Use Your CapEx Funds More Effectively for the Technology You Need
Make the Smartest Choices for Your Dallas Business
CapEx and OpEx—what is the difference? Well, that distinction can make quite an impact on your business’s taxes.
Capital expenditure (CapEx) are funds your business uses to acquire, upgrade, and maintain physical assets, which could include updating property, landscaping, technology, or equipment. Operational expenditures (OpEx), however, are non-investment purchases that are related to recurring daily operations. For example, OpEx could cover rent, payroll, office supplies, marketing expenses, or transportation.
So how does a business decide where to allocate CapEx funds? If you’re reading this article, you may be trying to decide if technology upgrades will be effective and financially feasible. In this article, we share how Dallas, TX businesses can use their CapEx funds more effectively.
And if you’re looking for a commercial AV system installation, contact Texadia Systems here to explore your options and learn more.
SEE ALSO: Looking to Boost Collaboration? Here’s How Unified Communications Can Help.
Determine Your Long-Term Objectives
When your business establishes long-term goals, you’ll have an outline to help decide if CapEx requests should be approved. For instance, if your company is returning to the office but still interacting with clients and remote staff over video calls, is it time to invest in video conferencing solutions?
Think of where you’d like your business to be in five or ten years. If these CapEx requests will help bring your company there, then they’re worth the investment.
Budget and Prioritize
As you start planning next year’s budget, look to see how many funds you’ll have for CapEx projects. As you set your budget, you may need to decide whether to allocate existing funds or add debt to the balance sheet. As you determine what’s financially feasible, you may find that it makes more sense to lease equipment rather than purchase it, for example.
And as CapEx requests arrive at your desk, you’ll need to establish a process for prioritization. Consider what projects will help the company the most and how much time and effort will be required to get the project in motion.
Look Forward
When you hear of companies going out of business, it’s often because they didn’t keep up with the times. The business world is moving fast. By doing your due diligence and keeping your technology updated, you’ll stay afloat as you pursue new opportunities.
And as for Taxes…
Unlike OpEx expenses, you can’t immediately write off your CapEx costs. Instead, the IRS permits an annual allowance for the decrease of purchased capital. There are rules regarding the amount that can be deducted for CapEx in a year and what types of property can qualify for deductions.
If your Dallas, TX business needs to upgrade its AV, security, or automation system, we’re here to help. Texadia Systems designs, installs, and programs technology solutions for businesses of all sizes. Contact our team here to get started today.
