what is an expense 
an expense is the cost of operations that a company incurs to generate revenue it is simply defined as the cost one is required to spend on obtaining something as the popular saying goes it costs money to make money common expenses include payments to suppliers employee wages factory leases and equipment depreciation businesses are allowed to write off tax deductible expenses on their income tax returns to lower their taxable income and thus their tax liability 1 however the internal revenue service irs has strict rules on which expenses businesses are allowed to claim as a deduction investopedia jake shiunderstanding expensesone of the main goals of company management teams is to maximize profits this is achieved by boosting revenues while keeping expenses in check slashing costs can help companies to make even more money from sales however if expenses are cut too much it could also have a detrimental effect for example paying less on advertising reduces costs but also lowers the company s visibility and ability to reach out to potential customers 