Capital letters are useful signals for a reader. They have three main purposes: to let the reader know a sentence is beginning, to show important words in a title, and to signal proper names and official titles.

1. Capitals signal the start of a new sentence. This is a stable rule in our written language: Whenever you begin a sentence capitalize the first letter of the first word. This includes capitalizing the first word or a direct quotation when it's a full sentence, even if it appears within another sentence.

Daughter loved the valentine. Her brother could have cared less.
Wow! I never thought I'd survive running the rapids.
Frank inquired, "Where do I make a donation to the new scholarship fund?". "The first time I lectured on that theory," the professor bragged, "not one student fell asleep in my class."

Note: Do not capitalize quotations that continue in a sentence after an interruption, as in the sentence immediately above.

Also, capitalize the first word in a line of poetry (even if it doesn't begin a new sentence)—unless the poet did not capitalize it (as in the second example below):

Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage, against the dying of the light. - Dylan Thomas

in time of daffodils (who know
the goal of living is to grow)
forgetting why, remember how - e.e. cummings

2. Capitals show important words in a title. Capitalize the first and last word, as well as any major word in a title or subtitle (words such as "a," "an," and "the" are not usually capitalized unless they function as the first word in the title or subtitle).

Here are two examples. The first is the title of a play and the second is a title of a book.

Oh Dad, Poor Dad, Mama's Hung You in the Closet and We're Feeling So Sad
The Shape of the Century: Readings from the Disciplines

3. Capitals signal proper names and titles.

Tip: Words that are customarily capitalized (such as "September") appear capitalized in the dictionary.

Examples
Exercise 2: Capital Letters