What is a cost but not an expense?

Okay, so what’s the deal with costs versus expenses? It’s kinda tricky, right? I mean, aren’t they both, like, money going out? They are, but there’s a big difference. I remember when I started my little Etsy shop – I bought a whole new fancy camera, a huge investment, right? That camera was a cost. A one-time, upfront thing. A hefty chunk of change that I hoped would pay off in better photos and more sales.

Expenses? That’s different. That’s like… my monthly Etsy fees, the electricity bill to keep the printer running, even the coffee I drink while I’m packaging orders. Those are ongoing things, necessary for the business to keep going, churning out those cute little handmade earrings. You have to pay those every month, otherwise, you’re in trouble. Expenses are all about keeping the business running. Costs are more like… investments. Big upfront things, like that darn camera, that hopefully make things easier or better in the long run.

I read somewhere – don’t remember where exactly, maybe a blog post? – that it’s all about the timing. Costs are singular events, expenses are ongoing. Makes sense, right? Like, buying a new computer is a cost. Paying for internet access is an expense. It’s just a different way of looking at how your money flows, ya know? It’s a really important distinction for keeping your books straight. Trust me, I learned that the hard way!

#Amortization #Depreciation #Inventory