General and Administrative Expense

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Efficiency

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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 /COGS).

Short Definition

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.

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.

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.

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.

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).

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).

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).

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).

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).

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).

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

Parents: Operating Expense, Total Expense (Operating Expense + COGS)

Children / Components:

People (fixed comp.): Salaries, wages, benefits, payroll taxes for Finance/Accounting & FP&A, Legal, HR/People Ops, Executive/Admin (CEO/CFO/EA), Office/Facilities.
Variable comp.:
- Bonuses/spot awards for back-office teams.
- Stock-based comp for these functions (if tracked by function).
Professional services: Audit & tax, external legal (corporate, employment, IP admin), compliance/SOX, consultants.
Facilities and workplace: Rent/leases, utilities, supplies, security, cleaning, mailroom, coworking seats, remote stipends.
Corporate IT and tools: Email/productivity suite, SSO, device/endpoint management, helpdesk/ticketing, HRIS & payroll, ERP/procurement, e-signature, general admin software (non-production).
Insurance, permits and fees: D&O, general liability, cyber, property, workers’ comp; business licenses, state filings, annual report fees.
Recruiting and employer brand: Agency fees, job boards, ATS fees, background checks, relocation, employer branding.
Board, governance and IR: Board meetings/stipends, minutes, data rooms, corporate filings, investor relations admin.
Travel and admin / Travel and Entertainement : Executive/finance/legal/HR travel, offsites, training for back-office teams.
Other admin: Bank fees (non-COGS), postage/courier, small donations, miscellaneous office expenses.

Commonly mistaken for:

COGS/Cost of Sales (Delivery Costs) : servers/CDN (to run the product), card fees (payment processing), must-have third-party APIs (e.g., SMS, LLM, maps), shipping/packaging/returns, the per-order cut you pay partners/suppliers, and any onboarding/support you must provide to meet promised SLAs.
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).
Income Taxes: Below operating line; not G&A.

Related Metrics

Parents: Operating Expense, Total Expense (Operating Expense + COGS)

Children / Components:

People (fixed comp.): Salaries, wages, benefits, payroll taxes for Finance/Accounting & FP&A, Legal, HR/People Ops, Executive/Admin (CEO/CFO/EA), Office/Facilities.
Variable comp.:
- Bonuses/spot awards for back-office teams.
- Stock-based comp for these functions (if tracked by function).
Professional services: Audit & tax, external legal (corporate, employment, IP admin), compliance/SOX, consultants.
Facilities and workplace: Rent/leases, utilities, supplies, security, cleaning, mailroom, coworking seats, remote stipends.
Corporate IT and tools: Email/productivity suite, SSO, device/endpoint management, helpdesk/ticketing, HRIS & payroll, ERP/procurement, e-signature, general admin software (non-production).
Insurance, permits and fees: D&O, general liability, cyber, property, workers’ comp; business licenses, state filings, annual report fees.
Recruiting and employer brand: Agency fees, job boards, ATS fees, background checks, relocation, employer branding.
Board, governance and IR: Board meetings/stipends, minutes, data rooms, corporate filings, investor relations admin.
Travel and admin / Travel and Entertainement : Executive/finance/legal/HR travel, offsites, training for back-office teams.
Other admin: Bank fees (non-COGS), postage/courier, small donations, miscellaneous office expenses.

Commonly mistaken for:

COGS/Cost of Sales (Delivery Costs) : servers/CDN (to run the product), card fees (payment processing), must-have third-party APIs (e.g., SMS, LLM, maps), shipping/packaging/returns, the per-order cut you pay partners/suppliers, and any onboarding/support you must provide to meet promised SLAs.
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).
Income Taxes: Below operating line; not G&A.

Related Metrics

Parents: Operating Expense, Total Expense (Operating Expense + COGS)

Children / Components:

People (fixed comp.): Salaries, wages, benefits, payroll taxes for Finance/Accounting & FP&A, Legal, HR/People Ops, Executive/Admin (CEO/CFO/EA), Office/Facilities.
Variable comp.:
- Bonuses/spot awards for back-office teams.
- Stock-based comp for these functions (if tracked by function).
Professional services: Audit & tax, external legal (corporate, employment, IP admin), compliance/SOX, consultants.
Facilities and workplace: Rent/leases, utilities, supplies, security, cleaning, mailroom, coworking seats, remote stipends.
Corporate IT and tools: Email/productivity suite, SSO, device/endpoint management, helpdesk/ticketing, HRIS & payroll, ERP/procurement, e-signature, general admin software (non-production).
Insurance, permits and fees: D&O, general liability, cyber, property, workers’ comp; business licenses, state filings, annual report fees.
Recruiting and employer brand: Agency fees, job boards, ATS fees, background checks, relocation, employer branding.
Board, governance and IR: Board meetings/stipends, minutes, data rooms, corporate filings, investor relations admin.
Travel and admin / Travel and Entertainement : Executive/finance/legal/HR travel, offsites, training for back-office teams.
Other admin: Bank fees (non-COGS), postage/courier, small donations, miscellaneous office expenses.

Commonly mistaken for:

COGS/Cost of Sales (Delivery Costs) : servers/CDN (to run the product), card fees (payment processing), must-have third-party APIs (e.g., SMS, LLM, maps), shipping/packaging/returns, the per-order cut you pay partners/suppliers, and any onboarding/support you must provide to meet promised SLAs.
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).
Income Taxes: Below operating line; not G&A.

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