When looking at the SG&A expenses, you will be examining them as a percentage of revenue/net income. This figure is used in the calculation of different margins and when looking at the profitability of a company. SG&A is a major non-production cost reported on the financial reports. BooksTime makes sure your numbers are 100% accurate so you can focus on growing your business. Keeping proper financial records is time-intensive and small mistakes can be costly. The general and administrative portion of the SG&A, on the other hand, includes salaries and benefits of non-sales personnel, such as management and legal staff, building rent, office equipment depreciation, supplies, utilities, travel costs, consultant fees, subscriptions, bad debt expense, insurance and other related spendings. They can also include selling commissions, shipping expenses, sales supplies used, credit and collection costs. The selling expenses usually include salaries of sales personnel and executives, advertising or promotional costs, and travel expenses. Moreover, most of them are dollar amounts that do not vary based on business activity volume. Typically, the company will still have to pay for these expenditures even if nothing is sold. They are incurred for the benefit of the enterprise as a whole and are not related wholly to a specific function. Indirect selling expenses cannot be directly allocated to a specific unit but are proportionally distributed between all products or services sold during that period, such as phone, electricity, shipping costs.Įxpenses that arise in the course of everyday activities of a business and incurred independently from sales are usually classified as G&A costs. These spending items typically rise and fall with sales and are mainly related to distributing, marketing, and selling.ĭirect selling expenses are can be easily traced to the sale of specific merchandise. They are a result of the company’s effort to create sales and fill customer orders. Selling expenses comprise all the costs associated with or tied to the company’s sales. SG&A expenses, also known as operating, are usually recurring costs and do not include one-time costs in most cases. The definition of SG&A is the sum of all expenses that are directly or indirectly related to sales and all costs incurred to manage the overall company. What exactly are these expenditures? It is actually very close to its name. Selling, general, and administrative expenses is an accounting term that you will see on the Profit and Loss report.
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