What are liabilities?

Liabilities are any debts your company has, whether it’s mortgages, a vehicle loan, accounts payable, sales tax payable, or any other type of long- or short-term loan. If you’ve promised to pay someone a sum of money in the future and haven’t paid them yet, that’s a liability.⁠
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Current liabilities are debts that you must pay back within the next 12 months, whereas long-term liabilities are debts that aren’t due for more than 12 months.⁠
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Common types of current liabilities are accounts payable, notes payable within 1 year, and payroll taxes. Typical long-term liabilities include SBA loans, deferred tax liabilities, and mortgage, equipment, and other capital payments that aren’t due for more than a year.⁠
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Connecting back to our previous post about assets, sometimes a purchase will be reflected as an asset and liability account. For instance, you purchase a new company vehicle and will be financing it over 36 months. A journal entry would be made in Quickbooks to reflect the purchase (fixed asset) and the loan (long-term liability). Each month, your car payment will be categorized to the liability account, over time paying off the balance shown. Your purchase amount in the fixed asset category, however, will remain constant and will be depreciated over the life of the vehicle.⁠
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