Even in today’s thriving and advanced technological market, any business will tell you how the phone is a key component to their success. A business incurs a lot of taxes that need paying on numerous items and services used for trade purposes every day, especially when it is something like their phone systems that they use explicitly. The positive thing is that business’ can actually claim back their expenses on most of this tax, however, it is important to have insight into where you can claim tax back. When calculating business expenses that can be written off, many are faced with the challenge and time of going through all expenses and working out exactly where they can claim tax. Working out costs in business and what can be written off as an expense can be challenging as there are so many areas to cover with even business phones falling under different terms depending on whether it is a cell phone or a landline, and whether it is from a business location or a home office. To avoid the hassle this brings, many companies have already switched to the cheapest VoIP phone services.
The Internal Revenue Service(IRS) has many rules for when you can and cannot write off business phone system costs. Technically, business phone systems can be written off as a business cost, however, The Internal Revenue Service scrutinize the usage of the phone system as personal calls are not allowed to be part of your deductible expenses. However, differentiating between personal and business calls can be very challenging. This goes for both cell phones and landlines. The biggest recommendation would be to separate and buy one phone for personal and one for business, but that never happens in most cases.
If you are working from a home office, the IRS stipulates that only home offices solely used to conduct business are eligible for any business expenses that can be written off, that include your phone systems and usage. To claim your business expenses, you need to fill out a Schedule C Tax Form and determine the percentage of your phone use deducted from your normal phone bill. Documentation is essential, so ensure you have all phone bills with any business calls highlighted.
With regards to cell phones, you need to be able to prove through your bills and call logs were only used for business calls if you want to claim the whole thing, otherwise, you need to provide the number of minutes along with your estimated claim. This is where it can get very tricky. For small businesses, this has now been taken away from listed property tax deductions but remains in fringe benefits as many employers need to use cell phones whilst traveling.
Although, the IRS have eased up with the scrutiny of business expenses that can be written off on phone systems and usage for small businesses as you can now deduct your entire bill without having to show documentation in your business expense claim. However, if an IRS auditor does stop by to check which happens frequently, you need to have this evidence to hand. To avoid any tax audit issues, restrict cell phones to only those who require them and ensure that they also carry their personal phone at the same time. It is recommended that you constantly time log when using a phone line that is used for both business and personal purposes. It may be better to use the cheapest VoIP phone services because as long as you streamline your Internet connection solely for your business, you can write it off as an expense without all the stressful tasks listed above.
Benefits of switching to VoIP Services
Due to many beneficial reasons, almost a third of businesses have already switched to a Voice over Internet Provider (VoIP) for business. In basic terms, a VoIP runs your phone line through your internet connection. If your internet connection is entirely dedicated to your business, the whole thing can be classed as business expenses that can be written off. This means that you will effectively save an incremental amount of money, meaning the investment into switching to the cheapest VoIP phone services will pay off from that alone. However, not only a benefit to your business expenses, the VoIP has many other key factors into why so many businesses are changing over.
Not only will it significantly cut down your telecommunication costs but the advanced features help to enhance productivity and efficiency within the workplace. These features include conference bridging, unlimited channel lines, so you never have a customer impatiently waiting, and a customized configuration to your voicemail and email inbox so you can always keep on top of every call coming in. You can also direct different calls to certain mobiles, if for example, you want every customer to have the same point of contact in your workplace so they feel more valued, or if you want to distribute calls to different teams. For any call that is needed to be taken overseas, the cheapest VoIP phone services will be able to direct the call to anywhere without incurring additional costs. Furthermore, you no longer need to be glued to your desk if you are waiting on an important call from a customer. The VoIP service, allows you to redirect numbers to business cell phones so you can take the call from absolutely anywhere. This is a great way to monitor cell phone usage on any business phones, and log call time to claim back if necessary. VoIP for business enhances customer satisfaction and the success rate can be measured, so you can watch as the switch is not only a savvy business expense that can be written off but a lucrative and cost-effective investment.
Arrowtel has worked with Vitelity to provide VoIP services for the businesses of any size. Visit Arrowtel website to find out more about the Cheapest VoIP phone services that are right for you. This article is not to be intended as comprehensive tax advice, so for more information and clarification on tax advice and claiming business expenses, please contact a professional tax advisor.