Business expenses - what is it? What does business expenses include?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

It is quite common to come across the concept of “business expenses”, and those who encounter it for the first time should familiarize themselves with it in more detail. This will be especially useful for future economists and accountants, as well as employees of commercial organizations.

Definition

Selling expenses are the costs that are aimed at the shipment and sale of products, as well as services for their packaging by third-party companies, delivery, loading, etc. This concept is not legally established. Quite often, users are faced with the expression "commercial expenses are the costs of the enterprise's circulation." It should be understood that this definition is correct, there is legislative confirmation of this.

The Tax Code defines distribution costs as sales costs for organizations that specialize in retail, small wholesale and wholesale trade in a variety of goods. Despite the fact that the concept under consideration is absent in the Tax Code of the Russian Federation, it occurs in accounting. In suchIn the case of selling expenses, this is line 2210, which is in the income statement.

What does this category include?

If you look at the list of such costs, you can create a complete picture of this term. Selling expenses include the following items:

• Packaging services for finished product warehouse.
• Transportation.
• Loading and unloading goods from vehicles.
• Commission costs.
• The cost of renting and maintaining premises in which goods are stored until they are sold.
• Paying salespeople to a manufacturing company.
• Enterprise expenses.
• Marketing expenses.
• Remuneration of employees of trading companies.
• Rent of retail space and storage space to accommodate finished products.
• Product insurance.
• Commercial risk insurance.
• Similar costs related to the sale of goods.

Knowing what business expenses include, you can understand how important they are for the company and its accounting.

What determines the amount of selling expenses?

It is necessary to consider the main categories of costs and factors influencing their formation:

• Product delivery. Depends on the distance of transportation, the company's transportation tariffs, the weight of the cargo, as well as the type of vehicle.
• Loading andunloading. They change due to a decrease or increase in the weight of products, as well as prices for this service per ton of goods.
• Packaging materials and containers. Their value is determined by the quantity and price per piece. The first indicator is related to the volume of production and the required materials for packaging one unit. Selling expenses of an enterprise of this type are those that are undesirable to exclude. This is due to the fact that aesthetically attractive packaging is one of the factors in increasing the demand for goods, so savings in this case are undesirable. The costs of this category will pay off with increased sales. This can also be said about the study of sales markets, advertising and other marketing research.

Once all business expenses have been analyzed, it is necessary to identify ways to reduce them, as well as develop clear recommendations for mastering this procedure.

What is the difference between selling expenses in manufacturing and trading firms?

It is worth noting that manufacturing companies include in this category only those funds that were used in the sale of products. Business expenses include everything related to the main line of business.

It is worth highlighting the following costs of this type of production organizations:

• packaging and co-packing services;
• transportation of goods to the place of departure;
• amount of fees paid by organizations;
• rentpremises for placing products at the point of sale;
• representative costs;
• advertising;
• other expenses similar in purpose.

Thus, we can conclude that for manufacturing companies, selling expenses are funds aimed at ensuring the sale of products.

Budget

Budgeting is a modern financial tool designed by enterprises to apply the implementation of certain goals. Timely preparation of budgets and their adjustment are an important detail in their formation for the enterprise. It also includes a business budget. It can be used to determine the company's costs for market research, product advertising and sales.

In the process of budgeting, it is necessary to take into account the fact that its amount is taken into account with VAT without depreciation of funds. In relation to commercial expenses, it is compiled by months. If necessary, this budget can be broken down into days. A schedule is required daily.

What features should be considered?

Selling expenses can be divided into semi-fixed and semi-variable. Depending on the segmentation of the market, they can be grouped according to many criteria. The company's costs are related to sales volumes. For their emergence and distribution, this will become an economic justification. If a firm undertakes a program to reduce sales costs, it should be understood that sales volumes are unlikely to increase,rather, they will even decline.

Variable costs must be planned depending on the life cycle of the product, expressing them as a percentage of the sales volume. If they play a significant role in the enterprise, they must be updated regularly, as the system for managing commercial expenses will be changed.

Expenses of commercial banks

They represent the application of funds that are necessary to carry out existing banking activities. They are classified according to the method of accounting, period, nature and form of education. The expenses and income of a commercial bank can be subdivided in a similar way:

• to ensure the functioning of the bank;
• operating and commission costs, for transactions in financial markets, etc.;
• other.

In this case, the bank's income is divided into the following types:

• from bank transactions;
• operating income;
• other.

In practice, a special group includes the expenses of a commercial bank aimed at forming a reserve fund. It covers losses on loans and losses on active operations, as well as on the depreciation of securities.

Conclusion

The information provided allows you to understand what constitutes selling expenses for different types of activities. It is required to adhere to the budgeting algorithm. This will help to avoid incorrect definition and scheduling. It should also be doneso that the amount of costs is as accurate as possible and it is possible to create a program to reduce them so that this does not lead to a decrease in profits. The category of commercial costs should be considered in detail in order to exclude the possibility of making mistakes.