What is a liability?
A Liability is something (usually cash) your business legally owes to an individual, another business, bank, or sometimes the government.
There are two main types of liabilities, Current and Non-current.
Current liabilities are anything your business is required to pay within one year.
Non-Current liabilities are anything your business is required to pay past one year.
Tracking your liabilities is key to forecasting and budgeting. If you know that in 60 days, you must pay x amount to somebody, it's easier to plan for that expense than if you aren't tracking it and suddenly that amount is due.