Legal Definitions - expense

An expense is a cost that a company incurs while carrying out its operations to generate revenue. These costs can be either fixed or variable. Fixed expenses are those that remain constant, such as rent and insurance. Variable expenses, on the other hand, fluctuate with production volume, such as labor or raw materials for production.

For instance, if a company produces more goods, it will need to hire more workers, which will increase its labor costs. Similarly, if a company needs more raw materials to produce more goods, its raw material expenses will increase.

Some expenses are tax-deductible business expenses, which means that a company can subtract them from its taxable income. For example, a company can deduct expenses related to business travel, office supplies, and advertising.

Overall, expenses are an essential part of a company's operations, and they need to be managed effectively to ensure profitability.