Overhead expenses sneak up on you. One minute you’re celebrating a big sale, and the next, your bank account is empty again. You’re confused, frustrated, and asking:

“Where did all the money go?”

Overhead 101: What It Is (and Isn’t)

Overhead includes everything it takes to run your business that isn’t directly tied to delivering your product or service. Think:

• Rent
• Software
• Wages
• Insurance
• Admin support
• Holiday parties
• Team gifts

This is different from COGS (Cost of Goods Sold), which covers the direct costs of delivering your offer.

Overhead is often the largest part of your budget and it’s also where your spending can spiral. Why? Because it includes all the bells and whistles you want in your business, like:

• Meals & entertainment
• Branded uniforms
• Team retreats
• Tenant improvements
• Holiday parties & client gifts
• Fancy software subscriptions

None of these are “bad.” But if they aren’t budgeted, and you’re not hitting your sales goals to support them, they will wreck your cash flow and leave your bank account empty.

The 3 Most Common Overhead Budgeting Scenarios

It’s easy to blur the line between what you need and what you want. Overhead is usually the part of your budget you avoid because it feels like it restricts your freedom.

Here are 3 real-world patterns we see all the time as your bookkeeper:

1.You commit to everything you want.
You budget in all the bells and whistles and build a business that supports it. Your revenue goals reflect your overhead needs, and you follow through. No corners are cut. You’re proud of what you’ve built.

2. You trim the fat and stay frugal.
You budget for what you actually need and let go of the extras. You realize you just liked those extras, but they weren’t required to deliver your service or stay profitable. You stick to the plan and feel in control.

3. You remove the extras… but buy them anyway.
This is the most common one. You say you’re cutting back but still buy the things. You override your budget, then feel defeated. Budgeting starts to feel pointless. Meanwhile, your cash flow is tight, you’re stressed, and you’re working around the clock just to stay afloat.

Full transparency: this isn’t about guilt. It’s about awareness. Your habits won’t change overnight but knowing your budgeting patterns gives you the power to change them.

Fixed vs. Variable Overhead

Not all overhead behaves the same. That’s why it’s important to understand which costs are fixed and which are variable:

• Fixed: Rent, payroll, insurance, software
  These stay the same each month.
• Variable: Utilities, bonuses, travel, 1099s
  These shift with your workload or seasonality.

Reviewing your overhead monthly ensures your sales goals are aligned with reality not wishful thinking.

Know Your Numbers: Use Your P&L Reports

If you want to truly understand where your money is going, start with your Profit and Loss Comparison Report. This is one of the most underused tools by business owners, and one of the most powerful.

✅ Review it month-over-month to catch expense creep.
✅ Compare year-over-year to catch seasonal patterns or price increases.
✅ Look at your expense-to-income percentage to see what percentage your overhead expenses are in relation to your revenue. You’ll clearly see what’s getting out of control and where you can tighten up.

Final Thoughts from Your Favorite Bookkeeper 🧡

Here’s what I would like you to remember:
Overhead isn’t the enemy. But ignoring it is.

It’s not about cutting every expense or running your business like a minimalist. It’s about clarity and committing to your own dreams in number format. It’s about building a business that supports your goals, your life, and your team, without sacrificing your peace when you make an emotional purchase.

And you don’t have to do it alone.

At My CFO, our QuickBooks Certified Bookkeepers do more than data entry, we help you understand your cash flow, build realistic budgets, and forecast your financial future with confidence.

📊 Ready to get clear on your overhead expenses and take control of your budgeting?
👉 Email us for a zoom chat and let’s see if we’re the right bookkeeping partner for you.

Because at the end of the day, cash flow isn’t luck, it’s strategy.
And support is just one email away.