Expense Category

What expense category are facility costs?

There is no definitive answer to this question, as facility costs can vary greatly depending on the business and the type of facility being operated. However, some common expense categories for facility costs include:

1. Rent or Mortgage

If your business owns the facility, then the mortgage or loan payments would be considered a facility cost. If you are leasing the space, then the rent payments would be considered a facility cost.

2. Utilities

Utilities are typically one of the largest ongoing costs for most businesses, and this is no different for those with a facility. Electricity, water, gas, and trash removal are all common utility expenses that would be considered part of your facility costs.

3. Maintenance and Repairs

Keeping your facility in good condition is important for both safety and aesthetic reasons. As such, most businesses budget for regular maintenance and repairs as part of their facility costs.

4. Insurance

Most businesses are required to carry some form of insurance in order to protect their employees, customers, and property. If your business has a facility, then the cost of insuring the building and contents would be considered a facility cost.

5. Property Taxes

If your business owns the facility, then you will likely be responsible for paying property taxes on the property. These taxes are typically assessed by the local government and can vary based on the value of the property.

As you can see, there are a variety of expense categories that could be considered facility costs. The best way to determine which expenses should be categorized as such is to speak with your accountant or financial advisor.

The information provided in this article does not constitute legal or financial advice and is for general informational purposes only. Please check with an attorney or financial advisor to obtain advice with respect to the content of this article.
“Accurate classification of expenses is vital for businesses as it forms the backbone of financial reporting, tax compliance, and strategic decision-making. It enables businesses to track and analyze their spending patterns, identify cost-saving opportunities, and assess the profitability of various operations or projects. Having a single source to turn to for accounting classification suggestions, such as the Ramp Expense Classifier tool, is immensely helpful as it provides consistency, reduces ambiguity, and streamlines the expense classification process.”
Audrey Carroll
Senior Manager, Accounting, Ramp

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