Operating expenses (OpEx) are the routine costs of running a business, expensed immediately in the period they're incurred. Capital expenditures (CapEx) are spending on longer-lived assets, expensed gradually over time through depreciation instead.
Payroll, rent, and software subscriptions are typical OpEx: the benefit is consumed roughly as it's paid for, so the expense hits the income statement right away. Buying equipment, building out an office, or developing certain software internally can qualify as CapEx, since the benefit extends well beyond the period the cash was spent.
The classification affects the income statement and cash flow statement differently: CapEx doesn't reduce reported profit immediately the way OpEx does, but it's still a real cash outflow the moment it happens, exactly why EBITDA (which ignores depreciation) can overstate how much cash a capital-intensive business actually has left after CapEx.
Staxiom closes your books every month and gives you reports you can actually read. Built by founders, investors, CPAs and startup people.