What is a current liability?

Definition of a current liability

A current liability is money that your business owes which it will have to pay within a year.

Examples of a current liability:

Classic examples of current liabilities are money that the business owes to HMRC, such as VAT or Corporation Tax and money owed to its suppliers, such as a solicitor or an accountant. Money owed to suppliers is also called 'trade creditors'.

If your business is a limited company, you will find its current liabilities are called "Creditors; amounts falling due within 1 year" in its statutory accounts filed with Companies House.

Where to find current liabilities

Current liabilities appear on a business's balance sheet.

Keeping track of your business's current liability

FreeAgent is a powerful double-entry accounting engine which can generate reports - including balance sheets - enabling you and your accountant to easily keep track of your business's liabilities.

Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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