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Any legal responsibility, duty or obligation. The state of one who is bound in law and justice to do something which may be enforced by action. This liability may arise from contracts either express or implied or in consequence of torts committed. Some examples of liabilities include mortgages, UCC liens, accounts payable, settlement charges and/or tax liens. 

A limited liability company is a  cross between a corporation and a partnership. This type of corporation is owned by a limited number of shareholders, which are not personally liable for investments made in the company.

It can be best desribed as the difference between current assets and current liabilities.Current Assets-Current Liabilities=Working Capital

LLC's and S Corporations are two very popular forms of incorporation, and both offer liability protection and pass-through income tax treatment for business owners, since taxes are reported on one's personal income tax return, not by the entity.  Among the issues to consider are the number of owners involved, what you can and cannot write-off for tax purposes, the amount of employment tax you may be required to pay, and individual state tax laws.

Accrual basis of accountinig is a method of accounting that recognizes revenue and expense at the period when invoices are issued. Liabilities are matched to the revenue for the same period.

There are specific guidelines for different states for forming an LLC but they all adhere to the same general principles set up by the SBA and the government. Basically no matter where your LLC is formed you will be required to complete  two specific documents namely, Articles of Organization and Operating Agreement.