As an employer, there will also be liability accounts for the employer payroll taxes, including FICA, federal and state unemployment, and for workers’ compensation insurance. If your business has a matching contribution pension plan or another type of employee benefit plan, there should be an account set up to record your liability as the employer to contribute to these plans.

Other taxes payable accounts that may need to be set up include sales tax payable, real estate and property taxes, and income taxes, including federal, state and local. Although not used in the United States, value added tax (VAT) payable is a common account in many countries. These payable accounts are used to record tax liabilities for which the amount has been determined (a return has been prepared, for example) and are pending payment.

Accrued tax accounts are used to record taxes that apply to the period, calculated based on earnings or another basis, but for which a return has not yet been filed, and the definitive amount due has not yet been determined. For example, U.S. income tax may be accrued each month, although the final liability will not be definitively known until the return is filed at year-end.

Another class of liability accounts includes income received in advance, or unearned income, such as advance payments on contracts which have not been completed. Another type of liability account in this section could be deposits that you are holding, and will eventually have to return.

Long-term Liabilities

Long-term liability accounts reflect the corresponding accounts in the current liabilities sections. These include the long-term portion of amounts payable to banks and other creditors. There may be a long-term liability account for obligations under capital leases. Long-term liabilities may also include notes payable, commercial paper, and bonds payable. And, there could be intercompany accounts and notes payable.