By Jeannine Mancini
Published on 25 Apr 2023 3 min read
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 circ*mstances, 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 reimbursem*nt 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!
FAQs
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.
FAQs
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.
Can you write off cell phone for LLC? ›
Your cellphone as a small-business deduction
If you're self-employed and you use your cellphone for business, you can claim the business use of your phone as a tax deduction. If 30% of your time on the phone is spent on business, you could legitimately deduct 30% of your phone bill.
Can I pay for my cell phone with my business? ›
California Labor Code 2802 requires your employer to reimburse you for all reasonable expenses necessary for doing your job. This includes reimbursing you for any business-required use of your personal cell phone.
Do I need a separate phone for LLC? ›
If you own a small business and customers keep overwhelming you with calls and texts after hours, it might be time to get a separate phone number to work exclusively for your business. Having both a work phone and a personal phone will allow you to better serve your customers and maintain your sanity.
How much of my phone can I claim on tax? ›
If your mobile phone cost under $300, you can claim a one-off, immediate tax deduction for the business use percentage of the purchase price. If your mobile phone cost more than $300, you can claim the depreciation of your mobile phone over the life of the equipment which is 3 years as per ATO guidelines.
Can I pay my cell phone bill out of my business account? ›
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.
How much can my LLC write off? ›
The Tax Cuts and Jobs Act (TCJA) added the latest LLC tax benefits. This act allows LLC members to deduct up to 20% of their business income before calculating tax. If you don't choose S corporation tax status for your LLC, members can often avoid higher self-employment and income taxes with this deduction.
When should a company pay for your cell phone? ›
In the state of California, employers are legally obligated under Labor Code 2802 to reimburse their employees for any reasonable expenses incurred while performing their job duties. This includes reimbursem*nt for the use of personal cell phones if it is necessary for business purposes.
Can I claim for a phone as a business? ›
GST can be claimed on mobile phones if they are brought into the country and used for business purposes. The user must have a tax registration number and invoice or purchase order number to claim ITC.
What is a reasonable cell phone reimbursem*nt? ›
In the US, the average cell phone reimbursem*nt for employees is $30 per month. However, this amount varies throughout the states, as well as the employees' specific requirements. Typically smaller companies will reimburse their employees in the $30-40 per month range.
Regardless of the reasons for removing yourself or others from an LLC, the good news is that it can be done. The first step you need to take is to read through the Articles of Organization that you put together when the LLC was officially registered.
What is the best phone service for a small business? ›
The Best 5 Business Cell Phone Plans of 2024
- RingCentral: Best VoIP business mobile plan.
- Verizon Wireless: Best traditional wireless carrier.
- Google Voice: Best mobile solution for sole proprietors and freelancers.
- AT&T Wireless: Best for mobile security.
- T-Mobile: Best for novel features.
The liability protection of an LLC: An LLC can help protect your personal assets from business liabilities. However, if you are not yet generating any income, you may not need the liability protection of an LLC.
Can I claim my phone as a business expense? ›
You can qualify for a cell phone tax deduction from cell phone charges incurred when the mobile phone is being used exclusively for business. There is not an IRS cell phone deduction for self employed people, exclusively. However, you can also deduct additional business expenses that you incur.
How much of my phone bill can I write off? ›
If 30 percent of your time on the phone is spent on business, you could legitimately deduct 30 percent of your phone bill. In “Entrepreneur” magazine, writer Kristin Edelhauser recommends getting an itemized phone bill, so you can measure your business and personal use and prove your deduction to the IRS.
Can I claim my home internet as a business expense? ›
The internet makes it possible for you to run your own business, and without it, your business wouldn't exist. You can deduct internet costs if you work from home or regularly do business online. Running a business online can include: Acquiring new business or customers through various platforms.
Can you write off an Iphone for business? ›
You can deduct all or part of your smartphone as a business expense if you and its use qualify. The key is determining your employment classification (which is simple) and then identifying how much of the phone is used for business and how much is used for personal calls, texting and other purposes.
Can I write off clothes for my LLC? ›
Only clothing that's a requirement from your employer and that can't be worn outside work qualifies as a work clothes deduction. A tax deduction calculator can help you check if your clothes can be counted as a write-off. The IRS considers clothes that are everyday wear as nondeductible.
Can I write off internet as a business expense? ›
You can deduct internet costs if you work from home or regularly do business online. Running a business online can include: Acquiring new business or customers through various platforms. Online banking for your business.
