A liability account is a record of financial obligations that a business has to pay or provide goods/services in the future. This type of account is usually created on a company’s balance sheet. Liability accounts represent debts, such as loans, accounts payable, accrued expenses, and taxes payable. In other words, when you owe money or are liable for something, it goes into your liability account. By tracking liabilities, businesses can plan ahead and ensure they have enough funds to cover their financial obligations.