As an entrepreneur, you’re wearing a million hats — managing clients, building your brand, and constantly trying to grow. But if you’re not tracking your business expenses the right way, you could be working hard without seeing the profits you deserve.

Let’s change that.

​In this blog post, we’re breaking down the three types of expenses you should track in your business, why they matter, and how they can help you build a business that actually supports your life.

Cost of Goods Sold (COGS) are the direct costs involved in delivering your product or service. These expenses rise when your sales increase and include things like:

When you subtract COGS from your total revenue, you get your gross profit. This tells you how much money you have left to cover the rest of your business costs — and eventually pay yourself.

Tracking your COGS helps you:

If your COGS are too high or rising too quickly, you could be underpricing or overspending without realizing it.

Operating expenses are the behind-the-scenes costs that keep your business running day to day. They aren’t directly tied to specific sales or clients, but they’re crucial to your operations.

​These include:

Operating expenses are often fixed or semi-fixed, which means they don’t change much when your revenue goes up — and that’s where the magic happens.

If you can grow your sales while keeping operating expenses steady, your net profit margin will increase dramatically. This is what scalability and moving past your breakeven point looks like.

​Understanding and tracking these costs helps you:

Other expenses include things like:

These don’t impact your daily operations, but they affect your overall profitability and cash flow. They’re especially important to track if you’re planning to sell your business or take on investors, because they are often excluded when calculating valuation metrics like EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

​Knowing what’s included in this category helps you:

Tracking these three categories — COGS, Operating, and Other Expenses — gives you more than clean books. It gives you clarity.

​When you understand where your money is going, you can:

If your goal is to build a business that funds the life you want, you need to know how profitable you really are — not just how much revenue you’re bringing in.

If this feels overwhelming, don’t worry — you don’t have to figure it out alone. At Blue Haven CPAs, we help entrepreneurs like you track, understand, and grow their numbers with confidence.

Book a free discovery call today and let’s talk about how to make your business work for you.

​Until next time, I’m Jennifer Engle — your business number navigator and partner on your path to profit.