What Is a Liability?

Liabilities are everything your business owes, now and in the future. They are found on the right side of your balance sheet.

There are two types of liabilities: long-term liabilities and short-term liabilities, which are also known as current liabilities. Current liabilities need to be paid back within a year and include accounts payable, lines of credit, and salaries. Many of your expenses will be current liabilities.

Long-term liabilities can be paid back after a year. Those include things like mortgages and bonds, and longer-term loans.

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