A business liability is something owed by the company to a person, entity, etc. These could be Current (short-term), Long-Term, or a combination of both.
What’s the cutoff between Current and Long-Term? Current Liabilities are due within the next 12 months. If you’ll be making payments on the balance for more than a year, the portion you owe in the next 12 months is Current, and the rest is categorized under Long-Term.
Just like with Assets there are different types, including the well-known Accounts Payable (money owed to vendors or suppliers), bank loans, and Payroll or Sales Tax Payable (taxes owed to the government). One type that most people wouldn’t think about is Owner Repayment Payable. This could come into play if the owner gave the company a loan, or invested in the business and expects to be paid back.
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