Business Tax Deductions: Why Your Website Redesign Could Save You Money

If your business has been holding back on initiating a website redesign due to cost concerns, know that an outdated website could cost the company money by losing leads and failing to serve as an effective brand ambassador. We previously highlighted numerous reasons why companies should consider a website revamp here. However, we neglected to note that your website redesign may offer another cost-saving benefit: Consider what if your next website upgrade could reduce your tax bill.  

That’s right, website design, development, maintenance, and related digital marketing expenses can qualify as valuable business tax deductions. Thus, when strategizing your website-related marketing efforts, keeping IRS guidelines on deductible business expenses and capital expenditures in mind is essential. In fact, by working with a tax professional, you can maximize write-offs from such expenses to significantly offset the cost of your website redesign. 

Strategic website spending isn’t just about design and effective marketing; it’s also smart business! Here’s what you need to know:        

How Website Expenses are Tax-Deductible

The U.S. tax code generally considers a business’s website-related expenses as ordinary and necessary costs that qualify for business tax deductions. Depending on expense type, website cost timing, business structure, and other factors, these expenses typically qualify as either a one-time IRS Section 179 deductible business expense that can be written off in the year incurred or as a long-term capital expenditure asset that may need to be capitalized and amortized over the website’s useful life. Annual recurring expenses, such as website hosting and domain registration fees, are generally deductible under IRS Section 162 of the Tax Code.  

What Website Costs Can You Deduct?

At this juncture, you’re probably wondering exactly what expenses you might be able to write off to reduce your tax bill. So, consider each of the following and consult with a tax professional to determine how to maximize potential deductions: 

• Website Development: The costs of hiring digital marketing experts like those at Lasso Up to design and develop your website are typically capitalized and amortized over the website’s useful life. However, in some cases, vagaries in the tax code may allow expenses to be deducted in the year incurred.
• Website Redesign and Redevelopment: More likely to be treated as a fully deductible one-time expense. 
• Hosting Fees and Maintenance: Annual hosting, domain fees, and ongoing website maintenance are usually deductible as current expenses for each tax year.
• Content Creation: Whatever you pay to incorporate content into your website can be deducted as a Section 162 expense for each tax year.  
• Marketing: Ongoing digital marketing initiatives related to your website should be deductible as advertising expenses for each tax year. This includes SEO campaigns and any related inbound marketing initiatives. 

Again, we strongly encourage you to consult with a tax professional to ensure you properly claim the correct type of tax-deductible expense and optimize its benefit to you. Note that, along with saving on taxes, a website redesign can significantly enhance business performance, especially if your current website is over three years old. 

How to Maximize Tax Savings with Your Website Investment

In addition to strategizing optimal business tax deductions with a professional tax advisor, you should take some additional steps to maximize tax savings with your website investment. For example:

• Schedule your website redesign or any other updates and maintenance to conclude before year-end, allowing you to claim any qualifying deductions in that tax year.
• Advise your digital marketing agency about any potential business tax deduction strategies, and coordinate with them and your accountant to ensure the relevant work is structured to take advantage of possible deductions.
• Plan significant website investments to coincide with tax years with higher taxable income. 
• Consider whether your business could benefit from restructuring—LLC, corporation, sole proprietorship, etc., based on different tax rules.
• Ensure that you receive and retain detailed invoices from your website developer.

Bonus: Your Website Redesign Also Boosts ROI

Remember, a website redesign or other relevant website improvements don’t just represent a tax benefit; they enhance user experience and renew your website’s SEO. This boosts user engagement, leading to more leads and conversions, and provides a new platform that may facilitate the launch of new, impactful SEO campaigns. 

How is Your Company’s Website and SEO Performance?

Overall, a website redesign is a smart investment that can yield significant returns in terms of performance and savings. To help you determine whether it might be time to revamp your company’s website, we offer a free website and SEO assessment that provides valuable insights about its current effectiveness. 

Consult Lasso Up to Invest Smarter with Your Website

Given that you may be able to write off the costs of your next website build or redesign, perhaps it’s time to consider a reboot. Your website represents a valuable revenue-generating asset that should maximize ROI through powerful SEO and other digital marketing features, as well as by taking full advantage of any business tax deductions. Contact us today for expertise in building a website that looks great, engages users, and qualifies as a smart business investment.