Is Accounting Software Tax Deductible for Your Business?

Yes, accounting software is generally tax deductible for self-employed individuals, freelancers, and small business owners. The IRS allows you to deduct ordinary and necessary business expenses, and accounting software typically qualifies when used for legitimate business purposes.

Key Rules for Deducting Accounting Software

Software used for business record-keeping (QuickBooks, Xero, FreshBooks) is an ordinary and necessary administrative expense.

Requirements to Claim This Deduction

• Must be for business accounting/bookkeeping
• Keep invoices

How to Document Accounting Software for Tax Purposes

Proper documentation is critical for any business deduction. For accounting software, you should:

• Keep all receipts and invoices showing the amount paid
• Record the date of the expense and the business purpose
• If mixed-use, maintain a log showing business vs. personal usage
• Store records for at least 3 years (7 years for major purchases)

Source: IRS Publication 535. This information is for educational purposes only. Consult a qualified tax professional for advice specific to your situation.