Is a telephone bill a utility expense?

What is a telephone expense?

Telephone expenses include the costs your business pays for phone and communication services used in daily operations. This can cover business landlines, mobile phone plans, VoIP services, and internet-based calling systems. These costs help maintain contact with clients, vendors, and employees, making them an essential part of business infrastructure.

How to categorize telephone expenses

• Record as Operating Expenses in your income statement.
• Include under the “Utilities” account in your chart of accounts, or create a separate “Telephone and Internet” subcategory.
• Split costs between business and personal use when applicable.
• For shared or home-based phone lines, deduct only the business-use portion.
• If phone services are bundled with internet, allocate the costs proportionally for accurate reporting.

Examples of telephone expenses

• Business Landline: Monthly service charges for office phone systems.
• Mobile Phone Plans: Business cell phone accounts or employee phone stipends.
• VoIP Services: Internet-based phone systems like Zoom Phone, RingCentral, or Google Voice.
• Internet Bundles: Combined internet and phone service used for communication.
• Equipment & Setup: Headsets, handsets, or routers used for communication.

Tax implications for telephone expenses

• Telephone bills used for business purposes are generally 100% tax-deductible.
• For home-based businesses, only the portion used exclusively for work is deductible.
• Keep detailed statements to distinguish business from personal calls.
• If employees use personal phones for business, reimbursements may also qualify as deductible business expenses.
• Bundled service plans (phone + internet) should be allocated appropriately when filing taxes.
• Always maintain records and billing statements in case of an IRS audit.