Overhead Expenses: Definition and What Business Owners Need to Know
Expenses aren’t as fun to think about as sales, but they are an essential part of your business. Even if you are the sole proprietor of and only worker in a service-based business, you will still have business expenses. Unlike a W-2 employee who gets to keep their entire salary—less taxes, of course—you won’t be able to keep every dollar you earn in your business.
Some of the expenses you must manage in your business are those you incur to make your product or deliver your service. Other expenses go into keeping your business running. And still other expenses aren’t expenses at all, at least not from an accounting perspective.
Part of doing business is managing the expenses that go into operating your business. But not all expenses are created equal. In this article, we will take a look at the expenses that take up the most space on your profit and loss statement: overhead expenses.