What does company overhead encompass?

Company overhead refers to the indirect costs associated with running a business that are not directly tied to a specific project. These costs are essential for the day-to-day operations of a company but are not directly attributable to any single project or job.

Office rent, accounting fees, and administrative labor are prime examples of overhead costs. These expenditures contribute to the overall functioning of a business by supporting administrative functions without being linked to specific project execution. They are crucial for maintaining the infrastructure that enables project work to take place.

Understanding overhead is vital for budgeting and financial planning because it helps businesses determine the total cost of operation, ensuring that they price their services appropriately and maintain profitability.