Correct nominal codes for software/subscriptions

Hi everyone,

I wondered if you could give some advice. I’m unsure which nominal code I should be using for:

  • domains/Google Workspace subscription
  • one-time software fees
  • software subscription fees

I’ve been tagging all of these up until now as 7506 (Hosting Fees and IT Consumables) which I now think is probably wrong.

So my questions are:

  1. Is the 8201 Subscription category for software subscription fees?
  2. Should one-time software fees and domains, Google Workspace etc be categorised as 5000 General Purchases? (Or something else entirely)

Thanks a lot

Personally I would probably do the same as you and treat the subscription ones as hosting fees. One time software costs it depends how much we’re talking - if it’s up to a hundred pounds or so I’d still be inclined to put it in P&L as an expense of some sort, but if it’s thousands of pounds for professional video editing software or something like that then it probably needs to be treated as an asset and amortised over the appropriate number of years.

One thing it definitely isn’t would be general purchases; this is generally for goods you buy for resale or for raw materials that you use to manufacture the goods that you sell, where there’s a clear link between the thing you purchased and the corresponding sale or sales that you make to your customers. Software would only be “general purchases” if your business is reselling software, e.g. if you buy licences in bulk at a discount and then sell them on to your own customers for profit. Software that you buy to use yourself in your own business is either an overhead or an asset, not a cost of sales.

Usual disclaimer - I am not an accountant, talk to yours if in any doubt.

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I really appreciate the time you took to write this Ian.

Much appreciated!

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