YOU ASK:

Is insurance an operating expense or general expense?

WE ANSWER:

Before we categorize what kind of expense insurance is, let us first set the parameters that define what operating and general expenses are.

General expenses are costs in order for your business to run. These are the kind of expenditures that your company acquire while performing normal business operations. There are many categories under general business expense. Administrative expense, capital expense, inventory cost, and operating expense are the basic elements under general business expense.

Operating expense, also known and abbreviated as OPEX, is classified as the ongoing cost for operating or running a business, service, product, or a system. Operating expenses are the ones you spend in order to make your business run on a day-to-day basis. Operating expenses include but is not limited to employees' wage, venue rental, electricity bills, maintenance and repairs, supplies, advertising, taxes, travel expenses, accounting expenses, and license fees. These cuts are directly associated with the production of your goods and services.

In most cases, business owners and insurance agents classify insurance as operating expense. Though insurance is an indirect factor in operating expenses, it still falls under it because it is associated with the operation and maintenance of the business. Others group it under inventory costs since they are associated with keeping inventory at hand.

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