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.
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:
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.
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?
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!