Before you can pay these liabilities, you must have an agency name associated with each liability. Usually these agencies are tax agencies, but they may also be a bank or an insurance company. To set up the agency names, enter the agency name in the “Agency for (Payroll Item)” window of the Payroll Wizard for the payroll items you use to track payroll liabilities.

Assets that are very liquid are shown on the balance sheet as current assets. Current assets are assets that are expected to be converted to cash in 12 months or less. Those assets with convertibility exceeding twelve months are considered to be illiquid and are categorized as fixed or long-term assets.

Assets = Liabilities + Owners’ Equity

This equation is also the framework for keeping track of money as it flows in and out of your company. Starting with the first penny you earn, you’ll record in a general ledger each and every transaction using a double-entry system of debits and credits. Assets get recorded on the top or the left side of the balance sheet; liabilities and owners’ equity are recorded on the bottom or the right side of the balance sheet.

The information on each company’s general ledger is unique to that business; however, all companies classify their general ledger accounts as assets, liabilities or owners’ equity. Businesses use more specific accounts within each classification, for example, “current assets” or “long-term liabilities,” to organize and track their finances.

Assets
An asset is anything of value that your company owns — including cash. Assets get recorded on the balance sheet in terms of their dollar values. Remember, even if you used credit to purchase an asset, you still own it. Its full dollar value gets recorded on one side of the balance sheet as an asset, and the amount you owe gets recorded on the other side of the balance sheet as a liability. There are several types of assets:

• Current assets. These are assets with dollar amounts that continually change, for example, cash, accounts receivable, inventory or raw materials your company uses to make a product. They are listed on the balance sheet in order of their liquidity, or how fast they can be converted into cash.

• Investments. Companies, like individuals, can own securities such as stocks and bonds. Investments, like cash or property, are considered assets.

• Capital assets. Think of capital assets, also called plant assets, as permanent things your company owns. Land, buildings, equipment and vehicles are common capital assets. So are things like computers, furniture and appliances, as long as they remain for use within your business and are not items you sell.

• Intangible assets. Patents, copyrights and other nonmaterial assets that have value are referred to as intangible.

It’s amazing how often a business structure gets started without the owner(s) first answering this very important accounting question, because the reality of being both a business owner and doing your own business books can be overwhelming if you are not well prepared.

Doing your own accounting could actually be the best thing for you to do! Just as long as you are well aware of all of the details that go into following the proper accounting procedures.

While bookkeeping 101 will provide you with helpful information on everything from setting up a chart of accounts  better understanding your balance sheet and profit and loss statemnets. For example, did you know that the accounts payable account is used to record the bills of a business that are outstanding and is also referred to as A/P which is Accounts Payable for short? Or that accounts receivable is the term that bookkeepers and accountants use to refer to the outstanding money that is owed to you for sales that you have already made that haven’t been paid for yet? There is much to be learned on the 101 page.

• The basic accounting forms page is a great resource of free accounting templates and tax deduction lists for an easier tax time. The free bookkeeping forms, excel & Quick Books  templates you find here should be very helpful. Please feel free to go ahead and download and/or copy any of the bookkeeping templates you find on the forms page.

Employers can visit: www.azdor.gov/Business/WithholdingTax.aspx

Direct your employees to the new fillable forms at: www.azdor.gov/Forms/Withholding.aspx

Liabilities are generally separated into two groups:

Current Liabilities

Debts to others that are due in a short period of time and are paid with current assets.

Long-term Liabilities

Debts that are “fixed” or paid over a long period of time, often for plant assets.

Common Liability Accounts:

Current Liabilities:

• Notes Payable – Promissory notes to creditors.

• Accounts Payable – What you owe others on account.

• Unearned Revenue – You’ve been paid, but haven’t delivered.

• Salaries Payable – Salaries you owe employees.

• Interest Payable – Interest you owe.

• Taxes Payable – Taxes you owe.

Long-Term Liabilities:

Liabilities that are carried over a number of years or at least more than one accounting cycle.  Examples of long-term liabilities are mortgages payable, bonds payable, and long-term notes.

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• Current liabilities — these liabilities are reasonably expected to be liquidated within a year. They usually include payables such as wages, accounts, taxes and accounts payables, unearned revenue when adjusting entries, portions of long-term bonds to be paid this year, short-term obligations and others.
• Long-term liabilities — these liabilities are reasonably expected not to be liquidated within a year. They usually include issued long-term bonds, notes payables, long-term leases, pemsion obligations, and long-term product warranties.

Payroll taxes are levied by government agencies on employees’ wages, tips, and other compensation. The amounts withheld by employers from employees’ pay for federal income, social security, and Medicare taxes are considered to be trust-fund taxes, because the money is held in a special trust fund for the U.S. government. Amounts withheld for state and local income taxes are held in trust for the state and local governments.