Is Your Website Tax Deductible?
Virtually every single business today should have an online web presence of some sort; this includes owners of hair salons, restaurants, and especially brick and mortar businesses; even if they don’t actually sell products or services over the internet. Customers expect to find adequate as well as accurate information about your business online such as hours of operation, exact directions, and preferred method of contact; just to name a few. Having a website also means fewer phone calls from customers asking for this basic info and hopefully more looking to book business with your company. As long as customers can find your business page and the content displayed on your website is informative and engaging. This can prevent interruptions of you or your staff not to mention just having a site alone allow your business to be able to easily advertise specials and sales.
Since a website is part of your business, you may automatically assume that the expenses to build and maintain it are then tax deductible. Keep in mind that you should always speak to a certified public accountant or lawyer to find out the tax laws affecting your particular business and deductions, and the following information shouldn’t substitute for advice you get from your tax professional. However, note a few principles about the costs of building and maintaining a business website, and the tax laws that may apply.
Website Start-up Costs
If you’ve developed your website but have not yet opened for business, the costs of paying a third party designer may be considered as part of your startup costs. Usually you are allowed to deduct some $5000 of those total costs in the first year, and then amortize the remaining costs over the next 3 years.
Website as Software
If you had a third party create a website for you and sophisticated program languages was used to to code your website or if the website is something you rely on to conduct business; this may be considered the same as software. You have purchased the design from a third party by paying them a fee, and that website works like software that runs a computer program, so you can amortize that cost over a three-year period, just as you would with new software cos
Website as Property or Equipment
If the website you’ve developed is not considered complex in coding language and wouldn’t cause you economic hardship if it failed, it may then be considered property or equipment. If this is the case, then immediate tax deductions are eligible. This might be the right choice for simple websites that don’t conduct business for the company but which simply advertise hours, location, and the like, as mentioned above. See if your website qualifies under "section 179 property deduction."
Website Maintenance Costs
Whenever you create or promote your business site, there are a variety of expenses that are eligible to be write offs. Some of these included but are not limited to graphic design and logo creation. Also, hiring a local SEO specialist to help boost your site up the ranks, could be a potential write off. Even monthly or annually hosting fees can be considered tax deductible expenses!
Again, be sure you talk to your accountant or tax professional before making assumptions about deductions, and before you even consider having a website built. This will ensure you know how to deduct those costs and that you have your tax bill reduced as much as possible.