Your Expense Model

10 min
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  • Expense Model Explained
    Ken Burke 4 min
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    Your expense model captures all of your non staffing-related expenses. To create accurate financial statements, and for tax compliance, you must classify all of your expenses properly. This Microcast provides an overview of the four classification groups: G&A, COGS, product development, and sales & marketing—and which ones to use for your business use case.

“Where did all the money go?” may be a common refrain when paying the monthly household bills, but expenses should never be a mystery when you’re launching a business. A thorough understanding of the costs of doing business – from rent to trade show marketing collateral – is essential to keep track of income and cash flow; you can track actual expenses against the projections as you move past launch and adjust activities accordingly. You also need to know baseline expenses so that you can price your offering appropriately and eventually realize a profit. This learning stream details potential expenses and their classifications, along with their potential tax implications, and offers a detailed worksheet for breaking out and tracking all the costs involved in running your business. Armed with this information, you’ll not only build solid financials for your business plan you’ll also build a buffer against overspending.

You will learn:

  • What kinds of costs should I capture in the expense model?
  • Why should I bother to classify expenses?
  • How can I handle overhead expenses?
  • What’s the difference between a COGs expense and an R&D expense?
  • What marketing and sales expenses should I track?
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