2018-01-23 08:48:02Self EmployedEnglishhttps://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/01/Conducting-Business-From-Smartphone-2.jpghttps://quickbooks.intuit.com/ca/resources/self-employed/calculate-sales-tax-in-seconds/How to Calculate Sales Tax in Quickbooks and Other Tax Tips for the Self-Employed

How to Calculate Sales Tax in Quickbooks and Other Tax Tips for the Self-Employed

1 min read

Cash equivalents appear as assets on a balance sheet. They include cash along with liquid investments you can quickly convert into cash.

Basics of Cash Equivalents

Money in your savings account falls is considered cash, while the funds in your money market accounts and three-month Canadian Treasury Bills are cash equivalents. Generally, cash and cash equivalents don’t change much in value. For instance, the value of a stock may fluctuate wildly, but short-term treasury bills tend to yield very modest gains. Even though money market accounts usually have higher rates of return than most savings accounts, they also result in modest changes to the overall value of your assets.

Cash and Cash Equivalents

Having cash and cash equivalents on your balance sheet shows investors or lenders that your business is healthy. If your revenues take a dive, you can still stay on top of your bills and other short-term liabilities.

On the other hand, having too much cash or cash equivalents on hand can be a sign you’re not taking full advantage of your liquid assets. To save money in the long run, you may want to use cash to pay down high-interest debts, for example.

The amount of cash or cash equivalents your business needs varies depending on your industry, your objectives, and how much debt you have. However, as a general rule, you should have enough cash or cash equivalents to cover three to six months of business expenses.

Keeping track of your cash equivalents and other financial aspects starts with accurate records and an accounting system such as QuickBooks Online. Keep your books accurate and up to date automatically. Change the way you manage your finances now.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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