Some of the general categories of operating expenses on a chart of accounts include:
Selling expenses
Personnel-related expenses
Materials
Repairs and maintenance
Rents
Insurance
Marketing, advertising, and promotion
Professional fees
Property operating expenses
Utilities
Depreciation and amortization
The accounts your business will need for selling expenses will probably depend on how the majority of your sales are handled – whether they are cash sales, credit card sales, open credit sales, for instance. Some possible accounts include doubtful accounts or bad debt expense, credit card charges, commissions, and cash overage and shortage.
Personnel-related expenses would include salaries and wages, or employee compensation, which can be broken down into regular pay, overtime pay, vacation pay, severance pay, incentive pay, holiday pay, sick pay, commissions, bonuses, and profit sharing. Employee benefit accounts include workers’ compensation, supplemental health insurance, life insurance, disability insurance, pension plan contributions, and employee meals. Expense accounts are also needed for the employer’s payroll taxes, including FICA, and federal and state unemployment tax. Other personnel-related expenses include dues and subscriptions, employee housing, employee relations, recruitment, relocation, training, and travel and entertainment.
Expense accounts for materials (aside from the materials accounts that are set up in the cost of goods sold section) could include spare parts, production supplies, operating supplies, maintenance supplies, cleaning supplies, and office supplies.
Separate repairs and maintenance accounts could be set up for labor and materials, for example, or repairs and maintenance accounts could be set up by class of equipment, in a capital-intensive business. Rent expenses could be separated into land, buildings, equipment, and vehicles.
Some examples of insurance expense accounts including buildings and contents, business interruption, earthquake, flood, fire and theft, fraud, life, lost or damaged goods, products liability, professional liability, and public, or third-party liability.
Marketing, advertising and promotion expenses include commissions, travel, point-of-sale materials, print materials, radio and television advertisements, and franchise fees.
Professional fees include legal, auditing, accounting, tax consulting, and other consulting.
A breakdown of separate property operating expenses could be beneficial in a business with significant infrastructure. Some accounts include building supplies, electrical and mechanical equipment, elevators, engineering supplies, grounds and landscaping, painting and decorating, and waste removal.
Utilities include electricity, fuel, water, and telephone.
Expense accounts for depreciation and amortization should be broken down the same way as the accumulated depreciation and amortization accounts in the assets section.