Have you set up a website over the past year? If so, you should know that web hosting associated with this site can be a deduction on your taxes. There are many aspects of your website that can help you to save money when tax time comes but many people do not realize that the invoices they receive from their hosting company can be used as a tax deduction.
Annual domain registration is also a tax deduction as are any of the domain services you subscribe to for purposes of keyword finders or other services that are billed regularly. There are many people who pay a hefty fee for web hosting. Some are $400 a month or more. If you do not use this amount as a tax deduction, you could be missing out on a very good savings on your taxes.
There are many hosting companies that set up the account to host your website and the amount is automatically deducted from the method you use to set up the account. This is a recurring charge that automatically comes out of your account and sometimes it is billed other than monthly. If the hosting company you are using does not send you an invoice, ask them for one.
In order to use the deduction on your tax return, you will have to have proof that you actually spent this money and how much it was on web hosting. The same is true for annual domain registration. Although many companies use the method of auto-billing, they may not send an invoice before billing or after billing. This is usually because the payments are automatically withdrawn from your account.
In the days before everything was automated, companies sent bills for services because many people paid by check. Technology has changed many things and this is one. Some companies do send an invoice but it will probably not be mailed – it will be emailed to you. If it is not emailed, it should be on your account page so that you can print a copy to use for tax purposes.
In addition to having this invoice for tax purposes, it does not hurt to check once in a while to make sure you are not being over billed. Reliable hosting companies do not make a practice of overcharging clients; however there are always unethical companies that have been known to charge clients more than their monthly fee. The invoice can be matched up with the payments that come out of your account so you will know if you are being overcharged.
A domain registration can be checked the same way. Since most of them bill annually, it is hard to keep up with when it is due. An invoice will help to make sure that you are not getting billed extra for this service either. If you receive an invoice in your email each time the payment for the web hosting is due, it will also help you to keep track.
Many times people forget about the automatic deduction and this can result in their credit card being over the limit or a checking account being overdrawn. Or if a payment is declined, your website may be taken down and that could have a huge impact on your business. If you receive an invoice, you have time to make alternate pay arrangements in the event the card you were using is running a little short of funds.