For a cash-basis company, there are no liabilities on the balance sheet. The accounting equation for the balance sheet is that Assets = Liabilities + Owner's Equity. If you have cash and inventory, the total of those two should equal your owner's equity line. All numbers on the balance sheet are normally positive (there are exceptions that don't apply in your situation).
Note that you can skip the Balance Sheet section if:
- Total business income (before deductions) is under $250,000; and
- Your business is not filing an Alabama, Connecticut (non-partnership), District of Columbia, Georgia, Kentucky, Louisiana, Massachusetts, Mississippi, New Jersey (non-partnership), New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, or Tennessee return; and
- Corporation year-end assets are under $250,000 or partnership/LLC year-end assets are under $1,000,000.
If you qualify, see: How do I turn off the balance sheet?
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