If you operate a successful small business, chances are you got there by tapping into a variety of resources. These resources would include operations, marketing and IT support provided by other small businesses. When it comes to accounting and how to successfully manage these services in your books, there are a few ideal ways to do so. Specifically, for IT administration and support costs, many people ask how they can be written off.
Managed IT Support vs. Hourly Support
A major difference in IT support is how it is provided and charged to your business. Most IT support administrators provide their services in one of three ways: 1) on a per-project basis where the business pays a larger up-front cost for support, 2) through hourly support where an hourly rate is negotiated and paid at the completion of work, and 3) through a managed services contract where the IT provider can give a business ongoing support.
What’s Best for Business?
The answer to this question is really dependent on the type of business. An IT support provider can service a variety of business technology functions including computers, phone systems, email and network issues. If your business deals with all of these areas of IT and requires services for a number of devices (computers and phones), you’re better off working with a managed services provider. With this option, the IT support provider will help service your machines on a monthly, ongoing basis. This person helps ensure your technology is always operating to your expectations and is “on call” in case something goes wrong.
Conversely, for businesses with a limited number of machines, they likely don’t need an ongoing support provider. Here is where an hourly provider is likely best for the business. There are not enough requests on a monthly basis to justify a contracted IT provider, so hourly service is best. Likewise, if you only have a handful of projects here or there such as buying new office computers, you’ll likely be fine with a project cost rather than monthly support or hourly service.
It’s important for business owners to evaluate their IT needs and then hire accordingly. And if you find your business is in constant need of IT support, consider hiring someone in-house as a full-time technology administrator.
Be Sure to Write It Off In Your Business Taxes
Perhaps the most important thing of hiring outside services like an IT provider is how these services are written off in taxes. Whether you choose to hire a contracted individual or pay someone on an hourly basis, you’ll want to keep track of the invoices and write them off as a business expense when you do your year-end taxes. Any major accounting tool will be able to categorize your IT expenses so you can easily keep track of them. Remember, services like supporting your technology are a necessity to running the business and can therefore be written off. Depending on how your business is structured, you may be able to completely write off all of your IT expenses.
If you have any questions about how you can account for your IT expenses, be sure to leave a comment below.
