Can I Write This Off?

Can I write off client onboarding software?

TL;DR

Yes, client onboarding software can generally be written off as a business expense if it is ordinary and necessary for your business.

Detailed Answer

Client onboarding software is typically considered a deductible business expense if it is used to facilitate the acquisition and management of clients, which is an ordinary and necessary part of running a business. This deduction is applicable to businesses that rely on client management and communication tools to operate efficiently. However, the expense must be directly related to business activities and not for personal use. For example, if the software is used exclusively for managing client relationships and improving customer service, it is deductible. If the software is used for personal purposes, the expense must be allocated accordingly.

Where to Put It on the Tax Form

Schedule C, Line 27a for sole proprietors or as a business expense on Form 1120 or 1120S for corporations.

Real World Example

A marketing consultant uses a client onboarding software to manage client intake forms, schedule meetings, and track project progress. The software costs $500 annually and is used solely for business purposes. The consultant deducts this amount as a business expense on their Schedule C.

Audit Risk & Documentation Tips

To minimize audit risk, maintain detailed records of the software purchase, including invoices and payment receipts. Keep documentation showing how the software is used in your business operations, such as screenshots or descriptions of its business functions. Ensure personal use, if any, is clearly separated and documented.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

Small BusinessConsultantsFreelancersMarketing AgenciesTech Startups

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 7, 2025

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