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What Are the Different Types of Home Business Capital?

B. Turner
B. Turner

Capital includes all the money and property that a business uses to make money or generate income. In very large companies, capital may include everything from a fleet of trucks to hundreds of manufacturing machines. Home business capital refers to the assets owned by a company that operates out of the owner's home. The different types of home business capital generally include things like cash, receivables, and loans. The house itself, as well as other equipment used to operate a small business can also be considered a type of home business capital.

Cash represents the most basic type of home business capital. This includes all cash held by the business or the owner in a bank account, as well as cash on hand or in a safe. Cash can come from profits that the business earns, or simply from money that the owner puts in to a new business. In many cases, this type of capital also includes receivables which are due to the business, as well as any investment income. Startup funds, bank loans, and other sources of debt or equity can also be considered a type of cash.

Man climbing a rope
Man climbing a rope

Any equipment that the business uses to make products and earn money is also considered a type of home business capital. For example, a company that makes cupcakes to sell could count ovens, cooling racks and bakeware as a type of capital. Cars or trucks used to deliver the cupcakes to buyers also count as capital, as do phones, fax machines or computers used to take orders and correspond with customers. Depending on the situation, furniture, lights and other fixtures may also represent a type of home business capital.

When preparing financial documents or tax forms for the company, parts of the home itself can sometimes be included in home business capital. A home office or room used to greet clients always represents a form of capital, while even garages or storage spaces used by the business may serve as capital under certain circumstances. Parking areas and other land outside of the home itself may qualify on a case by case basis.

While most equipment and space used by the business is considered a form of home business capital, certain materials generally do not fall into this category. For example, items which are used up, or consumed during production are not a form of capital. This may include things like office supplies or hand tools which are used up during the normal course of business.

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