Starting balances are only relevant for existing businesses. If your plan is for a new venture, you don't need to set starting balances in the forecast. If you are the owner of an up-and-running business, however, you'll need to provide your total asset, liability, and equity balances as of the start of your LivePlan forecast.
These starting balances create a starting point for the calculations of your forecast, and they ensure that the forecast accurately reflects your performance going forward.
Note: Starting balances are the way 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 in Representing past performance in LivePlan.
There are two ways you can enter starting 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, and this will automatically build a starting point for your forecast, and enter your starting balances.
- If you're not using one of the above tools, you can enter your starting balances manually.
Both options are covered below.
Setting starting 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: To use this option, you'll need a clean, untouched Forecast tab in your LivePlan company. If you've already started entering data in the Forecast tab, then you can simply create a new company to work in.
When the sync is complete, you'll see that LivePlan has used your accounting actuals data to automatically add starting balances to your forecast. The software will insert a month at the start of your forecast for these initial amounts.
In the example below, the forecast start date is January 2018. After a sync with QuickBooks Online, LivePlan has inserted December 2017 and placed the starting balances there:
If you'd like to make changes to the starting balances, please see the Editing starting balances section below.
If you'd like to know more about what the starting balances mean, please see the section below on Setting starting balances manually.
Setting starting balances manually
You can use this option in any existing company.
- Click the Forecast tab, and then click Balance Sheet:
- Next, click the Set Starting Balances button:
- At the top of the Starting 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 starting balances in the overlay, this equation will update to show the current totals:
Note: You can click on Total Assets, Total Liabilities, or Total Equity in the equation to switch to that step of the starting balances process.
Step 1: Total assets
In this section, you'll enter any cash on hand, accounts receivable, and long-term assets your business owned prior to the start of the forecast.
To enter assets:
- Enter the amount of cash you have in the bank:
Enter the amount your customers owe you for past sales on credit (i.e., outstanding invoices):
From the list, choose how long it will take you to collect on the outstanding past sales on credit:
- Indicate how much your unsold inventory is worth (if you have inventory):
- Enter the full value of your fixed (long-term) assets:
Note: Fixed assets include things that will have a long standing value, such as land or equipment.
- Indicate how much depreciation you've claimed on these assets:
Note: Depreciation is an accounting and tax concept used to estimate the loss in value of an asset over time. Assets depreciate due to wear and tear or by being replaced by newer models/technology. The older an asset gets, the more it depreciates in value.
- Enter the number of years over which you'd like to depreciate the remaining value of your fixed assets:
Note: If you don't want to show depreciation on your starting assets, choose Forever (do not depreciate). This setting applies to all starting long-term assets; this entry can't set depreciation on some assets and not on others.
- Enter the value (without amortization) of any other current assets you have as of the start of the forecast. Then select the amortization period for these assets:
- Click Next to move onto the Total Liabilities step.
Step 2: Total liabilities
Liabilities are debts; money that must be paid back. Usually a liability that 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.
- Enter the amount you owe your vendors for past purchases on credit:
Note: Accounts payable are bills to be paid as part of the normal 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.
- From the list, choose how long it will take you to pay off your past purchases on credit:
- Enter the amount you currently owe for corporate taxes:
- Enter the amount you currently owe for sales taxes:
- If you have any loans that exist before the start of your forecast, you'll enter those in the Financing page. With those entries in place, LivePlan will automatically calculate your short-term and long-term debt for starting balances:
Click Next to move on to the Total Equity step.
Step 3: Total equity
- Enter the amount of money that you or others have invested in the business in exchange for equity:
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 stock, or market value of stock, which are not represented in the starting balances.
- LivePlan calculates your retained earnings automatically, and they are displayed here:
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.
- Click Save & Close. The Projected Balance Sheet will be updated to display the information you entered.
Editing starting balances
To edit your starting balances, click the Balance Sheet link in the Forecast tab, and then click the Set Starting Balances button to access your original entries:
Remember, you can go directly to any of the steps in the overlay by clicking on the equation at the top:
Update any entries you need to change in the three sections, and then click Save & Close.