Expense Category
Professional Services

What expense category are permits?

The correct expense category for permits may differ depending on the business and the type of permit needed. Therefore there's no one definitive answer to this question. Nevertheless, some common expense categories for permits include:

Construction Permits

Construction permits are typically categorized as a 'construction in progress' or 'capital expenditure'. This is because the permit is required in order to begin construction, and the cost of the permit is typically included in the overall cost of the construction project.

Business Licenses and Permits

Business licenses and permits are typically categorized as 'operating expenses'. This is because they are required to operate the business, and the cost of the license or permit is typically included in the overall operating costs of the business.

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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