These are the financial obligations that your business is required to pay. In simpler terms, this is what you owe external parties or businesses. For example if you acquired a bank loan for your business, what you owe your bank is a liability.
- Current Liabilities – These are the things you expect to pay within 12 months of the date on the balance sheet. Examples include: short-term loans, wages payable and accounts payable.
- Non-Current Liabilities – These are your long-term debts which are not payable within 12 months of the balance sheet. Examples include: long term loans, and bonds payable.