Administrative expenses

Definition

Administrative expenses refer to the costs incurred by a business in the day-to-day operations and management of its activities. 

What are administrative expenses?

These expenses are essential for the functioning of the business but do not directly contribute to the production of goods or services.

Administrative expenses cover a wide range of costs associated with general management, administration, and support functions within an organisation. Some common examples of administrative expenses include:

  • Salaries and wages: Compensation paid to administrative staff involved in general administration and support functions.
  • Office rent and utilities: Costs associated with leasing office space and utility bills such as electricity, water, and internet services.
  • Office supplies and equipment: Expenses related to office supplies, equipment, and furniture necessary for day-to-day operations.
  • Insurance: Payments made for various types of insurance coverage, including property insurance, liability insurance, and workers’ compensation insurance.
  • Depreciation and amortisation: Allocation of the cost of tangible assets (depreciation) and intangible assets (amortisation) used in administrative activities.
  • Training and development: Expenses for employee training programs, professional development seminars, and educational courses.
  • Office maintenance and cleaning: Expenses related to maintenance of office facilities, including janitorial services, repairs, and renovations.

Administrative expenses are recorded on the income statement of a company and are deducted from its total revenue to calculate its operating profit. Monitoring and controlling administrative expenses are essential for businesses to maintain profitability, improve efficiency, and allocate resources effectively. 

Example of administrative expenses

Let’s consider a small consulting firm. Some of its administrative expenses for the month include:

  • Salaries and wages: $8,000
  • Office rent and utilities: $2,500
  • Office supplies: $500
  • Insurance: $800

To calculate the total administrative expenses for the month

Total administrative expenses = $8,000 + $2,500 + $500 + $800 = $11,800

So, the total administrative expenses for the consulting firm for the month amount to $11,800. These expenses cover essential costs related to the day-to-day operations and management of the business.

Clever finance tips and the latest news

Delivered to your inbox monthly

Join the 95,000+ businesses just like yours getting the Swoop newsletter.

Free. No spam. Opt out whenever you like.

Our offices:

Disclaimer: Swoop Finance Pty Ltd (ABN 52 644 513 333) helps Australian firms access business finance, working directly with firms and their trusted advisors. We are a credit broker and do not provide finance products ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop Finance Pty Ltd can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness, we may receive a commission or finder’s fee for effecting such introductions. Swoop Finance Pty Ltd does not provide any kind of advice and in giving you information about providers products, we are not making any suggestion or recommendation to you about a particular product. Offers of finance are subject to a separate assessment process by the provider and subject to their terms and conditions. If you feel you have a complaint, please read our complaints section which is contained within our terms and conditions.

© Swoop 2025

Looks like you're in . Go to our site to find relevant products for your country. Go to Swoop