Is a website a capital expense?

Website planning and maintenance costs are considered an expense. This means that they can be deducted from your earnings and your tax bill. The creation of the website counts as capital and is included in the balance sheet. The creation of an entirely new website or the creation of significant new functionality for that website will be included in capital expenditures.

Typically, the cost incurred for creating, designing, developing and programming a website will be treated as a capital asset. It's also the time when the company can purchase all the hardware needed to support the website. These purchases will follow existing capitalization policies, will be included in the balance sheet and amortized. In the case of a website, it includes all the cost of web and software development, graphic design and content development.

All of these costs are capitalized, but operational costs, such as the cost of hosting, ongoing maintenance, and annual domain renewal fees, are expenses incurred. There are many costs associated with starting and running a business, and determining whether those costs should be capitalized or spent can create challenges. Below is a summary of the generally accepted accounting principles of the U.S. In order to determine whether website design is a capital expense or a revenue expense, you need to be clear about the terms.