Smart Finance for Small Businesses: How to Get Tax Deductions on Internet and Phone Expenses!

Running a small business means keeping a close eye on every dollar and that includes making the most of tax deductions. One commonly overlooked area is internet and phone expenses. If you use these services for your business, you can claim a portion of the costs to reduce your taxable income.

Why Internet and Phone Deductions Matter

In today's digital world, internet and phone services are the backbone of small businesses. Whether you're sending emails, managing your website, attending virtual meetings, or handling customer service calls, these tools are crucial. Deducting the business-use portion of these bills helps you save money and shows a clear picture of your operational costs.

Beyond basic communication, these services also support cloud storage, online accounting software, e-commerce platforms, and remote collaboration tools all essential parts of modern business operations.

What You Can Deduct

You’re allowed to deduct the business use percentage of:

• Home internet services: If you're working from home, your internet likely supports activities such as sending invoices, updating your online store, marketing on social media, customer support chats, video conferencing, and research.
  

• Mobile phone usage: If your smartphone is used for answering client queries, business related texting, using apps like Whatsapp for Business, tracking mileage, or managing orders, those portions are deductible.
  

• Business only lines or services: If you have a dedicated line for work (like a VoIP number or a separate mobile plan), that’s considered 100% deductible. These are especially useful for keeping business and personal communication separate.
  

For example, if you estimate that 70% of your phone usage is for business purposes based on call logs and app usage, you can claim 70% of the bill. Just make sure your estimation is reasonable and backed by data.

How to Calculate the Business Use Percentage

To fairly claim these expenses, it’s important to track and calculate usage. Here’s how:

• Keep a log: For at least one month, record how much time or how many calls are business-related. Include time spent on work emails, calls, and online business tools.
  

• Use digital tools: Some phones and routers allow you to track data usage by app or activity. Tools like My Data Manager or your phone’s built-in digital wellbeing stats can help.
  

• Estimate based on your routine: For example, if you're online 8 hours a day and use 6 hours for business related work, that’s 75% business use. Similarly, if 9 out of 12 daily calls are for business, that’s 75% of phone usage.
  

Tips to Stay Organized and Audit Ready

Being organized helps you confidently claim deductions and handle any tax queries.

• Save your bills: Keep digital or printed copies of your monthly internet and phone bills in a dedicated bookkeeping folder.
  

• Highlight business usage: Make notes or highlights on the bills to show which portion is work-related. Annotating PDFs or using spreadsheet trackers can help here.
  

• Review usage quarterly: Business needs evolve. Check your usage every few months and update your claim percentage if needed.
  

• Use separate accounts where possible: If your budget allows, consider using a separate phone or internet account for business. This simplifies deductions and offers clearer records.
  

Final Thoughts

Claiming internet and phone expenses is a smart way to reduce your taxable income, but it requires accurate tracking and documentation. A well-supported claim keeps you compliant and can lead to significant annual savings.

Stay consistent, stay honest, and treat these deductions as part of your overall bookkeeping strategy. Your business budget will thank you and so will your accountant at tax time. #InternetExpenses #SmallBusiness #BookkeepingTips #TaxDeductions #BusinessExpenses #InternetAndPhone #TaxSavings #BusinessOwners #SmallBusinessTips #TaxSeason #BusinessFinance #AccountingTips #FinancialManagement #BusinessDeduction #EntrepreneurLife #TaxAdvice