Overhead Expenses – What Are They?

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Are you properly tracking your overhead?

Let’s discuss a few things that commonly get left out…

Vehicle

We commonly think of gas as the only expense for our car. It’s a big one, but it is not the only one. Oil changes, tires, lights and accessories are all common maintenance items that need to be accounted for. This combination can add a couple thousand dollars each year. Take this a step further and think insurance, registration and licensing. You don’t need to outline these as line items for the customer, but rather blend the maintenance cost in your markup. You’ll find it comes out to a much higher number than just gas.

Office

Think rent or mortgage payment for the space you work out of. This could be several hundred to a couple thousand a month. Be sure to factor this in as it is one of the largest expenses companies take on. This includes everything like rent, cleaning, insurance, phone lines, internet, utilities etc.

You also need to account for salaries of workers that are not doing the construction but rather the behind the scenes office work. These are your bookkeepers and administrative employees. This can also be your estimators and the time spent creating an estimate.

Think about your marketing, advertising, and legal fees. These are all behind the scenes expenses that keep the business going. Advertising and marketing are usually a percentage of the overall budget. Legal fees can come up any anytime. You’ll need these for contracts or any kind of dispute you might run into.

Insurance

We pay insurance on just about everything we own. I covered this in my last couple points and will emphasize it here. You can pay insurance for a few dollars a month to several hundred depending on the item. Insurance most commonly forgotten is for your workers. You also have auto, office space and general liability. Crunch those insurance numbers and be sure they are being accounted for!

Misc items

There are many small items we forget about that can really add up. Every job you do requires some cleanup, both to the home and to your equipment. Think about the air filters for vacuums, or the cleaner for brushes. Things like drinking water or temporary utilities.

Keep all of these potential expenses in mind and accounted for. When you crunch numbers at the end of the year and ask yourself “What the? We made X amount this year and I’m barely seeing a dime!” you’ll understand why.

Have an expense not mentioned above? Please feel free to comment below.

Thanks for reading!

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