General and Administrative Expense
Financials
Industry:
Sector Agnostic
Short Definition
General & Administrative (G&A) Expense is the overhead to run the company: finance, legal, HR/people ops, executive, facilities/office, corporate IT, insurance, audit, and other back-office costs. It excludes costs to build the product (Research and Development Expense) or acquire/serve customers (Sales and Marketing Expense /Cost Of Goods Sold).
Why it matters for Investors
Operating discipline: Shows how lean the back office is per $ of revenue.
Path to profitability: Lower G&A as % of revenue → better operating margin.
Scalability test: Healthy companies see G&A grow slower than revenue.
Formula
Practical considerations -
Be explicit: Publish what sits in General and Administrative Expense vs Research and Development Expense vs Sales and Marketing Expense vs COGS and stick to it.
D&A: Depreciation/Amortization may be shown separately or allocated into functions. If you include it in G&A, do it consistently and don’t double-count.
Capitalization: Capitalize qualifying items (e.g., leasehold improvements) and exclude from G&A; only the depreciation/amortization hits later.
Allocations: Shared costs (IT, office) can be allocated by headcount/usage if you want function-level margins—document the rule.
Worked Example
Line Item | Amount | Notes |
Add : People (finance, legal, HR, exec) | $780,000 | Salaries, benefits, bonuses, stock comp |
Add : Professional services | $210,000 | Audit, tax, legal, compliance, consultants |
Add : Facilities & office | $145,000 | Rent, utilities, supplies, security |
Add : Corporate IT & tools | $95,000 | Email, device management, HRIS, ERP, admin tools |
Add : Insurance & licenses | $70,000 | D&O, cyber, GL, business licenses, filings |
Add : Recruiting & employer brand | $60,000 | Agency fees, job boards, employer branding |
Add : Board & investor relations | $25,000 | Board costs, data rooms, filings |
Add : Other admin | $15,000 | Misc. bank fees, postage |
Total G&A Expense | $1,400,000 | Sum of above |
Notes:
People includes exec team comp (CEO/CFO/CHRO), finance, legal, HR/People Ops, admin.
Corporate IT is internal employee IT (helpdesk, laptops, email) — not production hosting (that’s COGS).
Recruiting lives in G&A unless you explicitly allocate to functions.
Income taxes are not G&A (they sit below operating income).
Best Practices
Track % of revenue: Aim for G&A % to decline over time as you scale.
Centralize tools: Consolidate back-office software; remove idle seats.
Set approval limits: Tighten vendor/contract thresholds to avoid creep.
Quarterly vendor sweep: Re-bid audit, insurance, and major contracts annually.
Allocate smartly: If you report function margins, allocate shared costs with a simple, documented driver (headcount).
FAQs
Does General and Administrative Expense include stock-based compensation?
Yes—wherever the employee sits. Exec/finance/legal/HR stock comp is in G&A.Is executive travel General and Administrative Expense or Sales and Marketing Expense?
Exec travel for customer selling → Sales and Marketing Expense. Corporate/board travel → General and Administrative Expense.Are production cloud and payment fees in General and Administrative Expense?
No. They’re delivery costs → Cost of Goods Sold.Where do recruiting costs go?
Usually General and Administrative Expenses. If you allocate, you can split to Research and Development Expense /Sales and Marketing Expense /General and Administrative Expense by hires.Do we put income taxes in General and Administrative Expense?
No. Income taxes are below operating income (not operating expense).
Related Metrics
Commonly mistaken for:
Cost of Sales (Delivery Costs)
R&D Expense (Engineering, product, design building the product_
S&M Expense (Sales/marketing people, paid media, agencies, partner fees, commissions (amortized))
CapEx (Office buildouts, equipment purchases recorded on balance sheet (only depreciation later hits P&L))
Source of: