What Would the Capital Expenses Be for a Clothing Store?

First Research, an American industry intelligence firm, estimated in 2012 that the U.S. was home to 100,000 clothing stores. It also estimated that these stores boasted total annual revenue of $165 billion. Women’s clothing accounted for 50 percent of industry revenue, while men’s and children’s clothing took up 20 and 10 percent, respectively. Running a clothing store comes with numerous expenses, including capital or revenue expenses. Capital expenses are those that create future benefits for the operation, such as the startup costs, and they manifest in many different forms across the life of a business.

Expenses on the property that will improve a building beyond its original condition is a capital expense. Such expenses should be intended to give your business a lasting benefit. Since décor and decoration are important parts of clothing stores, a significant amount of capital will be spent changing the look of the shop. For example, you might need to replace tiles and add vinyl siding if the shop has wooden walls.

Money you invest in starting the business is a capital expenditure. Such costs include expenses for drawing up business plans, conducting a market survey and promotional activities. Startup capital costs also include money spent on buying tangible assets such as computers and lighting systems.Though these expenses will not last for more than a year, these expenses are meant to benefit the store in the long run.

Clothing store equipment expenses spent on items such as clothing racks, cash register and mirrors are capital costs. The United States Census Bureau also states that any expenditure for the removal or replacement of any equipment without altering the structure is classified as machinery and equipment. For example, you could decide to replace a mirror or clothing rack in your business.

Depending on the state where you are doing business, you will need to acquire a general business license to run a clothing store. While it is possible to regain the cost of other capital expenses in your business by claiming depreciation, it is not possible to do the same for money spent on licenses and permits, as it is difficult to prove depreciation.