Business expenses are expenditures incurred during the day-to-day operations of a business, while capital expenses refer to investments made in capital assets in anticipation of future benefits, explains Caron Beesley for the Small Business Administration. Business expenses include salaries and rents, while capital expenses include money spent on equipment and vehicles.Continue Reading
Differentiating between a capital and a business expense is not necessarily straightforward, warns FindLaw. For instance, simple repairs on a capital asset are considered a business expense under the Internal Revenue Service tax code. However, improvements to the same asset, such as adding a new room to a building, are considered a capital expense. In general, modifications that lengthen the life of a capital asset, increase its value or make possible new uses are considered capital expenses by the IRS and taxed as such.
Business owners who use personal property such as cars or work from home are also required to distinguish between business and capital expenses by the IRS, notes Beesley. Repairs, utilities and other expenses incurred in the normal running of a household can be treated as a business expense and deducted from taxes as long as certain requirements are met. The same rules apply to personal vehicles used for business purposes.Learn more about Business Resources
The term fixed capital refers to assets a business must acquire in order to operate the company, but which are not purchased over and over to manufacture a product or provide a service, according to Investopedia. Examples of fixed capital include documents, such as legal contracts, and the premises on which a business is run, such as an office building or storefront.Full Answer >
Operating budgets pay for day-to-day expenses, while capital budgets pay for major capital, or investment, spending, writes Kevin Johnston in an article in the Houston Chronicle's Small Business section. Understanding the differences between these budgets is critical to effectively managing business finances.Full Answer >
A green employee is one who takes steps to protect the environment during day-to-day business operations, such as carpooling, taking public transportation, recycling and working from home. Employers often implement green teams and green leaders to properly instruct employees on the environmentally friendly practices they should adopt.Full Answer >
When opening a Chipotle Mexican Grill franchise, franchisees should prepare to spend cash on the initial investment, and then have funds in reserve for business operations such as hiring employees and marketing. In general, franchising costs more than owning a business, notes the United States Small Business Administration, or SBA. In addition to leasing or buying a space to house the franchise, new franchisees should expect to work with attorneys to handle the legal aspects of franchising, which may tack on additional substantial fees.Full Answer >