Are Shopify Fees Tax Deductible In 2024?

Yes, fees associated with Shopify are considered “online service fees” which are tax deductible. Any online service used for business purposes including apps and extensions that are required for you to run your online business are deductible as business expenses.

According to https://www.reconvert.io/ there are 5 simple and effective deductions that are a “must know” when it comes to selling on Shopify.

• Keep track of every single penny used towards ADVERTISING EXPENSES. Businesses are expected to spend heavily on advertising whether you are running an e-commerce site or a traditional storefront, the IRS is accustomed to seeing a large portion of profits being used solely for advertising purposes.
• MERCHANT FEE EXPENSES are a commonly overlooked deduction because your payment processor usually subtracts them under your radar. This little 3% of your total revenue will go a long way if you are focused on the long game of your business.
• There is also something called the “HOME OFFICE DEDUCTION” and requires only two aspects to qualify: There has to be a designated space in your home that you utilize only for work related subjects or events. Also, this space must be the principle place of your business. If these two requirements are met, there are two options when taking this deduction; Simplified option or the Actual expense method.
• There are three main things to focus on when considering your STARTUP COST DEDUCTION: All of the costs involved when you were preparing to open your business. The creation of a trade of business which includes any and all product research that was involved. Finally, any fees that were paid when you were organizing your business which include things like legal fees, accounting fees, filing fees, LLC fees, insurance etc.
• Congress created something called BONUS DEPRECIATION in the wake of the pandemic that is focused on helping small business owners grow and expand their US based companies. This deduction used to be 50% of the value of your asset, but with the new laws in place, it has risen to 100% which means that you are able to completely write off eligible assets that you have purchased for your business this year. An example of some of the eligible assets are: Furniture, manufacturing equipment, heavy machinery, computer software, and qualified film and television production equipment.

All in all the answer is yes, your Shopify fees are tax deductible. There are many ways to find deductions when it comes to your e-commerce business, and the deductions definitely add up when it’s all said and done. Furthermore, with all of the constraints and losses that have occurred due to the world wide pandemic, there are a large number of government funded incentives that are available for the purpose of jump starting the economy. If there was ever a time to start a business on Shopify, now would be the time. With all of the opportunities available to lessen the tax burden on a startup, the window has opened for new entrepreneurs to embark on that awaited venture.