Professional Fees are part of the overhead costs of a business for outside services that are acquired to help run the business. They typically are for needed services, but no one in the business can do them, or the outside provider can perform the work at a lower cost.
Overview
Professional Fees are indirect costs incurred in purchasing outside services and fees associated required in running a business. Every outside fee paid is overhead that is only incurred to help you manage your business better or because it is a hard indirect cost of doing business.
Typical expenses in this category range from professional fees paid to accountants, bookkeepers, and lawyers to bank fees, business licenses, and any other expense you pay to an outside entity for services and business support.
Remember, every dollar you spend is a dollar on which you need to generate a return, or you will lose money. In taking on outside fees, the first question to ask is, “The cost I am taking on something my customers will pay for?” The second question is, “Will my employees be willing to work with the outside people I bring in?” If the answer to both questions is “no,” you are at risk of wasting money on which you won’t make a return.
One challenge for many owners and managers is treating the hiring of outside advisors who work with your company better than the way you treat an employee. Don’t do this. It only makes the outside service provider feel they are more important to your business than your employees. It’s OK, for them to do important work. It’s not OK to put them on a pedestal.
The second consideration involves vetting the hiring of an outside service provider with the same rigor your customers use to vet you before they buy from you. Remember, they exchange their time and talent for money you have worked hard to earn from your customers. Don’t waste money or time on people collecting professional fees from that don’t help you grow sales at a profit.