What is a recurring expense?

A recurring expense is any ordinary and necessary business cost that repeats at consistent intervals. These expenses are usually tied to subscriptions, contracts, or ongoing services that support daily business activities. Unlike miscellaneous or one-time expenses, recurring expenses are expected and form the backbone of a company’s operating budget.

How to categorize recurring expenses

Record under Operating Expenses on your income statement.
Assign each recurring cost its own category in your chart of accounts (for example, Rent, Software Subscriptions, or Utilities).
Match the expense to the period in which it is incurred to maintain accurate financial reporting.
Review recurring expenses periodically to ensure they are still necessary and cost-effective.
Keep contracts, invoices, and receipts to document the ongoing nature of the expense.

Examples of recurring expenses

Office rent or coworking space fees.
Software subscriptions (accounting tools, CRM, design software).
Internet, phone, and utility bills.
Payroll and employee benefits.
Insurance premiums.
Cloud storage or hosting services.
Equipment leases or maintenance contracts.

Tax implications for recurring expenses

Recurring business expenses are generally tax-deductible if they are ordinary, necessary, and directly related to business operations.
Expenses must be allocated to the correct tax year, especially for annual or prepaid costs.
Personal expenses mixed into recurring charges (such as partially personal phone plans) must be prorated.
Clear categorization helps reduce audit risk and simplifies tax preparation.
Deduct recurring expenses on Schedule C (for sole proprietors) or under the appropriate operating expense categories on business tax returns.