What are Expenses?
Expenses are the operational costs and expenditures incurred to run your business and generate sales, including shop rent, staff salaries, electricity bills, and administrative services.
Types of Common Expenses
| Category | Description | Examples |
|---|---|---|
| Operating Expenses | Recurring operational costs | Shop rent, electricity, water, internet bills |
| Administrative Expenses | Management & overhead costs | Staff salaries, office stationery, licensing fees |
| Marketing Expenses | Costs to acquire customers | Social media ads, promotional printing |
All operating expenses are deducted from gross revenue to calculate Net Profit or Net Loss on your Income Statement.
Frequently Asked Questions
Buying an asset (like a computer or office equipment) provides value over multiple years. An expense (like rent or utilities) is consumed immediately during the current operating period.
No! Owner withdrawals are deductions from Equity/Capital, not operational business expenses. Separating them protects the accuracy of your net profit calculations.
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