In the course of doing business, there are costs and expenses that are not directly related to creating products or services, but must still be paid on an ongoing basis. These are called "overhead costs" and are very important not only for budgeting correctly and tracking finances, but also for determining the appropriate costs of goods or services so that the organization can turn a profit.
Examples of Overhead Costs
Overhead costs are made up of ongoing costs that must be paid regardless of the company’s current volume of business. Common overhead costs include:
- Rent and Utilities
- Repairs and Maintenance
- Insurance
- Office Supplies
- Accounting
- Taxes
- Human Resources (Only salaries for administrative employees that handle tasks like hiring, onboarding, etc. Does not apply to non-HR staff.)
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