Do you have funds remaining in your year-end capital budget? If so, now’s the time to determine how you’ll spend them!

Capital expenditure is a powerful tool to reduce your company’s tax liability, strengthen your financial health, and reach your growth goals. As the end of the year approaches (we know, it’s hard to believe it’s already here!), it’s vital to consider your options to use your capital expenditure budget and maximize your tax benefits. 

In this blog, we’ll go over the benefits of capital expenditure, examples of projects you can tackle with your capital budget, and how APPRO Development can help you plan and complete your year-end business improvement projects. 

Why You Should Spend Your Year-End Capital Budget

Capital expenditure (CapEx), refers to long-term assets you purchase to grow or maintain your business operations. This includes the purchase of fixed assets such as property, plants, and equipment (PP&E), as well as repair and upgrades of those assets.

Capital expenditures differ from typical business expenses in that they are not fully deducted in the year they’re incurred. Instead, they depreciate over the useful life of the asset, indirectly reducing your tax burden during that time. In this way, capital expenditures can help you maximize your year-end tax benefits.

Tax benefits of capital expenditures include:

• Depreciation. Rather than deducting the full cost of an asset in the year of purchase, you’re able to spread the depreciation expense out over the useful life of the asset, reducing your taxable income.
• Section 179 deduction. If they prefer, small and medium-sized businesses can deduct the total purchase price of qualifying assets in the year they’re purchased (rather than spreading it out over time) through a Section 179 deduction. This is an opportunity to significantly reduce taxable income for that year.
• Opportunity for growth. Investing in capital expenditures brings long-term advantages to your business in the form of improved productivity, increased revenue, and reduced operating costs, leading to more opportunities for growth.

Keep in mind that to take advantage of these tax benefits for your 2024 taxes, assets must be purchased and placed into service before December 31st.  Please consult your tax advisor and accountant regarding tax benefits. 

Projects To Tackle With Your Capital Budget Before Year-End 

Purchases that can be considered capital expenditures include physical assets like manufacturing plants, facility improvements or expansions, equipment, machinery, vehicles, and technology like computers and software.

To determine the best way to spend your capital budget, first consider your goals for your business: Where do you want to be in two or three years? Then think about what assets you’ll need to help you reach those goals. 

Here are several examples:

• Buy an additional vehicle for your fleet

• Expand your warehouse space

• Update your dock area to improve loading efficiency

• Buy new equipment to expand your capacity

• Purchase a new software system to improve inventory management

• Install LED lighting retrofits or upgrades

• Invest in a roof replacement or major repairs that will extend the useful life of your building’s roof

• Other exterior restoration such as concrete, masonry, siding, and so on

• Upgrade HVAC equipment 

• Install or upgrade building controls

• Buy new office furniture

• Purchase new computers and servers

• Invest in additional storage space

• Purchase land for an expansion

• Build an addition or new facility

As you can see there are a wide variety of projects you can fund with your capital budget that will help grow your business…and this list isn’t exhaustive! What project can you tackle this year  to meet your company’s needs and reach your goals?

Need Help Identifying and Completing Year-End Projects? Call on APPRO Development!

At APPRO Development, we’re well-versed in helping our clients identify and efficiently complete year-end capital expenditure projects. From designing and building a new commercial or industrial facility to making renovations on an existing space, the APPRO Development team are experts in handling quick-turnaround construction, renovation, and development projects. 

That said, if you want to complete a project before the end of this year, now is the time to get started!

If you’re in need of architectural design, general contractor, or construction management services for your project, contact APPRO Development today for a consultation on year-end project planning and execution.

In need of more space, but not sure whether to lease, buy, or build? Fill out the form below to receive our free guide to determine which is right for your needs!

Lease, Buy, or Build? Fill out the form to know which one is right for your business!