I do not understand what capital expenses are compared to just typical business expenses. Also what it means it capitalize an expense? I thought maybe amortize it, but I really am not sure? Thank you!
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A capital expense is an upfront cost to your business. For example, buying the equipment or building in which your business will operate is a capital expense, since it’s a one-time, upfront cost.
To capitalize an expense is to make it look like a capital expense. You might say that your car will cost $500 per year to maintain, for a total of 10 years. You can capitalize it by finding out how much money you would need on Day 1 of buying the car to keep it maintained for its entire lifetime, and budgeting for that. This way, you are guaranteed to be able to maintain the car throughout its lifetime (assuming your math and assumptions are correct).
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