Accounting / Bookkeeping Basics: Liabilities

Current Liabilities
Liabilities are different from expenses. Think of expenses as the monthly or daily costs associated with running your business. Liabilities represent a fixed amount of money that you owe to outside third parties. Generally, you assume liabilities as part of the overall investment for starting and/or growing your business. The following are some examples of the type of Liability accounts many businesses will record in their ledgers:
-     Accounts payable. All outstanding financial obligations that the company has not yet paid.
-     Sales tax payable. Especially if you sell goods and services online, your company may be required to keep track of the sales tax you owe and pay the IRS annually or quarterly. This account will help you record these transactions.
-     Salaries payable. Prior to distributing payroll checks to your employees, the hours they work will accumulate total amounts  payable in this account.
-     Retirement contributions payable. If your company provides employees with retirement accounts with matching contributions, you can record transactions here.
-     Mortgage payable. If you have bought a building for your business and you still owe money on the mortgage, you should record all associated transactions here.
-     Taxes payable. Your business may be responsible for a variety of tax obligations, and separate accounts can be set up for each of them:
○     Federal unemployment tax payable.
○     Federal income tax payable.
○     State unemployment tax payable.
○     State income tax payable.
○     Social security tax payable.
-     Interest payable. If you have taken out any business loans, you can record amortized interest payable here.

Non Current Liabilities
Any time a company has obligations that carry a set value you have a known liability.  The known liabilities may fall into other categories such as:
Accounts payable
Sales tax payable
Unearned revenue
Short-term notes payable
Payroll liabilities
Accrued liabilities

If you remember, any goods or services purchased on credit are considered accounts payable.  However, when you make a sale it may incur yet another type of known liability.  This would be sales tax payable.  This account will be used for tracking and recording sales tax that needs to be paid to the state and local governments.
Also remember when a company receives money in advance it would be considered as unearned revenue.  These unearned incomes can be considered as a known liability.
Another form of known liability is a short-term note payable.  This is a debt that will be paid on a promissory note within one year.

An important known liability for a business is the payroll liability. The best way to think about these liabilities is the amount paid to  employees and is a set amount paid on a predetermined date.  

This type of liability has three categories.
Employee compensation
Payroll withholdings
Payroll taxes

For this we can look at your regular paycheck.  You perform 40 hours a week for two weeks at $9 per hour.  This earns you $720.  This would be considered your employee compensation.  From that $750 there are withholdings that are deducted to fulfill tax requirements.  These payroll withholdings are social security, Medicare, and federal and state income taxes.  However, social security and Medicare taxes support benefits such as retirees, disabled individuals, and other types of medical programs.  Instead of employees needing to pay their federal and state taxes directly to the government, your business is required to deduct this and report it for the employee.  The last one is the payroll taxes.  There are the withholdings from the employees that need to be paid to the government. 

For an idea of how this is paid see the example:

There are times where an employee may request to have additional withholdings deducted from their wages. 

The most common are:
Insurance premium payments

Pension or retirement plan