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Simple English definitions for legal terms
overhead
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A quick definition of overhead:
Term: OVERHEAD
Definition: Overhead refers to the expenses that a business incurs in order to operate, but cannot be directly attributed to a specific product or service. These expenses are fixed and include things like rent, utilities, and salaries for support staff. They are also known as administrative or office expenses.
Simply put, overhead is the cost of running a business that is not directly related to making a product or providing a service.
A more thorough explanation:
Definition: Overhead refers to the expenses that a business incurs in its day-to-day operations, such as rent, utilities, and salaries of support staff. These expenses cannot be directly attributed to a specific product or service.
Examples: Examples of overhead expenses include:
- Rent for the office space
- Utility bills, such as electricity and water
- Salaries of administrative staff, such as receptionists and accountants
- Office supplies, such as paper and ink cartridges
These expenses are necessary for the business to function, but they do not directly contribute to the production of goods or services. For example, the rent paid for an office space is an overhead expense because it is not directly related to the production of a specific product or service.