What are liabilities?
A liability is reported in an annual financial statement that represents the business situation at the end of a settlement period. Current liabilities are debts or obligations that must be paid within one year. Long-term liabilities are expenditures and payments that stretch over years, such as mortgage balances.
If a company is unable to repay a long-term liability before it matures, it could face a solvency crisis. Short-term liabilities are obligations of the company that have to be paid within one year. If you run your business with only cash to pay or collect, you have no liabilities. You should monitor your current liabilities to ensure that your companies have enough cash to pay off all current assets and pay off all liabilities within a year or less.
Tracking Your Liabilities
Assets can be confusing because they not only track what you pay for your property, but also track things like depreciation. How many individual accounts you set up will depend on what type of debt you want to track and how much money you need to pay.
Some loans, even those that you have personally guaranteed, are listed as liabilities because they are on behalf of your business. Due accounts contain assets that can be considered receivables by the company to which they belong. When money, goods or services are to be received from a subsidiary and transferred to the parent company, these are referred to as cross-company receivables.
Liability tracking is an important part of accounting and financial health of your business. Almost all businesses will have liabilities and keeping your liabilities organized is crucial. There are different types of liabilities including current liabilities and long term liabilities. Current liabilities may include things like your business credit card balance, quarterly tax payments, salaries owed, etc. Long term liabilities are those debts/payments that are not intended to be settled in less than a year, for example the mortgage or lease on your building, long term business loans, etc. Don’t let liability tracking bring you down, let the pros at Oregonized Accounts take care of it for you!
Outsourcing liabilities helps your company track the liabilities of debit, credit and liability accounts. The liabilities are recorded in the company’s bank account, which is documented in invoices and payments. It is also recorded in a company account, which offers the possibility of proving payment on an invoice. The liabilities can also be registered with a third party, where they can be credited to invoices.
Our financial experts at Oregonized Accounts LLC can help you create a plan to increase your company’s profits. Call us today and learn how to grow and become more profitable by working with your company’s finances and accounts and outsourcing them to outsourced financial accounts.
Professional Liability Tracking Services in Bend, OR
A company must have assets to get and hold customers, and liabilities are good for your business because they increase leverage with assets. Tracking your assets or liabilities properly will give you a comprehensive overview of your financial health and business, and can help you manage your spending well and help you see where your money is going.
Call us now at 541-279-5983 to learn about liability tracking and other accounting services in Bend, OR.