Capital Definition

Learn more about what capital is in business.

Ready to start your dream business? Check the availability of your new company name to get started.

Starts at $49 + state fees and only takes 5-10 minutes

Excellent Trustpilot reviews 10,286 reviews Trustpilot reviews
capital definition

Today we will take a look at the definition of capital in business, the uses of capital, and the different types of capital. 

Start Your Company

What is capital?

Capital is money or assets that a company has on hand to finance its current operations and grow. The capital definition includes tangible and intangible assets. 

Having adequate capital has advantages that are critical to the success of any business. After all, you need money and resources to keep your business afloat. 

We make it easy for you to manage bookkeeping and accounting. ZenBusiness Money simplifies your small business finances. Our program makes the accounting process a piece of cake, putting the power in your hands. With the click of a few buttons, you can categorize your finances. Plus, you can receive and make payments all in the same place.

What are the broad categories of capital in business?

In business, there are many ways to finance and sustain your company with capital. Let’s review two main types of business capital: financial and human. 

Financial Capital

Financial capital encompasses money and anything that has a monetary value. Financial capital includes:

Financial capital examples include actual cash and things that you can convert into cash. Further, assets that have a financial worth and that you use to make money fall into the capital category as well. 

Need help managing finances?

ZenBusiness Money makes it easy.

START NOW

Equity and cash are typically preferable forms of financial capital. Why? Because they are already in a usable form to, say, pay the bills. Equipment is important for making more money by making products. But it takes longer to convert equipment into cash-on-hand, either by making and selling products or by selling the equipment. 

Business debt is a popular way to get an influx of much-needed cash, but debt capital disadvantages include long-term liability. When all is said and done, you’ll need to pay back the initial loan amount plus interest. When deciding when to take out debt to fund your business, it’s important to consider your business’s current and future ability to pay off the loan. 

Self-funding by using your own funds or by borrowing money from friends and family is also a common way to fund a startup. 

Don’t wait any longer to form your dream business. The time is now. Our Business Formation Service is available for a reasonable price plus state filing fees. Answer a few questions, and we’ll provide you with service packages to fit your needs. Select a package, pay the applicable fee, and let us do the rest. 

Human Capital

As any business owner knows, money is important — but it’s the people who make it happen. After all, a latte doesn’t make itself. People are the real powerhouses, making, packing, and selling products and services. 

What is the meaning of human capital in business? It includes:

You can’t buy or sell these things directly, but without human capital, even the best-laid business plans can crumble. 

Thinking of starting a business?

We can help you form it.

START NOW

Summary: Capital Definition

Capital in business is the financial and human assets a company uses to fund and grow its operations. Financial capital examples include cash and things with a monetary value, like inventory, shares, and accounts receivable. Human capital is the value of the people in a business in terms of their knowledge, skills, and productivity. 

We Can Help

We’re a public benefit company, meaning that our commitment to the communities that we serve is part of our corporate structure. Our dedication and quality services have earned us the trust of over 300,000 business owners. We’re making waves and making a difference, and we’d love to be part of your success story. With our Worry-Free Compliance Service, we’ll help you protect your investment and stay up to date on your compliance requirements. Ready for take-off? Three. Two. One. Lift-off. 

Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

Start New Company Today

Ready to get started?

This is it.

Create Your LLC in Minutes