Expenses
Expenses refer to the costs a business incurs in its day‑to‑day operations to generate sales and keep the business running.
In Filipino MSME terms: ito yung “mga gastusin ng negosyo” — tulad ng puhunan, kuryente, tubig, renta, suweldo, delivery fees, at iba pang bayarin para tumakbo ang negosyo.
Expenses directly affect profit, cash flow, and overall financial health.
Why Expenses Matter
For Filipino MSMEs, understanding expenses is important because it:
- Shows true profitability — hindi lahat ng benta ay kita
- Helps control overspending
- Improves pricing decisions
- Supports budgeting and forecasting
- Ensures accurate tax reporting
Managing expenses well can significantly increase earnings.
Types of Expenses
1. Operating Expenses
- Rent
- Utilities (kuryente, tubig)
- Salaries and wages
- Transportation and delivery
- Marketing and advertising
2. Cost of Goods Sold (COGS)
- Raw materials
- Ingredients
- Wholesale product costs
- Packaging
3. Administrative Expenses
- Office supplies
- Software subscriptions
- Professional fees
4. Non‑Cash Expenses
- Depreciation
- Amortization
Simple Expense Formula
Total Expenses = Operating Expenses + COGS + Other Business Costs
Example:
If your monthly expenses include ₱20,000 rent, ₱15,000 ingredients, and ₱10,000 salaries:
Total Expenses = ₱45,000
Example / Context
Example 1 (Carinderia):
Expenses include ingredients, gasul, utilities, and staff wages.
Example 2 (Sari‑Sari Store):
Expenses include wholesale product costs, electricity for the chiller, and permits.
Example 3 (Freelancer):
Expenses include software subscriptions, equipment, and internet.
Example 4 (Retail Store):
Expenses include rent, staff salaries, packaging, and marketing.
Related Terms
FAQs
1. Are expenses the same as COGS?
No. COGS refers to the cost of producing or buying goods. Expenses include all other business costs.
2. How can MSMEs reduce expenses?
By controlling waste, negotiating with suppliers, improving inventory management, and monitoring utility usage.
3. Are all expenses tax‑deductible?
Most business‑related expenses are deductible, but proper documentation is required.
4. Why do high sales not always mean high profit?
Because expenses may be too high, reducing actual earnings.