Disclaimer: Understand that we are not licensed to provided legal, tax, or accounting advice. Please consult a licensed and expert person for any tax related questions.

A client called us last week asking if the cost of developing his website was tax deductible. We had always assume that everyone knew it was indeed a tax deduction for their business. Yes, as of today, developing, upgrading, or maintaining a website will typically go under your marketing expenses or capital expenses therefore it is a fully deductible item.

If your website is very large expensive project, you most likely have an accountant on staff or CPA who might decide to amortize the expense over a few years.

For most of our clients, the expense of hiring our team is fully deductible on the year the money was paid. Make sure you receive a proper paid invoice from your web development team. It is not uncommon for our team to be paid in December for a project not started or finished until January (or June for some corporations types). This helps the client deduct the expense right away instead of waiting for the following fiscal year.

There are different types of costs to remember when filing your business taxes:

1. The actual development cost: the design and programming. In some instances, these are treated as capital asset. Make sure to check with a tax expert. If they are a capital asset, they would have to be expensed over a few years.
2. The side yet necessary costs such as domain name registration, hosting, 3rd party services (for instance your cart might be with another company), SSL certificate, backup programs, server firewall, website security products (either one time or recurring), and so forth. Those are often time small if dollar amounts and typically go under marketing.
3. There are other costs after the launch of a website such as maintenance plans, upgrades, editing website content, etc. Those are often treated as regular expected marketing expenses and are often deducted on the year they are occurred.

So yes the budget you spent on your website is a tax expense to not forget when you file your taxes. For more questions, we suggest you contact an accountant, CPA, or other tax professional.