Wednesday, April 10, 2024

What are the major business expense categories?

In accounting, 'the books' refers to all the financial records of a business, including the balance sheet, income statement, and cash flow statement. As a business owner, reviewing these records should give you a clear understanding of your business’s financial health. Expenses are critical components of running a successful business, which makes proper categorization essential. Below are some of the major categories of business expenses.

1. Operating Expenses

The costs associated with the day-to-day operations of a business.

+ Rent and Utilities (office, electricity, water, and internet services)

+ Salaries and Wages (salaries, bonuses, and benefits)

+ Supplies and Equipment.

+ Insurance (liability, property, and health insurance)

What are the major business expense categories?An image of a person in a burgundy shirt holding a white tablet with a screen displaying a simple bar chart graphic. The chart consists of vertical bars of varying heights representing different values, with a line graph overlaid, suggesting a trend analysis. This type of chart could be used to represent various business expense categories over time, showcasing trends and comparisons in a clear, visual format. The tablet is the main focus, held centrally by the person, implying the importance of data and analytics in business decision-making.

* Use Receipt-AI and SMS to upload receipts directly to QuickBooks and Xero, simplifying the process of gathering receipts and reconciling expenses.

2. Cost of Goods Sold (COGS)

COGS refers to the direct costs attributable to the production of the goods sold by a company. This category is particularly relevant for manufacturing and retail businesses.

+ Raw Materials (materials and supplies directly used to create a product).

+ Direct Labor: (Wages for employees who are directly involved in the manufacturing process).

+ Manufacturing Overheads (Costs indirectly related to production, such as maintenance of equipment and factory rent).

3. Travel, Meals and Entertainment

+ Travel (Airfare, hotels, and transportation for business trips).

+ Meals and Entertainment (For hosting clients or for employee outings).

4. Technology and Software

+ Software Subscriptions (accounting software, customer relationship management (CRM) systems, and project management tools.)

+ Hardware (Computers, servers etc)

5. Marketing and Advertising

This category encompasses costs related to promoting the business and its products or services.

+ Advertising: Costs of traditional advertising (TV, radio, print) and digital marketing (social media, PPC, email marketing).

+ Promotional Materials: Costs for creating and distributing marketing materials, such as flyers, brochures, and swag.

+ Market Research: Expenses for conducting market research and surveys to understand customer preferences and market trends.

6. Professional Services

+ Legal Fees (legal advice, litigation, trademarks, and patents).

+ Consulting Fees.

+ Accounting Services (bookkeeping, tax preparation, and financial advice).

We recommend using Receipt-AI to manage receipts and expenses. Simply take a picture of the receipt and send it via SMS. Receipt-AI is the most convenient way for professionals to upload their receipts.

business expense

what is a business expense

business expense categories for taxes

business Expense categories

receipt ai

Related Articles

Start uploading Receipts using SMS.

Save 97% of your time with efficient receipt processing

Works with Xero and QuickBooks

Perfect for businesses, big and small

No extra app downloads. Works with tools you already have (Email and SMS)

Start texting receipts →
A working professional traveling at a client site smiles as he takes a photo of a receipt with his smartphone. He plans to upload the receipt using SMS and Receipt-AI, which is integrated with Xero or QuickBooks, while sitting in a cozy café environment. Indicating the ease of using the app.

Receipt-AI with AI and SMS

What's new? Accounting Tips, Product News & Stories

2024 Receipt AI - Big Green Company Terms Privacy