What expense category does Cloudflare fall under?

Wondering where to categorize your Cloudflare expenses? Correctly classifying these costs can streamline your financial reporting and give you better insights into your software spending. Let's explore which expense category Cloudflare falls under and why it matters.

Classifying Cloudflare expenses

Cloudflare is typically categorized under the software expense category. Depending on your accounting practices, you might further classify it into subcategories:

• Cloud computing services: Cloudflare offers cloud-based services like content delivery networks (CDNs), DNS management, and DDoS protection.
• Web performance and security software: If you track web performance or security software separately, Cloudflare fits here due to its focus on website optimization and security.
• Internet services: For some businesses, expenses for online services are grouped under this category.

Examples of Cloudflare expenses

Here are some common expenses related to Cloudflare services:

• Subscription fees: Monthly or annual fees for Cloudflare plans like Pro, Business, or Enterprise.
• Add-on services: Costs for extra features such as Argo Smart Routing, Load Balancing, or Rate Limiting.
• Domain registration: Fees for registering or transferring domains through Cloudflare's registrar.
• Custom solutions: Charges for tailored services or dedicated support packages.

For example, if your company pays $200 per month for the Cloudflare Business plan to enhance your website's performance and security, this expense might be categorized under software expenses.

Tax implications of Cloudflare expenses

When it comes to taxes, Cloudflare expenses are generally deductible as ordinary and necessary business expenses. Key considerations include:

• Deductible expenses: Subscription and service fees paid to Cloudflare can typically be deducted in the year they're incurred.
• Capitalization vs. expense: If you're paying for long-term licenses or significant software development, you might need to capitalize these costs and amortize them over time.

Keep detailed records of your Cloudflare expenses to support deductions in case of an audit. Since tax laws may vary, it's wise to check with an accountant to ensure proper treatment of these expenses.

Let Ramp automate your expense process

Managing and categorizing expenses like Cloudflare can be time-consuming. Ramp simplifies this process by automating expense categorization, tracking, and management. With Ramp, you can streamline your financial operations, gain better insights into your software spending, and focus on growing your business.