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Accounting Terms
Expense
Definition
The cost incurred in running a business or generating revenue.
Overview
Expenses include all costs of doing business—supplies, software, rent, contractors, etc. Managing expenses is crucial for profitability.
Example
Monthly expenses: rent ($1,500), software ($200), contractors ($3,000), supplies ($100) = $4,800 total.
Best Practices
Track all expenses, categorize consistently, and review regularly for cost-saving opportunities.
Common Mistakes to Avoid
Not tracking small expenses
Poor categorization
Missing tax deductions
Frequently Asked Questions
What's the difference between expenses and costs?
Often used interchangeably. 'Costs' sometimes refers specifically to production costs.