{"id":1387,"date":"2026-10-02T00:00:00","date_gmt":"2026-10-02T00:00:00","guid":{"rendered":"https:\/\/thenesttools.com\/blog\/how-to-calculate-total-liabilities\/"},"modified":"2026-10-02T00:00:00","modified_gmt":"2026-10-02T00:00:00","slug":"how-to-calculate-total-liabilities","status":"publish","type":"post","link":"https:\/\/thenesttools.com\/blog\/how-to-calculate-total-liabilities\/","title":{"rendered":"How to Calculate Total Liabilities (With Examples)"},"content":{"rendered":"

To calculate total liabilities, add up everything you or your business owes: current liabilities due within a year (such as credit card balances, accounts payable and the next 12 months of loan payments) plus long-term liabilities due later (such as the rest of a mortgage or business loan).<\/strong> You can also work it out from the accounting equation: total liabilities = total assets \u2212 equity. For example, a business with $250,000 in assets and $140,000 in owner’s equity has $110,000 in liabilities.<\/p>\n

The Formulas<\/h2>\n\n\n\n\n\n\n\n
Method<\/th>\nFormula<\/th>\n<\/tr>\n<\/thead>\n
Add them up<\/td>\nTotal liabilities = current liabilities + long-term liabilities<\/td>\n<\/tr>\n
From the accounting equation<\/td>\nTotal liabilities = total assets \u2212 equity<\/td>\n<\/tr>\n
For a person<\/td>\nTotal liabilities = all debts you owe (net worth = assets \u2212 liabilities)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

What Counts as a Liability?<\/h2>\n\n\n\n\n\n\n\n\n\n
Business: current (due within 12 months)<\/th>\nBusiness: long-term<\/th>\n<\/tr>\n<\/thead>\n
Accounts payable (bills owed to suppliers)<\/td>\nLong-term loans and bonds<\/td>\n<\/tr>\n
Wages and taxes owed<\/td>\nMortgage on business property<\/td>\n<\/tr>\n
Short-term loans, overdrafts<\/td>\nLease liabilities<\/td>\n<\/tr>\n
Current portion of long-term debt<\/td>\nDeferred tax liabilities<\/td>\n<\/tr>\n
Customer deposits and unearned revenue<\/td>\nPension obligations<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n\n
Personal liabilities<\/th>\n<\/tr>\n<\/thead>\n
Mortgage balance<\/td>\n<\/tr>\n
Car loan<\/td>\n<\/tr>\n
Student loans<\/td>\n<\/tr>\n
Credit card balances<\/td>\n<\/tr>\n
Personal loans and buy-now-pay-later balances<\/td>\n<\/tr>\n
Money owed to family or friends<\/td>\n<\/tr>\n
Unpaid taxes or bills<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Monthly bills you haven’t received yet (next month’s rent, for example) aren’t liabilities until they’re owed. See assets and liabilities examples.<\/p>\n

Worked Example: Small Business<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Item<\/th>\nAmount<\/th>\n<\/tr>\n<\/thead>\n
Accounts payable<\/td>\n$18,000<\/td>\n<\/tr>\n
Wages and taxes owed<\/td>\n$7,500<\/td>\n<\/tr>\n
Credit card<\/td>\n$4,500<\/td>\n<\/tr>\n
Current part of bank loan<\/td>\n$12,000<\/td>\n<\/tr>\n
Total current liabilities<\/strong><\/td>\n$42,000<\/strong><\/td>\n<\/tr>\n
Bank loan (after next 12 months)<\/td>\n$48,000<\/td>\n<\/tr>\n
Equipment lease<\/td>\n$20,000<\/td>\n<\/tr>\n
Total long-term liabilities<\/strong><\/td>\n$68,000<\/strong><\/td>\n<\/tr>\n
Total liabilities<\/strong><\/td>\n$110,000<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If total assets are $250,000, equity is $250,000 \u2212 $110,000 = $140,000, so the balance sheet balances.<\/p>\n

Worked Example: Personal<\/h2>\n\n\n\n\n\n\n\n\n\n
Debt<\/th>\nBalance<\/th>\n<\/tr>\n<\/thead>\n
Mortgage<\/td>\n$185,000<\/td>\n<\/tr>\n
Car loan<\/td>\n$14,200<\/td>\n<\/tr>\n
Student loan<\/td>\n$9,800<\/td>\n<\/tr>\n
Credit card<\/td>\n$2,300<\/td>\n<\/tr>\n
Total liabilities<\/strong><\/td>\n$211,300<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

With assets of $290,000 (home $260,000, savings $18,000, car $12,000), net worth is $290,000 \u2212 $211,300 = $78,700.<\/p>\n

Calculate It With a Balance Sheet<\/h2>\n

The free Balance Sheet Generator<\/a> lists your assets and liabilities in categories, totals them automatically, shows equity or net worth, and exports a clean balance sheet as a PDF. It works for small businesses and personal finances, and nothing you enter is uploaded.<\/p>\n

Useful Ratios Using Total Liabilities<\/h2>\n\n\n\n\n\n\n\n
Ratio<\/th>\nFormula<\/th>\nWhat it shows<\/th>\n<\/tr>\n<\/thead>\n
Debt ratio<\/td>\nTotal liabilities \u00f7 total assets<\/td>\nHow much of the assets is financed by debt (example: 110,000 \u00f7 250,000 = 44%)<\/td>\n<\/tr>\n
Debt-to-equity<\/td>\nTotal liabilities \u00f7 equity<\/td>\nBorrowing compared with owner investment (0.79 in the example)<\/td>\n<\/tr>\n
Current ratio<\/td>\nCurrent assets \u00f7 current liabilities<\/td>\nAbility to pay short-term bills; see current ratio and working capital<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Why Total Liabilities Matter<\/h2>\n

Lenders, investors and you yourself use total liabilities to judge financial health. A business with rising liabilities and flat assets is borrowing to stay afloat; a household whose total debt keeps falling is building net worth. Track the figure every quarter: the trend tells you more than any single number. Reducing high-interest liabilities first, such as credit cards, usually improves both cash flow and net worth fastest.<\/p>\n

Frequently Asked Questions<\/h2>\n

How do you calculate total liabilities?<\/h3>\n

Add current liabilities (due within a year) and long-term liabilities, or subtract equity from total assets.<\/p>\n

What is the formula for liabilities on a balance sheet?<\/h3>\n

Liabilities = assets \u2212 equity, from the accounting equation assets = liabilities + equity.<\/p>\n

Is a mortgage a liability?<\/h3>\n

Yes. The outstanding balance is a liability; the home itself is an asset.<\/p>\n

Are monthly expenses liabilities?<\/h3>\n

Only amounts already owed (an unpaid bill, for example). Future rent or utilities aren’t liabilities until they’re due.<\/p>\n

What is the difference between liabilities and expenses?<\/h3>\n

A liability is an amount you owe at a point in time, such as a loan balance. An expense is a cost for a period, such as this month’s rent. An unpaid expense becomes a liability until you pay it.<\/p>\n","protected":false},"excerpt":{"rendered":"

Total liabilities = current + long-term liabilities, or assets minus equity. Business and personal examples and key debt ratios.<\/p>\n","protected":false},"author":1,"featured_media":1386,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-1387","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-documents"],"_links":{"self":[{"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/posts\/1387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/comments?post=1387"}],"version-history":[{"count":0,"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/posts\/1387\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/media\/1386"}],"wp:attachment":[{"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/media?parent=1387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/categories?post=1387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thenesttools.com\/blog\/wp-json\/wp\/v2\/tags?post=1387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}