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Liabilities are debts or financial obligations your business owes to others—where others could be people, banks, vendors, etc.

There are two types of liabilities: current and long-term.

Current liabilities are obligations your business must pay back within 12 months—these are things like credit card balances or employee wages.

Long-term liabilities are debts your business is expected to take longer than one year to pay back—such as bank loans or multi-year equipment leases.

Basically, liabilities are money your company is responsible for paying to someone else. They are the opposite of assets on your business' Balance Sheet.