Company expenses: clear and simple examples

For an SME, knowing the costs of a company with clear and simple examples is essential. The reason is simple: many small businesses do not have sufficient financial resources to create their own accounting department. Below we will try to clear up some of the most frequent doubts about this type of expenses thanks to simple and, above all, easy to understand examples. 

What are the costs of a company

Economists divide the costs of a company into two main groups: fixed costs and variable costs. 

• Fixed costsAs the name suggests, these are all those expenses or costs that are constant. In other words, those that do not vary according to the level of activity or the number of customers of the company, the economic situation or any other element. 
• Variable costsExpenditures can change and fluctuate on a case-by-case basis. They can increase or decrease, and can do so either voluntarily or involuntarily as the case may be. Regarding the voluntary way, different saving systems can be implemented, such as, for example, the following systems Flexible Compensation, use of Petrol Ticket, or any other action that is implemented voluntarily and that allows for a reduction in this type of expenses. As for the involuntary form, these are all those that affect variable costs but do not depend on a decision that the company controls, such as the cost of raw materials, the increase in the cost of fuel, etc. 

Knowing what a company's expenses are, especially when it is a small company, is essential for improving productivity and competitiveness of it. Here are some examples common to most businesses. 

Company expenses: examples of fixed costs

The fixed costs or expenses of a company are those that have to be paid by the company. to assume on a regular basis and irrespective of their volume of work or turnover. Generally, most economists take it as a rule of thumb that the fewer and smaller the fixed costs, the better. However, there are certain fixed costs that will always have to be borne in most circumstances:

• Rent or mortgageThis is a fixed cost associated with the space in which the activity is carried out. There may be cases where it is not necessary (e.g. a delocalised activity or a company that already owns the premises). However, in most cases, it is one of the typical business expenses. 
• Basic suppliesThis is the other fixed cost par excellence. This includes both water and electricity, as well as air conditioning, telephone and internet costs, etc. 

Company expenses: examples of variable costs

The second group of a company's expenses are known as variable costs, and include all expenses that are not always paid on a regular basis, but which are paid on a regular basis. will depend on the circumstances and the particular activity of each company.. 

These business expenses depend very much on the type of SME or small business involved. For example, in the case of a workshop, variable costs will include items such as the maintenance of machinery and the purchase of tools. This will be much higher than, for example, the costs of another business such as a grocery shop or a hairdresser's shop. In other words variable costs will vary widely depending on the type of enterprise or SME in particular the one in question. 

In any case, there are a number of variable costs that all companies tend to bear, regardless of the type of business they are in. The most common are the following:

• Advertising and external communicationThe main objective is to attract new customers, which will allow the company to remain active and, at the same time, to expand its activity. Its main objective is to attract new customers, which will allow the company to remain active and, at the same time, to expand its activity. 

Staff costsStaffing: This is the most common business expense and is also the main variable cost faced by most companies. The staff of an SME is an indirect cost of the company. These personnel costs are unavoidable, since the value of a company depends to a large extent on the value of its human resources.