Expense Category
Human Resources
What expense category are payroll fees?
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There are a few different ways to categorize payroll fees, and it may depend on the type of business and the accounting method used. Here are a few possibilities:

Cost of Goods Sold

If the business sells products or services, then the payroll fees can be considered a cost of goods sold. This means that the payroll fees are directly related to the revenue generated by the business. For example, if the business has 10 employees and each employee costs $1,000 in payroll fees per month, then the total monthly payroll expense would be $10,000. This amount would be deducted from the total revenue generated by the business.

Operating Expense

Another way to categorize payroll fees is as an operating expense. This means that the payroll fees are not directly related to the revenue generated by the business, but are necessary for the business to function. For example, if the business has 10 employees and each employee costs $1,000 in payroll fees per month, then the total monthly payroll expense would be $10,000. This amount would be deducted from the total revenue generated by the business, but would not be directly related to any specific revenue stream.

Non-Operating Expense

Another way to categorize payroll fees is as a non-operating expense. This means that the payroll fees are not directly related to the revenue generated by the business and are not necessary for the business to function. For example, if the business has 10 employees and each employee costs $1,000 in payroll fees per month, then the total monthly payroll expense would be $10,000. This amount would be deducted from the total revenue generated by the business, but would not be directly related to any specific revenue stream and would not be necessary for the business to function.

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As we scale we need tools that are built to scale with us - we need to see expenses real time, we need to see duplicate spend. These types of insights are important to the health of our business.
Steve Padis, SVP Finance & Strategy, Barry's
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.

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