Glossary · Reading the business
Capitalize
In short
To capitalize means to record an expenditure as an asset on the balance sheet rather than an expense, spreading its cost over its useful life. This affects a business's reported profit.
What it means in a deal
When buying a business, understanding what the seller capitalized versus expensed is crucial for assessing true profitability and future cash flow. Major purchases like equipment or significant leasehold improvements are often capitalized. Your accountant will help you determine how to capitalize assets post-acquisition, impacting your depreciation and taxable income.
Related terms
Common questions about Capitalize
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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