Direct costs are those costs incurred directly for products, services or projects, and include items such as raw materials, labour, equipment and tools.
Overheads are those costs incurred for general operations of the business and they are not directly related to any particular product, service, or project.
Fixed assets are for long-term use, such as motor vehicles, machinery, computer and office equipment. For low value and short useful life items, they are normally treated as overheads.
You can also set a materiality leval, for example, if tools or equipment cost less than £100, they can be expensed on the Profit and Loss account.
