1. A category of expenditure that a business incurs as a result of performing its normal business operations (investopedia). 2. Expensing the full cost of building or buying something in the year in which you incur the cost. So, if you build something that costs $50k, and you make $150k in revenue that same year, your profit would be $150k-$50k = $100k in that year. Contrast with capital expenditure.