What is included in G&A expenses is the overhead cost of running the corporate entity itself: executive and back-office salaries, corporate office rent and utilities, outside professional fees, general insurance, business licenses, and the IT and communications tools that support the whole company. If a cost would still exist even if the company stopped selling tomorrow, it’s almost certainly G&A. Costs tied to making the product (cost of goods sold) or to generating sales (selling expenses) sit in different categories.
Administrative Salaries and Benefits
Compensation for people who don’t directly make or sell products is typically the largest G&A line. That covers pay and bonuses for the CEO, CFO, and other executives, plus staff in human resources, corporate accounting, the in-house legal team, and compliance. These roles keep the organization functioning but don’t generate revenue on their own.
The employee’s function is what determines the classification, not the paycheck. A chief human resources officer is G&A because HR serves the whole company. A regional sales manager is a selling expense because that role exists to drive revenue in a defined territory. A factory supervisor is neither: that salary belongs in cost of goods sold.
Facility and Office Costs
Rent or lease payments on the corporate headquarters and general office space are G&A, along with utilities for those spaces, general office supplies, and routine maintenance. If the company owns its office building, depreciation on that property counts here too. The distinction that trips people up: a factory’s rent is a production cost, but the corporate office’s rent is G&A. Same lease terms, different bucket, because the space serves a different function.
Professional and Legal Fees
Fees paid to outside accountants for annual audits, attorneys handling corporate governance or litigation defense, and consultants working on organizational strategy are all G&A. So are tax preparation fees for the business itself. These services benefit the entire entity rather than a specific product line or customer relationship.
Technology and Communications
IT infrastructure that supports employees across the organization counts as G&A when it can’t be traced to a specific production or sales function. Server maintenance contracts, corporate email platforms, cybersecurity tools, and general software subscriptions belong here. A CRM used exclusively by the sales team, by contrast, is a selling expense. The test is who benefits, not what the tool does.
Insurance, Licenses, and Regulatory Costs
General liability insurance, directors and officers (D&O) coverage, property insurance on administrative buildings, and business licensing fees are G&A. Annual state filing fees to keep the company in good standing fall here too. These costs protect and maintain the corporate entity itself rather than any specific operation inside it.
What Is Not G&A
Two boundaries matter more than any list, because misclassification distorts the financial statements in ways lenders and investors notice.
Cost of Goods Sold Is Separate
COGS captures everything spent to produce or acquire the products a company sells: raw materials, direct production labor, and manufacturing overhead like factory equipment depreciation. G&A covers the administrative shell around that production activity, not the production itself.
The reason this matters: COGS is a product cost, meaning those dollars attach to inventory on the balance sheet and only hit the income statement when the product sells. G&A is a period cost, expensed in the accounting period it occurs regardless of what sold. Coding a factory supervisor’s salary as G&A instead of COGS inflates gross profit and makes production look more efficient than it is. Coding an HR manager’s salary as COGS does the opposite. Gross profit is revenue minus COGS, so every dollar in the wrong bucket distorts the number analysts scrutinize most.
Selling Expenses Are Separate
Selling expenses are tied to revenue-generating activity: sales commissions, advertising, marketing campaigns, travel for salespeople visiting prospects, and rent on a dedicated retail storefront or sales office. When a cost sits on the border, ask whether it would disappear if the company stopped all sales activity. If yes, it’s a selling expense. If no, it’s G&A.
Public companies often combine the two on the income statement as “Selling, general and administrative expenses,” or SG&A, under SEC reporting rules.1eCFR. 17 CFR 210.5-03 – Statements of Comprehensive Income Even when they’re reported together, they’re functionally different, and companies that break G&A out separately in footnotes give a clearer view of where money actually goes.
Allocating Shared Costs
The gray area shows up with shared resources. A building that houses both a factory floor and corporate offices needs its rent split between COGS (for the manufacturing space) and G&A (for the office space). The same goes for a shared IT department or a facilities crew that services both areas.
The standard approach is a systematic allocation that approximates each function’s proportional share. Square footage works for rent. Headcount or time spent can work for shared personnel. Whatever method the company picks needs to be rational, documented, and applied consistently period after period. Switching methods opportunistically to move costs between categories is the kind of thing auditors flag immediately.
Fixed Versus Semi-Variable G&A
Not every G&A cost behaves the same way when business activity moves. Truly fixed items stay constant month to month: office lease payments, executive salaries, insurance premiums, and depreciation on office furniture don’t change whether the quarter was record-breaking or terrible. These are the most predictable numbers in the G&A budget.
Semi-variable items have a baseline but shift with usage. Utility bills rise when more people work in the office. Office supply spending tracks headcount. Maintenance costs spike when equipment breaks unexpectedly. Executive travel depends on how many trips get approved. The semi-variable items are where companies typically find room to cut G&A without eliminating positions or breaking leases.
Tax Deductibility
Most G&A expenses are deductible as ordinary and necessary business expenses under federal tax law. The IRS allows deductions for the costs of running operations, including salaries, rent, utilities, insurance, and professional fees, as long as those costs are common in the industry and helpful to the business. The statute specifically calls out reasonable compensation for services actually performed, business travel including meals and lodging, and rental payments for property the business uses but doesn’t own.2Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses Legal, accounting, and tax preparation fees tied to business operations are also deductible.3Internal Revenue Service. Publication 334 (2025), Tax Guide for Small Business
Meals and Entertainment Limits
Entertainment expenses — tickets to sporting events, concerts, and similar client outings — are not deductible at all. Business meals are deductible at 50% of the cost, and only when the meal isn’t lavish and a company employee is present.4Office of the Law Revision Counsel. 26 USC 274 – Disallowance of Certain Entertainment, Etc., Expenses Transportation workers subject to Department of Transportation hours-of-service rules get 80%.
Records to Keep
Claiming these deductions requires documentation. The IRS expects records showing the payee, the amount, proof of payment, the date, and a description establishing the business purpose.5Internal Revenue Service. What Kind of Records Should I Keep Canceled checks, credit card statements, and invoices all work. Employment-related records should be kept at least four years. Expenses paid in advance belong in the tax year they apply to, not the year the check went out.3Internal Revenue Service. Publication 334 (2025), Tax Guide for Small Business
Where G&A Shows Up on the Income Statement
G&A appears below the gross profit line as an operating cost. It doesn’t touch COGS and doesn’t factor into the gross profit calculation. Because it’s a period cost, the full amount hits the income statement in the quarter or year it’s incurred. There’s no deferral, no capitalization, no matching to specific revenue. A company that signs a three-year consulting agreement expenses each payment as it comes due, not the total upfront.