Compare and Contrast Capital Expenses to Operational Expenses
Capital Expense (Traditional) vs. Operational Expense (TaaS)
Used to purchase major physical goods (e.g. real estate, vehicles, computer hardware).
Used for ongoing costs to run an organization (salary, benefits, utilities, etc.).
Usually requires complex acquisition process with bidding/approval and hearings.
Smaller and more simple acquisition/approval process-can often be approved by department head.
Relatively few capital expenses can be made each year due to their size and complexity.
Usually a larger portion of the budget with more flexibility.
Tax depreciated over useful life (not immediately deductible as an expense).
Expenses are 100% tax deductible in the year the money is spent.
