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Honestly, I don't believe there is any way to write-off a website you design for a group at no cost.
This is definitely a question more so for an accountant than anything.
None of us on here are going to give the best advice on this in my opinion, unless we have a CPA on here.
C J, Lets try answering your question from an Accountants view.
How long have you been in business?? Do you have an Accountant??
I am guessing that you have filed a Business Tax return in prior years.
Lets start with INCOME. You bill out invoices for your services. At year end you add up
all your invoices (or you can use Quickbooks, but that is another story).
Lets say that you bill out 10 invoices at $1000. each TOTAL INCOME $10,000.
Another example. You bill out 11 invoices, 10 for !000. each, One No charge TOTAL INCOME $10,000.
The extra invoice was a donation. If you incurred costs on the 11 invoice, the costs are a donation.
Try it on a spread sheet.
Let me know if you have any additional questions.
I think the problem is with the preception of 'end product'. Web design is usually at the behest of the customer and the designer is directed by the consumer of his/her services.
A customer could purchase a website in a box, and then pay for 'upgrades' to the basic design. These upgrades probably would/should NOT be custom, but having an upgrade box with design scales from simple to modest to advanced. Any custom deisgn work you could bill as you are doing now.
CorpCons was right as well...talk to the CPA.
Thank you DomainDiva for distinguishing a website in a box. I was confused by that lol.
I guess you learn something new every day.
You could try this, but your end product would be treated as a donation of property and "the IRS determines the fair market price that would have been received had the taxpayer sold the contributed property on the open market." So, how much is a charity's custom website code worth on the open market? That could be the hang up.
If you could create some type of customizable "design skeleton" (or "website in a box" as you called it), then yes, you'd have a basis for deducting that portion of the donation. However, it seems like this product would be much the same as the DIY website building packages/templates that currently available for under $100 (or even for free). So to give the IRS evidence that would allow them to establish a higher fair market value, you'd need to actually sell whatever this product was to your other commercial clients (i.e., that basic skeleton code would need to appear as a billable item on invoices and become the starting point for your customization work on other client projects). In that case, you'd be fine deducting the amount of the skeleton product.
I hope this helps. Best wishes.
Hmm... I really don't know about that Lighthouse24. I love your responses, they are always well thought out. I just don't understand how he could deduct it at fair market value. Could you explain this to me a bit more?
Sure, CorpCons . . . but since I don't know web design that well, let me use a computer based supervisory development program (something I actually provide), as an example.
My "skeleton" for the program is a PowerPoint presentation with narration, animation, and embedded video (all my intellectual property). It contains everything you'd expect in a basic supervisory development program. The presentation file, in itself, is a significant "product" that has tangible value. It's all just very plain and generic.
A client can purchase that skeleton and customize it in house, or hire me to do it (which is what usually happens). So to that skeleton, I will add the things a client organization requests to make it look like an in-house supervisory development program of their own. For example, a greeting video from their CEO, custom graphics including slide design backgrounds and/or company logos; anecdotes and learning examples selected for their audience; industry-specific terminology and exercises; references to their specific docuements and procedures; appropriate end-of-module quizzes and surveys. When they review and approve all the changes, I convert it all into a SCORM-compliant output that will run on their system, and then I turn it over to them.
On my invoice, I bill them for the base module (flat fee, always the same) plus the customizations and conversions they requested (billed at an hourly rate).
I have also provided versions of this same program to six non-profits. In those cases, the invoice lists the base module as a donated product (with a clearly established market value -- the amount I've billed clients and government agencies for it since 2003), while my customization work is shown as a donated service (non-deductible).
Does that explanation make sense?
Yes, thank you. I am understand it more...but looking at how confused I was...I think I would avoid the deduction lol.
This is an easy one for me to answer. Based on what you do, you likely won't be able to write off your service. You are more or less donating time. Now what you should be able to write off is the expense of buying domain names if you do that for a non profit or hosting fees if you pay for those or images, if you pay for those. Other than that, chalk it up to doing the right thing.
Thank you for the clarification BDS. It was one that by far stumped me lol.
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Hello I am a freelance web designer / developer who is often approached by non-profit organizations. While I would love to do work for some of these organizations, they usually can't afford my services and I can't really afford to not charge or give that much of a discount especially with out some sort of tax benefit (write-off). Researching through this forum and many others its been made pretty clear that you cannot write off donations of time spent for providing a service. What makes me still ask this question is that couldn't the website be looked at as a product instead of a service? The projects I usually work on, because of their nature, are charged on an hourly basis. If I were to charge a flat fee then aren't they paying for the delivery of the end result and not time? or would my only solution be to come up with some sort of "website-in-a-box", which would be a general purpose site focused for a specific type of organization that could be purchased or donated and then only charge for customization and additional design?