Business expenses can be categorized into several general categories to track and manage financial transactions effectively. These categories are essential for budgeting, financial reporting, and tax planning. Here are the main expense categories:
Operating Expenses: These include day-to-day costs such as rent, utilities, office supplies, and salaries.
Cost of Goods Sold (COGS): Expenses directly associated with producing goods or services, like raw materials and labor costs.
Marketing and Advertising: Costs for promoting the business and attracting customers, including advertising, promotions, and marketing campaigns.
Depreciation: The allocation of the cost of assets over their useful lives, impacting your financial statements.
Interest and Finance Charges: Payments on loans and credit, including interest and other finance-related fees.
Taxes: Various taxes, such as income tax, sales tax, property tax, and payroll taxes.
Understanding these expense categories is crucial for effective financial management and tax planning. A CPA can help you accurately classify and manage these expenses to optimize your financial performance. If you have questions, please contact us for a free telephone consultation at 480 747 3935 (call or text) or send us an message.