We need to create a nominal code for fees paid to web developers, not web hosting costs, but cost of programming. Under which category should this go, purchases 5000-5999, direct expenses 6000-6999, or overheads (7000-9999). We want to separate out web development costs and think that they are capitalized in a way that 7603 Professional Fees are not.
Treatment of web development cost varies depending on factors like how material it is, is it limited company or not? Web development cost would end up in balance sheet or P&L. If you can expand of your situation that would be helpful
Thank you for the quick reply. It is a Limited company which trades online so the website is the main business and web development is ongoing and most months incur a cost. Some is for adding new services and features, other work is for bug fixing and maintenance. Should these be treated together or separated?
If initial development cost is material enough to be capitalised then subsequent cost to upkeep should be in P&L. You can create a new nominal for web cost or use 7506 Hosting Fees and IT Consumables
So as web development cost is material enough to be capitalized it should go in the P&L and we can create a new nominal for web cost or use 7506 Hosting Fees and IT Consumables.
7506 is under ‘Overheads’ (7000-9999). So if we use 7506 will that automatically put it under the P&L as suggested? Or if we create a new code, should we make it within the range 7000-9999 like this:
Category: Overheads
Sub-Category: Professional Fees
Then we enter the Account Name 'Web Development’
Will that automatically put it under the P&L?
If you are capitalising some thing that wont go in P&L. How much is your initial web development cost?
The initial cost will be about £1,000. Not much but it is a small business. We expect future costs of around £500 a month.
Where should be create the nominal code for web development costs, and how do we capitalize the costs?
I wont bother capitalising this, just write off in P&L
OK. So if we create a new Nominal Code (so we can separate the costs from other professional fees and keep track of the cost) should we make it within the range 7000-9999 like this:
Category: Overheads
Sub-Category: Professional Fees
Then we enter the Account Name ‘Web Development’
yes that is correct way to do it
OK. Thank you for this.
I’d like to know the answer to this as well however I am a sole trader.
Thank you