What expense category does product liability insurance come under?
There are a few different ways to answer this question, depending on the business owner or finance team's needs. Product liability insurance can come under the insurance category, or it can be listed as a separate line item. For businesses with inventory, product liability insurance may be listed as part of the cost of goods sold (COGS).
Insurance Category
If the business owner or finance team needs to know where product liability insurance falls for accounting or tax purposes, it should be listed under the insurance category. This is because product liability insurance is a type of insurance, and businesses can deduct the cost of insurance as an expense on their taxes.
Separate Line Item
If the business owner or finance team needs to know how much they are spending on product liability insurance, it should be listed as a separate line item. This is because the cost of product liability insurance can vary depending on the amount of coverage and the deductible. By listing it as a separate line item, the business owner or finance team can see how much they are spending on product liability insurance and make changes if necessary.
Cost of Goods Sold
If the business owner or finance team needs to know the cost of product liability insurance for inventory purposes, it should be listed as part of the cost of goods sold (COGS). This is because product liability insurance is a cost that is incurred when purchasing inventory. By including it as part of COGS, the business owner or finance team can get a better understanding of the true cost of their inventory.
