An expense is money a business spends as part of its normal operations.
What is an expense?
An expense is a cost a business incurs to operate day to day. This can include paying employees and suppliers, covering rent or utilities, purchasing equipment or software, and accounting for things like depreciation. Tracking expenses helps organisations understand how money is being used, manage budgets and report financial performance accurately.
Things to know
- Expenses cover the everyday costs of running a business
- They can be fixed (like rent) or variable (like materials or travel)
- Accurate expense tracking supports budgeting and financial reporting
- Some expenses are tax‑deductible, depending on local rules
- Clear policies help employees understand what can be claimed
FAQs
What counts as a business expense?
Any cost directly related to running the business, such as salaries, supplies, rent or software.
Are expenses the same as liabilities?
No. Expenses are costs incurred during normal operations. Liabilities are amounts the business owes.
Can employees claim expenses?
Yes, if the cost is work related and allowed under company policy.
Why is tracking expenses important?
It helps manage budgets, monitor spending and ensure accurate financial reporting.
Are all expenses tax deductible?
Not always. Deductibility depends on local tax rules and the nature of the expense.
