What Expense Category Does Zoom Fall Under?

With the increased reliance on remote work, Zoom has become a standard operational cost for many businesses. Properly categorizing this expense is important for maintaining accurate financial records and ensuring correct tax reporting.

Common Expense Categories for Zoom

Your Zoom subscription can logically fit into a few different expense accounts. The most common category is “Software and Subscriptions,” as you pay a recurring fee for access to the software. Placing it here allows for clear tracking of all your software-related expenditures in one place.

Another widely accepted category is “Office Expenses.” This account serves as a general catch-all for costs associated with running an office, whether physical or virtual. If your business does not have many software subscriptions, grouping Zoom here can simplify your Chart of Accounts.

A third option is to classify Zoom under “Communications” or “Utilities.” This is logical because the service functions much like a telephone line, facilitating business discussions. If your company uses Zoom as its primary method for meetings, this aligns the cost with its function. The key is to choose one category and apply it consistently.

Recording the Expense in Your Books

Once you have selected a category, the next step is to record the transaction in your accounting system. For those using accounting software, this can often be automated. When a Zoom charge appears in your bank feed, assign it to the predetermined expense account.

If an appropriate account does not exist in your Chart of Accounts, you may need to create one, such as “Software Subscriptions.” This ensures that all similar future costs are categorized uniformly. Many accounting platforms also allow you to create rules that automatically categorize recurring transactions from a specific vendor.

Handling Mixed Personal and Business Use

When a single Zoom subscription is used for both business and personal meetings, you can only deduct the portion of the cost attributable to business activities. The IRS requires this allocation to ensure expenses are directly related to your business.

To calculate the business portion, determine the percentage of time the service was used for business purposes. For instance, if you find that 80% of your Zoom time was for business, you can claim 80% of the subscription fee as a business expense. If your plan costs $15 per month, the deductible amount would be $12 ($15 x 0.80). It is important to maintain a log or other records to substantiate your allocation.