In finance, G&A stands for General and Administrative expenses: the overhead costs of running a company that aren’t tied to making a product or closing a sale. Executive salaries, corporate rent, accounting and HR staff, audit fees, business insurance, office software. If a cost keeps the corporate structure itself functioning, rather than producing or selling something, it’s G&A. The category shows up on income statements, drives tax deductions, and, for federal contractors, sits inside a tightly regulated cost pool.
What Counts as G&A
The clearest test is whether a cost supports the whole organization or a specific product or sales effort. Support the organization, and it’s almost certainly G&A. A few groupings cover most of what you’ll see.
People costs are usually the biggest slice. Salaries and benefits for the CEO, CFO, and other senior executives are G&A, as are wages for accounting, payroll, human resources, and in-house legal staff. If someone’s job is keeping the corporate machine humming rather than building or selling something, their compensation lands here.
Facility costs for administrative offices count too, distinct from factory or warehouse space. Lease payments on corporate headquarters, utilities for office buildings, and depreciation on office furniture and general-use computers all qualify. A company with a plant and a separate corporate office splits its facility costs between cost of goods sold and G&A depending on which space each cost relates to.
Professional and compliance costs form another chunk: external audit fees, legal counsel retainers, corporate insurance premiums, business license maintenance, tax preparation, and regulatory work. General operating costs round it out — office supplies, company-wide software like ERP and HR platforms, and corporate travel that isn’t tied to a specific sales trip.
How G&A Differs From Cost of Goods Sold
The line between G&A and Cost of Goods Sold comes down to one question: does the cost exist because the company produced something, or because the company exists at all? COGS covers direct costs of bringing a product or service to a salable state, including raw materials, production labor, and factory overhead. G&A covers the corporate support structure around all of that.
The accounting treatment differs sharply. COGS includes manufacturing overhead like factory maintenance wages, equipment depreciation, and production facility utilities. Under generally accepted accounting principles, those costs get folded into inventory value and sit on the balance sheet until the product sells. G&A expenses are period costs. They hit the income statement in the period they’re incurred, no matter how many units the company produced or sold that quarter.
A personnel example makes it concrete. The salary of a production supervisor managing an assembly line is COGS. The salary of the Vice President of Operations who oversees all facilities from the corporate office is G&A. Both contribute to what the company puts out, but only the supervisor’s cost traces directly to production.
Misclassifying matters. Treating a G&A expense as manufacturing overhead inflates inventory on the balance sheet and understates operating expenses, making profitability look better than it is. The reverse mistake overstates current-period expenses. Either error distorts the picture investors and lenders rely on.
Where G&A Shows Up on the Income Statement
Public companies rarely break out G&A as a standalone line. SEC reporting rules list “Selling, general and administrative expenses” as a single category on the statement of comprehensive income.1eCFR. 17 CFR 210.5-03 – Statements of Comprehensive Income That combined figure, SG&A, bundles G&A with selling costs like sales commissions, marketing salaries, and advertising.
The math on the statement works in layers. Revenue minus COGS produces gross profit, which shows how efficiently the company turns inputs into sellable goods. SG&A is then subtracted from gross profit to get operating income, which reflects the profitability of the core business after both production and overhead. The layered structure lets you separate production efficiency from administrative efficiency at a glance.
Scale varies enormously by industry. Apple’s 2024 annual report listed SG&A of $26.1 billion, about 7% of total net sales.2U.S. Securities and Exchange Commission. Apple Inc. Annual Report (Form 10-K) Fiscal Year 2024 For a company of Apple’s size, that’s lean. A smaller company or one in a less efficient industry might see SG&A eat 20% to 30% of revenue or more.
The SG&A bundling can hide useful detail. A company might have tight administrative costs but heavy marketing spend, or the reverse, and the consolidated number won’t tell you which. Analysts often dig into 10-K footnotes or earnings call transcripts, where companies sometimes disclose the G&A and selling expense components separately.
Tax Deductibility
Most G&A expenses are tax-deductible as ordinary and necessary business expenses under federal tax law. The statute allows a deduction for “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business,” explicitly including reasonable compensation for services, business travel, and rent.3Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses
Two tests apply. An “ordinary” expense is one common and accepted in your industry. A “necessary” expense is one helpful and appropriate for your business, though it doesn’t have to be indispensable.4Internal Revenue Service. Ordinary and Necessary Corporate rent, staff salaries, insurance premiums, and professional fees generally pass these tests. Some categories carry limits (meals and entertainment face percentage caps, and legal fees paid to acquire a business asset get added to cost basis instead of deducted), but the deductibility of routine G&A is straightforward.
G&A in Government Contracting
The term carries a more specific and regulated meaning if you work with federal agencies. Under the Cost Accounting Standards, a contractor’s G&A expenses must be grouped into a separate indirect cost pool and allocated across every contract and project the company performs.5eCFR. 48 CFR 9904.410-40 – Fundamental Requirement The allocation base should represent the business unit’s total activity, and once a company selects that base it can’t cherry-pick which costs to include.6Acquisition.GOV. FAR 31.203 – Indirect Costs
The G&A rate is total G&A expenses divided by total cost input. It gets applied to every contract, so a 15% G&A rate means every dollar of direct contract cost carries fifteen cents of administrative overhead billed to the government. Auditors examine these rates closely, and misallocation between G&A and other cost pools can lead to audit findings and contract disputes. If federal work is part of your business, G&A is a formal cost pool with rigid rules, not just an accounting label.
Reading the G&A Ratio
The standard efficiency measure is the G&A-to-revenue ratio: total G&A divided by revenue, expressed as a percentage. What’s “good” varies by industry. Asset-light technology companies can run in the single digits, as Apple’s 7% SG&A illustrates.2U.S. Securities and Exchange Commission. Apple Inc. Annual Report (Form 10-K) Fiscal Year 2024 Professional services firms, which are people-intensive, tend to see overhead closer to 20% to 25% of revenue. Comparing against similar-size companies in the same industry gives you a workable baseline.
Because G&A is largely fixed, it doesn’t shrink automatically when revenue drops. Executive salaries, office leases, and insurance premiums keep running even as the top line falls. That’s why a sudden jump in the G&A ratio without matching revenue growth is one of the clearest warning signs in financial analysis: the company is spending more to keep the lights on relative to what it’s bringing in.