Are SAFE notes a liability or equity?

This is a very common question and is sometimes debated. Simple Agreement for Future Equity (SAFE) notes are a product developed by the startup accelerator, Y Combinator. SAFE notes are not loan or debt instruments - they do not have a maturity date or interest rate. SAFE notes are intended to be converted to equity at a later date. Therefore, it would be accurate to categorize SAFE notes as equity.

Two ways to handle this.

1. You can create a new equity account for each investor who signs a SAFE Note as they come in.

For example: 

Name = SAFE Note-[xxx investor], Account Type = Equity, Sub-Type = Partners Equity

2. If you prefer to keep track on a separate detailed spreadsheet of all of your SAFE Notes, then you can create one equity account simply named SAFE Notes and put them all in that account.

For example:

Name = SAFE Notes, Account Type = Equity, Sub-Type = Partners Equity