List of Expenses for a Sports Store
When you own a sports store as a small business, it’s important to monitor your expenses, or the costs you incur in an accounting period to generate sales. Expenses are the items on the income statement that you subtract from revenue to calculate net income, or profit. While selling a lot of basketballs and jerseys boosts revenue, the lower you keep your expenses, the greater your profit will be. A business typically lists expenses on the income statement in categories to easily identify how it spends money.
The “cost of goods sold” line on the income statement represents the amount you paid for the inventory you sold in the current accounting period. Although you might have bought the items in a previous period, their cost becomes an expense only in the period in which you sell them. Such inventory might include athletic clothing, shoes or exercise equipment. For example, if your sporting goods store bought tennis rackets for $2,000 last quarter and sold them this quarter, you would include $2,000 as part of the cost of goods sold this quarter.
A sporting goods store reports the expenses it incurs to run its primary, day-to-day business activities as “operating expenses” on the income statement. Such expenses include commissions and wages for sales associates, salaries for store managers and administrative personnel, rent, insurance, janitorial services, office supplies, property taxes, utilities and advertising. Operating expenses also include depreciation, an expense that accounts for wear and tear on long-term assets, such as store shelves and cash registers.
The “other expenses” section of the income statement includes the costs you incur that are not directly related to selling sporting equipment in your store. You would include expenses from a secondary line of business in this section. Interest expense on a loan is also a common item in this category. For example, assume your sporting goods store has an attached warehouse from which you rent storage space. If you spend $500 to advertise available space, you would list this expense as part of other expenses.
If your sports store business is a corporation, you would also list income tax expense on your income statement, typically as the last expense. This income tax expense is based on the profit you earn as reported on your income statement. It rarely matches the actual tax you owe on your corporate tax return because of differences between accounting rules and tax laws. For instance, your sporting goods store might report income tax expense of $150,000 on the income statement but actually pay $125,000 in income tax during the year.