The concept of "management expenses" as such does not exist in the Tax Code of the Russian Federation. The wording "indirect expenses" is used, i.e. those that are not related to the production process and can be taken into account for the period when these expenses were incurred. In particular, this is payment for communication services, rent of premises, money for insurance, etc.
Indirect costs (as opposed to direct ones) are fully considered as expenses of the current tax period. This rule does not apply only to companies whose activity is the provision of services (i.e. they do not have their own production). Each organization itself determines which costs are considered direct, which are indirect (for all existing production cycles).
Paying taxes
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Here are some expenses that can be considered indirect:
maintenance of the chinese student data package company administration and management staff;
rent for premises and equipment that is not directly involved in the production process;
insurance (issued on property);
services of auditors, consultants, and information services;
utility bills, etc.
How to enter indirect expenses in the income tax return? With a cumulative total from the beginning of the year (line 040 of Appendix No. 2 to sheet 02). There are several types of management expenses that relate to line 040, but some of them must be specifically highlighted:
line 041 contains advance payments for accrued taxes and fees;
in lines 042 and 043 – depreciation expenses;
in line 047 – money spent on the purchase of land plots and the acquisition of rights to lease land (meaning the conclusion of lease agreements), etc.
Of course, experts always have a lot of questions about how management expenses should be reflected in tax accounting. For example, if there was no profit for the reporting period, should management expenses be attributed to subsequent periods? According to current regulations, in taxation, management expenses should be recognized as expenses of the current reporting period. As for accounting reporting, each company decides for itself (and fixes this in the accounting policy) how to relate its expenses.
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Frequently Asked Questions about Management Expenses
Management expenses include expenses that are not directly related to production and the sales process (performance of work, provision of services). In particular, money for rent, depreciation costs, salaries of managers, accountants, lawyers, payment for communication services. In accounting, they are recorded under account 26 "General business expenses".
How to display management expenses in financial analysis?
Management costs do not depend on production volumes, so they are considered conditionally constant. When output grows, the amount of management costs per unit decreases and, accordingly, profit increases (again, per unit). This profit can be increased by reducing management costs by reducing the management staff (this will result in good savings on salaries). It would be good to simultaneously start producing more products (or at least maintain the same volumes). The choice of method for increasing profit per unit of goods is at the discretion of the enterprise. Many combine both approaches described.