What is a periodic expense?

Periodic expenses are business costs that occur on a regular but not necessarily frequent schedule. They’re predictable, recurring expenses that businesses plan for.

What is a periodic expense?

A periodic expense is an ordinary and necessary business cost that recurs at set or predictable intervals. Unlike daily operating expenses, periodic expenses are incurred less frequently but consistently over time. Because they are expected and repeatable, businesses often budget for them in advance to manage cash flow and avoid surprises.

How to categorize periodic expenses

Record under Operating Expenses or Fixed Expenses on your income statement, depending on the nature of the cost.
Assign each expense to a specific category (such as Insurance, Subscriptions, or Professional Services).
Accrue expenses when applicable to match costs with the correct accounting period.
Use prepaid expense accounts for costs paid in advance and expense them over time.

Examples of periodic expenses

Monthly or annual software subscriptions.
Insurance premiums paid quarterly or annually.
Annual business licenses or permits.
Scheduled equipment maintenance or service contracts.
Professional fees for legal, accounting, or consulting services.
Property taxes or regulatory fees due on a set schedule.
Membership dues for industry organizations.

Tax implications for periodic expenses

Periodic expenses are generally tax-deductible if they are ordinary, necessary, and business-related.
Expenses must be deducted in the correct tax year, even if paid in advance or accrued.
Prepaid expenses may need to be spread over multiple periods rather than deducted all at once.
Consistent classification helps support deductions during audits.
Report these expenses under the appropriate categories on your business tax return.