What are general and administrative expenses?

General and administrative expenses, or G&A expenses, are the administrative costs that keep your business running. Think payroll for your HR team, legal retainers, rent for your office space, and software for your finance team.

This article will walk through what counts as a G&A expense, how to track and improve these costs, and how they evolve as companies scale. 

You’ll learn where teams tend to overspend, how finance can bring more discipline to this category, and why some early-stage startups spend as much as 70% of their revenue on G&A alone.

What is G&A in accounting?

G&A expenses are the administrative costs your business incurs outside of making or marketing your product. They cover foundational functions not tied to production or sale like executive leadership, human resources, finance, IT, full-service compliance, and more. These departments ensure your company operates legally, supports employees, and keeps core systems running, but they often go under-scrutinized.

That’s because G&A isn’t always visible. Unlike direct costs, which are tied to outputs (like products shipped or leads converted), G&A covers things that are “always on,” like payroll for back-office employees, insurance policies, office rent, software subscriptions, and legal retainers. These are essential to your business’s infrastructure, but often treated as static or untouchable.

From an accounting perspective, G&A is grouped with SG&A (selling, general, and administrative expenses) but can be split out for clearer tracking. 

On an income statement, these indirect costs appear just below gross profit and above operating income. It doesn’t include anything tied to customer acquisition (ads, sales commissions), or direct production costs (raw materials, packaging).

G&A costs cover the essential overhead that keeps a company running. This includes things like office space, core administrative salaries, and key services such as legal, accounting, and HR support. Many companies also rely on software tools and outsourced experts that fall under G&A costs as well.

G&A may also include business expenses related to employee training, HR technology, IT system support, business travel for internal teams, internal communications tools, and company-wide subscriptions to services that support compliance or industry research. 

Classifications can vary depending on the industry and company structure. For example, a tech startup may include DevOps platform spend here, while a healthcare provider might count internal audit or credentialing systems as G&A. 

What's important is that these costs are not tied directly to making or selling a specific product; they’re what keep the business structurally sound. For accounting teams, this creates a challenge: G&A is critical to long-term viability, but its return on investment is harder to quantify.

Key takeaways:

• G&A covers essential overhead functions that support growth but don’t generate sales.
• It's listed below gross profit on the income statement.
• Good visibility into G&A improves control, forecasting, and financial discipline.
• Examples include payroll, software, insurance, and back-office services.
• As businesses scale, G&A categories often expand to include more systems and partners.

Why G&A expenses deserve more attention

General and administrative expenses are easy to overlook until they become a problem. Many founders focus on topline growth, treating G&A as a fixed cost that scales automatically with the business. But left unchecked, G&A can quietly erode margins, hide inefficiencies, and distort your cost structure.

G&A deserves more scrutiny for three reasons: it compounds with scale, it's often fragmented across departments, and it rarely gets the same strategic oversight as revenue-driving functions.

Let’s break that down:

1. G&A grows quietly. As companies scale, they layer on tools, policies, processes, and people. Every hire in HR or finance adds salary, benefits, and tech. Every vendor adds overhead. Without a structured approach to G&A management, these costs increase without a proportional return.
2. G&A is fragmented. One department owns payroll, another owns legal, and another owns IT procurement. Without centralized visibility, it’s hard to spot redundancies. 
3. G&A is under-optimized. Most companies don’t treat G&A as a performance driver. But that’s a missed opportunity. Back-office functions like HR, finance, and legal can create strategic leverage, but only if managed well. Automating processes, consolidating vendors, and improving reporting all contribute to more agile operations.
4. Investor expectations are rising. The VC ecosystem has moved away from “growth at all costs” and now puts more weight on sustainable business models. Startups are expected to show a clear path to profitability, and that’s harder to do when G&A is bloated or mismanaged.
5. G&A controls lead to faster scaling. When your business is built on a stable administrative foundation, you can onboard more customers, grow headcount, and expand into new markets more quickly, because the back-office machine won’t break under pressure.

Disciplined accounting of G&A expenses has a real, measurable impact on your company’s bottom line. A 2024 study found that 62% of companies were leaving money on the table in SG&A, missing out on up to $317 million in savings per $10 billion in revenue due to inefficiencies. 

Improving G&A efficiency by just a few percentage points can translate to hundreds of millions in profit for large firms (or tens of thousands for a small business). 

How do you calculate G&A expenses as a percentage of revenue?

Smart G&A management can extend runway and signal operational maturity to investors. This is especially true for venture-backed companies, where every dollar needs to drive maximum impact. 

One of the most effective ways to evaluate G&A efficiency is by calculating G&A expenses as a percentage of revenue—a critical metric for assessing financial health and operational discipline.

To calculate it, use this formula:
G&A Expenses ÷ Total Revenue × 100

For example, if a company has $2 million in G&A expenses and generates $50 million in total revenue:

$2,000,000 ÷ $50,000,000 × 100 = 4%

In this case, G&A expenses represent 4% of total revenue.

While calculating this ratio might seem simple, it’s critical and too often overlooked. Knowing what percentage of your revenue goes to G&A helps benchmark your business against companies of similar size, stage, and industry. 

G&A as a percentage of revenue varies widely:

Early-stage startups often allocate a large portion of revenue to G&A, sometimes as high as 70%, due to upfront investments in infrastructure, systems, and personnel required to get the business running. Once your business hits its stride, an average G&A would be closer to 20%.

While there’s value in reducing G&A to improve short-term margins, cutting too deep can backfire. Administrative functions like finance, HR, and IT are essential to long-term scalability and compliance. That’s why companies should treat G&A spend as a strategic lever, one that should be monitored regularly, benchmarked externally, and aligned with the company’s stage and goals.

A solid G&A management strategy is built on a foundation of total visibility. Our Expenses tracking tab allows you to tap into a top-down view of your small business's fiscal profile confidently and easily.

Key takeaways:

• G&A expenses often grow faster than revenue if not carefully managed.
• Fragmented ownership leads to duplicate tools, services, and spend.
• Treating G&A as strategic infrastructure unlocks margin and scalability.
• Investors look for G&A discipline as a sign of operational strength.
• G&A optimization improves resilience, agility, and cross-functional accountability.

What’s the difference between G&A and SG&A?

Understanding the relationship between G&A and SG&A is crucial for accurate financial reporting and budget allocation. SG&A stands for selling, general, and administrative expenses. It includes all non-production-related costs a company incurs, but these can be divided into two distinct categories:

• Selling expenses: Expenses directly tied to sales and marketing activities such as advertising, sales team commissions, promotional campaigns, CRM platforms, and event sponsorships.
  
  
• General and administrative (G&A) expenses: Operational costs not tied to selling or making the product, such as office rent, HR systems, accounting, legal, executive salaries, and administrative software.

While some companies combine these expenses under a single SG&A figure, more mature organizations typically break them out to analyze operational efficiency in more detail. Segmenting SG&A allows finance teams to create accountability across functions and identify where costs are rising unnecessarily - a top stressor for the modern executive.

For instance, if your company’s selling expenses spike due to ad budget increases but G&A stays stable, that’s a different story than if both increase simultaneously without corresponding revenue growth. 

Separating them also helps investors and stakeholders get a clearer picture of how capital is being deployed. Our expense management and bill pay tools keep visibility and control in your hands by allowing you to tag and track spending by department, function, or budget owner.

Key takeaways:

• SG&A includes both selling and general/admin expenses.
• G&A is a non-revenue-generating subset of SG&A.
• Splitting SG&A improves clarity and accountability in reporting.
• Segmenting spend helps isolate inefficiencies in sales vs. operations.

G&A cost categories and benchmarks

G&A expenses may vary depending on your company’s size, industry, and growth stage, but most organizations deal with a consistent set of cost accounting categories. The table below outlines typical benchmarks across common G&A areas to help you identify inefficiencies and set realistic budget expectations.

Some fast-scaling startups may tolerate higher G&A ratios temporarily, especially if they rely on external vendors or G&A partners like PEOs. On the other hand, mature enterprises often aim to reduce G&A through process optimization, better procurement, or consolidation.

Key takeaways:

• Cost ratios help benchmark G&A across similar businesses.
• Payroll, rent, insurance, and tech make up the bulk of G&A spend.
• Inefficiencies often come from duplicate tools and low utilization.
• PEOs and outsourcing can lower fixed G&A, which can be especially helpful for small businesses, but it requires tight controls.

The 10 most common G&A expenses and examples

You’ve seen how G&A categories benchmark against revenue—here’s a closer look at what those categories included:

1. Executive & Admin Payroll: Includes salaries, bonuses, and benefits for C-suite leaders, HR managers, legal counsel, finance controllers, and administrative assistants.
   
   
2. HR Services & Payroll Processing: Whether you run HR in-house or through a G&A partner like a PEO, this includes onboarding, benefits, compliance training, and payroll software.
   
   
3. Office Rent & Utilities: Long-term lease agreements, shared workspace costs, and utilities like electricity, water, and internet.
   
   
4. Insurance Premiums: General liability, workers’ comp, health plans, property insurance, and cyber insurance policies.
   
   
5. Legal & Accounting Fees: External consultants, tax preparers, auditors, and law firms that provide ongoing business support.
   
   
6. Office Supplies & Equipment: Furniture, hardware, monitors, printers, security systems, and even cleaning services.
   
   
7. Software Subscriptions: Tools like QuickBooks, Gusto, BambooHR, DocuSign, and Notion that are used by internal teams.
   
   
8. Licensing & Regulatory Fees: Required business licenses, renewals, certifications, and any industry-specific filings.
   
   
9. Travel & Training: Employee training sessions, industry webinars, internal conferences, and back-office travel.
   
   
10. Internal Tools & Communication Platforms: Company-wide licenses for Slack, Zoom, Asana, etc.

Key takeaways:

• Software, insurance, and compliance are major contributors to G&A cost
• Many G&A expenses are recurring but reviewable.
• A regular audit of vendors and subscriptions can reveal savings.
• Tracking usage per department can help prevent tool sprawl.

Three hidden G&A drains and how to fix them

Beyond the obvious costs, G&A often hides inefficiencies that go unnoticed. Here are three subtle but expensive categories every company should track:

1. Shadow IT

Unapproved software purchases (made with company cards) create blind spots in both security and budget oversight. These tools operate outside formal procurement channels, making them hard to monitor, secure, or integrate.

Fix: Centralize purchasing through finance. Offer employees a simple request flow for new tools. Regularly audit credit card and procurement logs.

2. SaaS sprawl

When each department picks its own tools, the organization ends up with dozens of overlapping platforms. Companies have an average of 7.6 duplicate software subscriptions and 4.3 “orphaned” (unused) apps. This not only inflates G&A, but it also introduces security risks.

Fix: Implement procurement guardrails. Consolidate vendors quarterly. Require department heads to justify each renewal.

3. Zombie spend

Unused software and forgotten subscriptions can quietly bleed money from your budget month after month. Often triggered by auto-renewals, abandoned initiatives, or inactive accounts from departed employees, zombie spend rarely surfaces without deliberate scrutiny.

Fix: Set up automated alerts for renewals. Review expense reports monthly to flag underused tools.

At Rho, we help eliminate hidden G&A drains by giving finance teams real-time visibility into spend, subscriptions, and vendor overlap. With smart controls like automated approvals, role-specific cards, and category-level reporting, it’s easy to flag sprawl before it inflates overhead. Everything runs through a centralized system, so teams stay accountable and budgets stay clean.

Key takeaways:

• Hidden drains like SaaS sprawl and shadow IT inflate G&A silently.
• Decentralized purchasing leads to redundant and risky spend.
• Regular audits and approval workflows improve financial hygiene.
• Fixes don’t necessarily require cuts, just visibility and smarter governance.

How to reduce and optimize G&A costs

Managing G&A isn't just about cutting expenses, it's about building a more resilient, flexible, and scalable business. Once you have a strong system in place to monitor your G&A costs, use these proven strategies to reduce excess spend:

• Centralized procurement: Use a unified platform to manage vendor contracts, licenses, renewals, and payments. This improves oversight and negotiating leverage.
  
  
• Use PEOs and G&A partners: Especially for small or mid-sized businesses, outsourcing administrative services, payroll, compliance, and benefits can reduce cost and complexity.
  
  
• Rationalize your SaaS stack: Run a full software audit every quarter. Cut what’s redundant, underused, or overpriced. Align each tool to a clear function or KPI.
  
  
• Improve reporting granularity: Separate selling vs. admin costs. Track G&A by department, vendor, and contract type to spot trends and outliers.
  
  
• Renegotiate or cut contracts: This includes insurance policies, payroll providers, IT support vendors, and more. Check for redundant contracts, most providers expect periodic renegotiation.
  
  
• Educate your team: Host internal webinars or even sessions on platforms like LinkedIn using documentation explaining what qualifies as G&A, how it’s tracked, and why it matters.

Track overhead costs in real-time

G&A efficiency is as much about process as it is about price. Using PEOs and automation helps improve cost-per-function ratios, making routine tasks leaner without adding overhead. Businesses should track G&A by category and owner to uncover inefficiencies early. With the right structure, every business can trim fat without harming its infrastructure.

G&A strategies by company stage

How you handle G&A should evolve with your company. Here’s what to focus on at each stage:

Early-stage startups should keep teams lean with cross-functional roles, use a PEO for HR and payroll, avoid long-term contracts, and keep founders closely involved in G&A decisions.

Growth-stage businesses need to invest in core systems like AP and HRIS, consolidate redundant tools, and establish clear ownership to improve G&A visibility and accountability.

Mature enterprises should focus on margin improvement through automation, optimize vendor terms, and segment G&A ownership to drive long-term operational efficiency.

Streamline as you grow

G&A strategy should evolve with a company’s stage. In the early days, outsourcing is often the smartest path—offloading overhead until there’s enough traction to justify an in-house investment. As businesses grow, visibility and accountability become more important, and systems need to scale accordingly. For mature companies, G&A becomes a tool for reinforcing margin strength and operational resilience.

G&A isn’t just overhead, it’s your operational foundation

Many businesses treat G&A as something to tolerate or avoid. But managed intentionally, it becomes one of your most powerful levers for discipline, efficiency, and growth.

By tracking costs with more granularity, optimizing systems, and working with the right partners, you can transform G&A from a bloated cost center into a well-oiled backbone that supports every function in your business.

At Rho, we help finance teams take control of G&A with tools built for modern operations: real-time expense tracking, automated payables, centralized vendor management, and seamless reporting.

Looking to streamline your G&A without sacrificing performance?
See how Rho can help your team operate leaner and smarter.