What are liabilities?
Liabilities are your business's financial obligations to others — everything owed but not yet paid: supplier debts, bank loans, wages payable, and taxes due.
Types of liabilities
| Type | Meaning | Examples |
|---|---|---|
| Current liabilities | Settled within a year | Payables, wages due, taxes |
| Long-term liabilities | Settled after more than a year | Bank loans, property finance |
Why track them?
Because profit alone is not enough. A business can be comfortably profitable and still fail because obligations fall due before its receivables are collected. Tracking liabilities is tracking your ability to pay on time.
Where they sit in the equation
The higher liabilities climb against assets, the more your business depends on other people's money.
Frequently Asked Questions
Yes. A loan is an obligation you must repay, so it is recorded under liabilities. It is usually split into a short-term portion due within a year and a long-term portion.
An expense is a cost already consumed during the period. A liability is an obligation still outstanding. An electricity bill can be this month's expense and a liability at the same time if you have not paid it.
Yes. If the month has ended and wages have not been paid, that is an outstanding obligation and it sits under current liabilities.
Ready to start with Qayd?
Start free today — no credit card needed, cancel anytime.