Liabilities are what a business owes, from unpaid bills to loans and tax. This guide covers current and long-term liabilities.
Published July 2026 · Updated July 2026
Liabilities are the debts and obligations a business owes: unpaid supplier bills, overdrafts, credit cards, loans, and tax not yet paid. They're the counterpart to assets in the accounting equation.
Current liabilities fall due within a year, trade creditors, VAT and tax due, short-term borrowing. Long-term liabilities are due beyond a year, such as a multi-year bank loan. Comparing current liabilities with current assets shows whether you can meet what's due soon.
Yes, tax you owe but haven't paid (VAT, Corporation Tax, PAYE) is a current liability until settled.
Not inherently, borrowing can fund growth. What matters is whether you can comfortably meet obligations as they fall due.
Source: Investopedia ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.