Can you capitalize cost to build a website?

The cost incurred for creating, designing, developing and programming a website is included in capital assets. Capitalize on these costs associated with the visual impact of the website and its readability. This stage includes the design of the site with backgrounds, fonts, frames and buttons. Just as the costs for developing back-end functions are capitalized, these development costs will also be included in the balance sheet and amortized.

Accounting for website development costs depends on the current stage of site development. At the planning stage and once the website is complete, all costs are spent as incurred; however, at the website development stage, the guidance is not as clear. As the site develops, the costs to develop any application software on the website are capitalized, but other costs are spent. Updates and improvements to the website can be capitalized on, but only if additional features are added.

If you consider that your website is primarily for advertising, you can currently deduct the internal software development costs of the website as an ordinary and necessary business expense. For accounting purposes, entities that have been within the scope of FRS 10 (the financial reporting standard for goodwill and intangible assets) should capitalize on website costs to the extent that they include application and infrastructure development costs, design costs and content costs; and only if they are within the scope of application. Before you can begin to determine the tax treatment for your website development costs, you need to determine what you use your website for. The internal software development costs of the website can currently be deducted as an ordinary and necessary business expense if you believe that your website is primarily intended for advertising.

In the event that a taxpayer pays the interior designer to purchase furniture and accessories, and to make recommendations on a new office design, the costs paid to the interior designer should be included in the cost of furniture and accessories.