Are you constantly glued to your cell phone for business purposes? Does your Limited Liability Company (LLC) need you to be available at all times? If so, you might be wondering if your LLC can foot the bill for your monthly cell phone expenses. After all, you’re practically on-call 24/7, so it only seems fair, right? Read on to learn whether or not your LLC can pay for your phone and what you need to know to make it happen.
Can I Claim My Cell Phone as a Business Expense?
You can claim your cell phone as a business expense depending on how you use it.
If I Use My Own Phone
You can deduct a portion of the bill based on the amount of time you use your phone for work-related purposes. These include:
- Making business-related calls or texts
- Taking calls from clients
- Using data to complete work-related tasks or research
The amount you can deduct will depend on the percentage of time you use your phone for business purposes, so you’ll want to keep accurate records of your phone usage to support your deductions.
Example: When deducting a personal phone used for business, calculate the proportion of time spent using it for business activities. For instance, if you are using it 50% of the time for business activities such as attending meetings or making calls to customers, then you can claim 50% of your phone bill as a business expense.
If I Use Two Phones
If you use two phones, one for business and one for personal activities, then you can claim all of the cost related to the phone that is used for business activities. This includes the cost of purchasing and maintaining the device itself, any associated service charges such as data plans, international roaming fees if necessary, etc.
Other Business Deductions
Other deductions related to cell phones are costs associated with accessories needed to improve your productivity while working on the go such as cases and chargers. You might also be able to deduct expenses related to home office setup costs that make it possible for you to work remotely such as a secure Wi-Fi connection or remote software subscriptions that enable online meetings with clients.
Are Cell Phones LLC Expenses or Employee Benefits?
The question of whether cell phones are considered LLC expenses or employee benefits can be complex and depends on several factors, including your jurisdiction’s laws and regulations, the nature of your business, and any employment contracts in place. If a cell phone is deemed necessary for conducting business, it may be deductible as a business expense by the LLC.
Some LLCs may provide cell phones to their employees as a benefit, which would classify them as an employee benefit. The specific classification of cell phones varies based on your unique business circumstances, so it’s always best to seek guidance from a qualified legal or financial professional if there is any uncertainty.
Can an LLC Pay for an Employee’s Cell Phone?
Yes, an LLC can pay for an employee’s cell phone. It’s a common practice for many businesses. Providing employees with cell phones is beneficial in ensuring that they’re available and reachable for business-related matters, especially if they frequently work remotely or outside of regular business hours.
Payment for the employee’s cell phone can either be made directly by the LLC or by reimbursing the employee for the cost of the cell phone or their phone plan. Any payment or reimbursement for an employee’s cell phone must be reasonable and necessary for business purposes and should be documented and tracked for tax purposes.
Internal Revenue Service (IRS) Publication 15b, The Employer’s Tax Guide to Fringe Benefits, provides detailed information for deducting cell phone expenses for business use. You can learn more about the documentation requirements here, as well as any particular guidelines or restrictions that might be relevant to your situation.
doola for Accurate Cell Phone Usage Records
While it’s great that your Limited Liability Company can cover the cost of your cell phone if it’s used for business, you should remember to keep your tax obligations in mind. Only reasonable and necessary expenses can be claimed, and documentation is key to ensuring compliance with tax regulations. When it comes to accurate bookkeeping, doola has got your back!
Can mobile phones be an asset or an expense?
When it comes to mobile phones, the answer depends on how you use them. On one hand, they can be an asset for businesses that need to stay connected and in contact with their employees or customers. On the other hand, they can also be an expense if your business uses them for activities that are not directly related to its operations (e.g. personal calls).
Can wireless earphones be a business expense?
Wireless earphones may also be considered a business expense depending on several criteria such as the type of earphones used (brand-name vs generic) or their intended purpose in the business (work-related vs leisure activities). If a company provides its employees with wireless earphones for work purposes such as listening to conference calls or providing customer service, then these can be claimed as a deductible business expense.
Which expenses cannot be claimed as business expenses?
Expenses related to personal use of the cell phone, such as non-business-related phone calls, texts, or data usage, cannot be claimed as business expenses.