Intuitively, it makes sense that you should be able to deduct your business's web development expenses just as you would other business expenses. After all, website design is often a key investment in your marketing strategy, so why wouldn't you be able to write it off your taxes? As with many things concerning the IRS, though, it's not quite that simple. While you can deduct web development expenses in many cases, there are some complications to keep in mind.
Disclaimer: Neon Rain Interactive and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Can I Deduct the Cost of My Business Web Development?
In short, probably.
While we aren't tax professionals, many businesses looking to outsource web development will meet the requirements to deduct their web development expenses: namely, the website is used exclusively for business purposes, the website serves an advertising function, and the website was commissioned after the formation of your business.
How Does it Work?
Because of the way the IRS defines software expenses, the exact deduction process will vary depending on your situation. Generally speaking, outsourced development can be amortized as a software cost and deducted over the course of three years. In-house development can be handled similarly, or the whole expense can be deducted at once.
The other important thing to note is that non-software costs must be separated from software costs: the design and content creation, for instance, are not considered part of the software expense. Graphic design elements can be deducted over the course of their useful life while content can be treated as an advertising expense. A tax professional can help ensure that you've treated the various expenses appropriately.
A Worthwhile, Often-Deductible Investment
As complicated as tax codes can be, the bottom line is that you should be able to deduct your web development costs in one way or another. So don't let the investment of quality web design deter you: few investments are more important for your brand's marketing efforts. To learn more about how Neon Rain's comprehensive web development approach can help recoup advertising costs and gain loyal customers, get in touch with our team today.