A liability is a financial obligation a business owes to others, from supplier bills and loans to taxes payable and deferred revenue.
Liabilities are what the business owes, and they sit on the right side of the balance sheet opposite assets. They split into current liabilities (due within a year, payables, short-term loans, taxes and payroll owing) and long-term liabilities (mortgages, term loans, lease obligations).
Some liabilities carry personal exposure for business owners. Unremitted source deductions and GST/HST are trust amounts for which directors can be held personally liable, so not all liabilities are equal, some are far more urgent than others.
A company's liabilities include $8,000 owed to suppliers, a $40,000 bank loan, and $3,000 of HST collected but not yet remitted. The HST is a trust liability the directors are personally on the hook for if it goes unpaid.
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