There’s far more to running a business than simply the product or service it produces, and these things have an associated cost. These costs are known as operating expenses.
Operating expenses can be categorized in two ways:
Selling, General and Admin Expense (SG&A)
Costs of Goods Sold (COGS).
SG&A operating expenses may include R&D and marketing. Whereas COGs operating expenses refer to staff salaries.
Notably, tax, depreciation and interest are not classified as operating expenses.