TLDR: General and administrative expenses (G&A) are the indirect costs of keeping a business running: rent, insurance, administrative salaries, and professional fees that aren't tied to producing or selling a specific product. They sit below gross profit on the income statement, separate from cost of goods sold (COGS) and selling expenses. Combined with selling costs, G&A makes up SG&A (selling, general, and administrative expenses), which reached a median of 16.2% of revenue among the largest North American companies in 2026, according to The Hackett Group.1
General and administrative expenses are the operating costs a business incurs to function day to day, regardless of how much it produces or sells. They exclude COGS (direct production costs) and selling expenses (costs tied to generating revenue, like sales commissions and advertising).
Common G&A expenses include:
| Category | Tied to sales or production? | Examples | Where it sits on the income statement |
|---|---|---|---|
| COGS | Tied to production | Raw materials, direct labor, manufacturing overhead | Subtracted from revenue to get gross profit |
| Selling expenses | Tied to generating sales | Sales commissions, advertising, marketing campaigns | Operating expenses, below gross profit |
| G&A | Tied to neither | Rent, admin salaries, legal fees, insurance | Operating expenses, below gross profit |
Selling expenses and G&A combined are what show up as SG&A on the income statement.
Add up every G&A line item for the period:
G&A = rent + admin payroll + insurance + professional fees + office and admin overhead.
A company with $40,000 in office rent, $220,000 in administrative salaries, $18,000 in insurance premiums, and $32,000 in legal and accounting fees for the quarter has $310,000 in G&A for that period.
Yes. G&A expenses are a category of operating expense, reported below gross profit and above operating income on the income statement. They reduce operating income but are not included in gross profit calculations, since they aren't tied to producing the goods or services sold. When a given G&A cost hits the income statement also depends on your accounting method: cash basis records it when paid, accrual basis when incurred.
There's no single healthy number. Total SG&A (selling plus G&A) typically runs 10–25% of revenue for established businesses, with wide variation by sector: software and services companies often run higher, while manufacturers and retailers with heavy COGS tend to run lower. The Hackett Group's 2026 SG&A Cost Study found that just over half of large North American companies saw SG&A costs grow faster than revenue, even as inflation eased, making sustained cost discipline more the exception than the rule.
Advertising is not a G&A expense. It's a selling expense, since it's directly tied to generating revenue. Depreciation depends on the asset. Depreciation on office furniture, admin computers, or headquarters buildings is G&A. Depreciation on manufacturing equipment belongs in COGS, and depreciation on sales vehicles or showroom fixtures belongs in selling expenses. Prepaid items like annual insurance premiums raise a similar classification question; see prepaid vs. accrued expenses for how to record those correctly.
Your G&A rate measures G&A spend as a percentage of revenue:
G&A rate = (Total G&A ÷ total revenue) × 100.
A company with $310,000 in quarterly G&A and $2,200,000 in quarterly revenue has a G&A rate of 14%. Tracking this rate quarter over quarter shows whether administrative costs are scaling with the business or outpacing it.
G&A rarely spikes all at once. It creeps up through a handful of repeatable patterns:
Controlling G&A takes both visibility into current spend and a process for reviewing it on a schedule, not just at year-end. Practical steps include:
Expense management software like ExpensePoint gives finance teams that kind of real-time spend control across every department, without waiting on manual reports to catch a problem after the quarter closes.
G&A expenses are the indirect, non-production, non-sales costs of running a business: rent, admin salaries, insurance, and professional fees sitting in operating expenses below gross profit. They combine with selling expenses to form SG&A, and tracking G&A separately makes it easier to spot inefficiency before it shows up in a shrinking operating margin.
1. The Hackett Group, "The Hackett Group® Finds SG&A Costs Reach Five-Year Highs Across North America and Europe," thehackettgroup.com, July 2026