--- title: What Are Business Liabilities? | Accounting Liabilities | Ignite Spot description: Learn more about legal and accounting small business liabilities. There are several different ways you can be considered legally responsible for something. --- [**Call us at   1-855-694-4648           ** ](tel:1-855-694-4648) [![squareyoutube_copy](https://www.ignitespot.com/hubfs/2021_IgniteSpot/YOUTUBE.png "youtube")](https://www.youtube.com/channel/UCimfeJCvdyYVasnJCdMQhsw) [![facebook](https://www.ignitespot.com/hubfs/2021_IgniteSpot/FACEBOOK.png "facebook")](https://www.facebook.com/ignitespot/) [![IgniteSpot_logo](https://www.ignitespot.com/hs-fs/hubfs/2021_IgniteSpot/IgniteSpot_logo.png?width=187&height=72&name=IgniteSpot_logo.png "IgniteSpot_logo")](https://ignitespot.com) [![IgniteSpot Logo](https://www.ignitespot.com/hs-fs/hubfs/2021_IgniteSpot/IgniteSpot_logo.png?width=187&height=72&name=IgniteSpot_logo.png) ](https://www.ignitespot.com/) Menu ☰ ## What Are Business Liabilities? Written by [Eddy Hood](https://blog.ignitespot.com/author/eddy-hood) What are business liabilities? In simple terms, liabilities are **legal responsibilities or obligations**. Many of these small-business liabilities are not necessarily bad but to be expected. In an accounting sense, some liability is needed for a business to succeed. Loans, mortgages, or other amounts owed can be considered to be liabilities. A business definition of “liable” in the real world, though, tends to have a negative connotation. That’s because liability tends to correlate with litigation, which can be costly and alarming. **Examples of Normal Business Liabilities** In accounting, liabilities are financial ones. They are recorded as either amounts owed to creditors or amounts paid for future services. A bookkeeping professional might list amounts owed in “payable” categories: 1. Accounts payable 2. Interest payable 3. Income taxes payable 4. Notes payable 5. Wages/Salaries payable Prepayments, deposits, and unearned amounts are also liabilities. The business definition of “liable” covers this kind of debt as well. When a customer prepays or makes a deposit, this is considered to be “deferred” or “unearned” revenue. 1. Customer deposits 2. Unearned revenues In accounting, liabilities simply describe financial obligations, which the company needs to pay. They also are used to compute assets and equity. These are important, valuable amounts! **Legal Matters** Many global visitors say that America is a litigation-happy country, and people often tend to sue businesses and business owners rather than individuals. When a business owner hears the word “liable,” they tend to panic. What are business liabilities to watch out for? These tend to be unpredictable and varied and are very different from financial, necessary liabilities. **“I Could Be Liable!” ** Here are some things you should avoid doing in order to decrease your chances of being legally liable and getting sued: 1. Allowing accidents to happen on your premises (endangering customers and/or employees) 2. Ignoring OSHA, ADA, EPA, health, or other enforced standards 3. Not training employees in safety measures or proper use of safety equipment 4. Producing products, goods, or services that endanger people, either from poor workmanship, labeling, or testing 5. Not having an employee handbook or policies to prevent sexual harassment, discrimination, or wrongful termination 6. Violating either federal or state wage and hour laws 7. Practicing negligence in some way (including malpractice) 8. When applicable, not enforcing driving standards 9. Conspiring or [monopolizing](https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/single-firm-conduct/monopolization-defined) 10. Advertising in a factually inaccurate way 11. Not protecting consumer or employee data 12. Endangering the environment (including the air, water, or land) 13. Ignoring local zoning laws 14. Not having viable or accurate contracts 15. Violating copyright and intellectual property laws It’s important for a business owner to remember that just because someone is suing doesn’t necessarily mean they have a real case. Liability doesn’t always lead to litigation, and litigation doesn’t always happen because of your liability. Sometimes, lawsuits are simply unavoidable. If you run into legal trouble, trust an experienced lawyer. If you need your business liabilities to be accurate on the accounting end, [trust Ignite Spot](https://www.ignitespot.com/accounting-services-for-small-business). We’re an online, outsourced accounting firm who can help you to organize your liabilities and expenses. Contact us today or [download some of our free advice modules](https://offers.ignitespot.com/subscribe-0). ## Learn More About Similar Accounting Topics:  [Understanding the Accrual Accounting Method](https://www.ignitespot.com/understanding-accrual-accounting-method) [What Does Equity Mean?](https://www.ignitespot.com/what-does-equity-mean) [The Difference Between Cash Basis and Accrual Basis Accounting](https://www.ignitespot.com/difference-between-cash-basis-and-accrual-basis) [The Purpose and Practice of The General Ledger](https://www.ignitespot.com/purpose-and-practice-general-ledger-accounting) [How to Write Off Bad Debt](https://www.ignitespot.com/how-to-write-off-bad-debt) [What is a Trial Balance?](https://www.ignitespot.com/what-is-a-trial-balance) [How to Reconcile Accounts](https://www.ignitespot.com/how-to-reconcile-accounts) [What is a Credit Memo?](https://www.ignitespot.com/what-is-a-credit-memo) [Is Inventory an Asset?](https://www.ignitespot.com/is-inventory-an-asset) [What is the Cash method of Accounting?](https://www.ignitespot.com/what-is-the-cash-method-of-accounting) [What is Activity Based Costing?](https://www.ignitespot.com/what-is-activity-based-costing) [Self Employment and FICA](https://www.ignitespot.com/self-employment-and-fica) [Employer FICA Rates](https://www.ignitespot.com/employer-fica-rates) [Affordable Care Act and Small Business Requirements](https://www.ignitespot.com/affordable-care-act-small-business-requirements) [Generally Accepted Accounting Principles (GAAP)](https://www.ignitespot.com/generally-accepted-accounting-principles-gaap) [Know Your Options in Small Business Finances](https://www.ignitespot.com/know-your-options-small-business-financing) [The Effects of Small Business Bankruptcy](https://www.ignitespot.com/small-business-bankruptcy-effects) [How Do Small Business Loans Work?](https://www.ignitespot.com/how-do-small-business-loans-work) [The Importance of a Business Plan](https://www.ignitespot.com/importance-of-business-plan) [Choosing the Best Small Business Credit Card](https://www.ignitespot.com/choosing-the-best-small-business-credit-card) [What are Retained Earnings?](https://www.ignitespot.com/what-are-retained-earnings) [What is a Business Investment and How Should It Be Accounted For?](https://www.ignitespot.com/what-is-business-investment-and-how-should-it-be-accounted-forr) [How Hard Is It To Get a Small Business Loan?](https://www.ignitespot.com/how-hard-to-get-small-business-loan) [Understanding Different Entity Types](https://www.ignitespot.com/understanding-different-types-of-small-businesses) [How Much Capital Is Needed to Start a Small Business?](https://www.ignitespot.com/how-much-capital-needed-to-start-small-business) [Getting Involved in Business and Communicty Organizations](https://www.ignitespot.com/get-involved-business-community-organizations-to-join) [What is Business and Financial Leverage?](https://www.ignitespot.com/what-is-business-and-financial-leverage) ### Explore ### Latest Posts ### Contact Us **Phone:** [855-694-4648](tel:8556944648) **Hours:** 9 AM - 5 PM MST Monday - Friday **Location:** Ignite Spot Outsourced Accounting [2943 Parkway Blvd. PMB 49 Salt Lake City, UT 84119 United States](https://goo.gl/maps/B5MbZapPP2v74NWS7) ### Our Certifications - ![Quickbooks program advisor elite - Edited](https://www.ignitespot.com/hs-fs/hubfs/Quickbooks%20program%20advisor%20elite%20-%20Edited.webp?width=200&height=208&name=Quickbooks%20program%20advisor%20elite%20-%20Edited.webp) - ![Ignite-Spot-Gusto-Gold-Partner-1](https://www.ignitespot.com/hs-fs/hubfs/Ignite-Spot-Gusto-Gold-Partner-1.webp?width=227&height=179&name=Ignite-Spot-Gusto-Gold-Partner-1.webp) - ![FF_Top_50_Firms_Badge_Design_FA@4x_1_640](https://www.ignitespot.com/hs-fs/hubfs/FF_Top_50_Firms_Badge_Design_FA@4x_1_640.webp?width=236&height=220&name=FF_Top_50_Firms_Badge_Design_FA@4x_1_640.webp) - ![Badge---Gold-Champion-Partner](https://www.ignitespot.com/hs-fs/hubfs/Badge---Gold-Champion-Partner.webp?width=150&height=150&name=Badge---Gold-Champion-Partner.webp) - ![BILL Platinum Partner Badge - Edited](https://www.ignitespot.com/hs-fs/hubfs/BILL%20Platinum%20Partner%20Badge%20-%20Edited.webp?width=161&height=193&name=BILL%20Platinum%20Partner%20Badge%20-%20Edited.webp) - ![image (4)](https://www.ignitespot.com/hs-fs/hubfs/image%20(4).webp?width=300&height=67&name=image%20(4).webp) - ![Xero_software_logo-1](https://www.ignitespot.com/hubfs/Xero_software_logo-1.svg) - ![idjTKKEDt7](https://www.ignitespot.com/hs-fs/hubfs/idjTKKEDt7.webp?width=800&height=114&name=idjTKKEDt7.webp) - ![anchor](https://www.ignitespot.com/hs-fs/hubfs/anchor.webp?width=600&height=180&name=anchor.webp) - ![Avalara](https://www.ignitespot.com/hs-fs/hubfs/Avalara.webp?width=290&height=110&name=Avalara.webp) - ![Top 50 Badge 2024](https://www.ignitespot.com/hs-fs/hubfs/Top%2050%20Badge%202024.webp?width=200&height=218&name=Top%2050%20Badge%202024.webp) - ![Gold (1)](https://www.ignitespot.com/hs-fs/hubfs/Gold%20(1).webp?width=160&height=160&name=Gold%20(1).webp) [![IgniteSpot_logo](https://www.ignitespot.com/hs-fs/hubfs/2021_IgniteSpot/IgniteSpot_logo.png?width=187&height=72&name=IgniteSpot_logo.png "IgniteSpot_logo")](https://ignitespot.com) [![facebook](https://www.ignitespot.com/hubfs/2021_IgniteSpot/FACEBOOK.png)](http://facebook.com/ignitespot) [![twitter](https://www.ignitespot.com/hubfs/2021_IgniteSpot/TWIT.png)](http://twitter.com/ignitespot) [![youtube](https://www.ignitespot.com/hubfs/2021_IgniteSpot/YOUTUBE.png)](https://www.youtube.com/channel/UCimfeJCvdyYVasnJCdMQhsw) [![linkedin](https://www.ignitespot.com/hubfs/2021_IgniteSpot/linkedin.svg)](https://www.linkedin.com/company/ignite-spot/) © 2026 Ignite Spot, All Rights Reserved. ![](https://px.ads.linkedin.com/collect/?pid=7433034&fmt=gif)