-to-day accounting, you can connect your accounting tool to the LivePlan Dashboard. This will automatically build a starting point for your forecast and enter your initial balances. 
  • If you're not using one of the above tools, you can enter your initial balances directly.

Both options are covered below.

Setting initial balances automatically from your accounting actuals

The first step in this process is to sync LivePlan with either QuickBooks Online or Xero. For details, see Connecting LivePlan to your accounting solution.

Note: You'll need a clean, untouched Forecast section in your LivePlan company to use this option. If you've already started entering data in the Forecast section, you can create a new company to work in.

When the sync is complete, you'll see that LivePlan has automatically used your accounting actuals data to add initial balances to your forecast. The software will insert a month at the start of your forecast for these starting amounts.

Balance sheet starting balances highlighted.png

Please have a look at the Editing initial balances section further below if you'd like to make changes to the initial balances. If you would like to learn more about how to set the initial balances directly, we will cover that topic in the next section.

Setting initial balances directly

You can use this option in any existing company.

  1. From the Forecast section, select Balance Sheet and click Set Initial Balances:
    set starting balances highlighted balance sheet.png

  2. At the top of the Initial Balances overlay, you'll see an equation expressing that the sum of your liabilities and equity must equal your assets. As you enter or edit initial balances in the overlay, this equation will update to show the current totals:
    assets liabilities equity highlighted.png
Note: You can click on the Total Assets, Total Liabilities, or Total Equity fields in the equation to switch to that step of the initial balances process. You can also use the Initial Assets, Initial Liabilities, and Total Equity buttons to jump between the 3 steps.
initial assets initial liabilities and total equity buttons.png

Step 1: Initial assets

In this section, you'll enter any cash on hand, accounts receivable, and both long-term and current assets your business owned before the start of the forecast.

To enter assets:

  1. Enter the amount of cash you have in the bank as of the start date of your forecast:
    cash.png

  2. Enter the amount your customers owe you for past sales on credit:
    accounts_receivable.png

    Note: This includes money owed to the business, such as unbilled revenue, outstanding invoices, and retainers.
  3. Select from the list how long it will take to collect outstanding credit sales:
    days_to_get_paid.png

  4. Indicate how much your unsold inventory is worth:
    inventory.png
    Note: For more information on inventory settings in LivePlan, please see Adding and managing inventory
  5. Enter the total value of your long-term assets:
    long_term_assets.png
    Note: Long-term assets, also known as fixed or tangible assets, include items such as land, buildings, vehicles, furniture, and equipment that retain their value for an extended period.
  6. Indicate how much depreciation you've claimed on these assets:
    accumulated_depreciation.png
    Note: Depreciation is an accounting and tax concept used to estimate the reduction in value of an asset over a period of time. This reduction in value can occur due to wear and tear or because newer models or better technology have replaced the asset. As an asset gets older, it tends to depreciate more, which has an impact on its overall value.
  7. Select the number of years (between 1 - 50) over which you'd like to depreciate the remaining value of your fixed assets:
    depreciation_period.png
    Note: If you don't want to show depreciation on your initial assets, choose Forever (do not depreciate). This setting applies to all initial long-term assets; this entry can't set depreciation on some assets and not on others.
  8. Enter the value (without amortization) of any other current assets you have at the start of the forecast. Then select the amortization period (between 1 - 12 months) for these assets:
    other_current_assets_starting_balances.png
    Note: If you don't want to show amortization on your initial current assets, choose Keep at full value (do not amortize). This setting applies to all initial current assets; this entry can't set depreciation on some assets and not on others.
  9. Click Continue to liabilities to move on to the Initial Liabilities step:
    continue to liabilities button.png

Step 2: Initial liabilities

Liabilities are debts, money that must be paid back. Usually, a liability you pay back in less than 12 months is called a short-term debt, and a liability that will take longer than 12 months to pay back is a long-term debt.

  1. Enter the amount you owe your vendors for past purchases on credit:
    accounts_payable_starting_balances.png
    Note: Accounts payable are bills to be paid as part of the ordinary course of business. When your business receives goods or services from a vendor, you receive an invoice, and until that invoice is paid, the amount is recorded as part of your Accounts Payable.
  2. From the list, choose how long it will take you to pay off your past purchases on credit:
    days_to_pay.png

  3. Enter the amount you currently owe for income and sales taxes:
    2022-12-16_15-07-13.png
  4. If you have any recurring charges revenue streams that have existing subscribers, and charge those subscribers every 2-12 months, then LivePlan will automatically calculate the prepaid revenue from those subscriptions and enter it in initial balances:
    prepaid.png
    Note: The prepaid revenue is automatically calculated based on the recurring charge amounts you’ve entered in your recurring charges revenue streams.
  5. If you have any loans that exist before the start of your forecast, you'll enter those on the Financing page. With those entries in place, LivePlan will automatically calculate your short-term and long-term debt for initial balances:
    balance_sheet_debt.png
  6. Click Continue to equity to move on to the Total Equity step.

Step 3: Total equity

  1. Enter the amount of money that you or others have invested in the business in exchange for equity:
    paid_in_capital.png
    Note: Paid-in capital is actual money paid into the company as equity investments by owners or outside investors. This is not to be confused with par value of the stock or the market value of the stock, which are not represented in the initial balances.
  2. LivePlan calculates your retained earnings automatically, and they are displayed here:
    retained_earnings.png
    Note: Retained earnings are those that have been reinvested into the company, not paid out as dividends to the owners. When retained earnings are negative, the company has accumulated losses. 

Editing initial balances

From the Forecast section, select Balance Sheet and click Set Initial Balances to edit your initial balances:

set starting balances highlighted balance sheet.png

Remember, you can go directly to any of the steps in the overlay by clicking on the equation at the top:

initial balances page detail showing assets liabilities and equity.png

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