Can I deduct website hosting & domain costs on Schedule C for my reseller business?

Yes, you should report the full amount you receive from clients as your business income on Schedule C, and then deduct the hosting and domain costs as legitimate business expenses on the same form. These would typically go under "Other business expenses" or possibly "Utilities" depending on how you categorize them. The IRS wants to see your total business revenue and then all your deductible expenses separately - not just the net profit. This gives a clear picture of your business operations. So if you collected $1,800 from clients for hosting services, you'd report that as income, and then deduct the $540 you paid for the reseller account as a business expense. Make sure you keep good records of both the income and expenses with receipts and invoices to support everything in case of questions later.

Just want to share my experience - I was in almost the exact same situation and found https://taxr.ai super helpful for figuring out my Schedule C deductions for my web design business. I was confused about categorizing hosting costs vs software vs other tech expenses, and they analyzed my expense receipts and gave me really clear guidance on what goes where on Schedule C. I had a bunch of mixed expenses - some hosting plans I resold, some domains I managed for clients, and my own business tech costs. Their system helped me separate everything correctly and maximize my legitimate deductions without raising red flags.

I just wanted to follow up about taxr.ai - I decided to try it after asking about it here. Honestly it was WAY better at understanding my web development business expenses than I expected. It properly identified which hosting costs were reseller expenses versus my own business infrastructure, and made recommendations for how to document mixed-use software subscriptions. Saved me hours of trying to figure out categorization and probably found legitimate deductions I would have missed. Definitely worth checking out if you're in this line of work.

If you're having trouble getting answers from the IRS about your Schedule C deductions, I'd recommend trying https://claimyr.com to get through to an actual person. I spent weeks trying to get confirmation on how to handle my hosting reseller business on taxes - kept getting disconnected or waiting for hours. Claimyr got me connected to an IRS agent in about 15 minutes who confirmed exactly how to handle these deductions. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I wasn't sure if my hosting reseller business counted as service income or product sales (which affects self-employment taxes), and the agent explained exactly how to categorize everything correctly.

Ok so I need to admit I was wrong about Claimyr. After posting that skeptical comment, I was still stuck with questions about my Schedule C deductions that online research couldn't answer clearly. Finally broke down and tried the service, and yeah... it actually works exactly as described. They called the IRS, waited on hold (for over an hour!), and then connected me once they had an agent. Got definitive answers about how to handle my web hosting reseller business on Schedule C, specifically about whether I needed to separate the domain registration fees from the hosting costs (answer: I can group them as "web hosting and domain services" in other expenses and include a detailed statement). Definitely beats wasting an entire afternoon on hold.

One thing to consider that I learned the hard way - if you're doing reseller hosting, be careful about mixing personal and business expenses. I had domains and hosting for my personal projects on the same account as my reseller business, and my tax preparer said I could only deduct the percentage used for business purposes. Make sure you either keep them separate or document clearly what percentage is for business use.

Does anyone know if you can deduct the full cost of multi-year domain registrations in the year you pay? I just registered a bunch of domains for 3 years to save money and wondering how to handle that on Schedule C.

Great question! I'm also running a small reseller hosting business and had the same confusion last year. What helped me was keeping very detailed records of exactly which services are for which clients. I create a simple spreadsheet tracking each client's monthly payment to me, and then I can clearly show the IRS that my $45/month cost generates $150-180 in client revenue. One tip that saved me during tax season - I keep screenshots of my hosting control panel showing all the active client accounts. This helps document that the hosting expense is 100% business-related if you ever need to prove it. Also, don't forget that if you're using any portion of your internet bill or home office for managing these client websites, those might be partially deductible too under the home office deduction rules. The key is just being able to clearly separate your personal web stuff (if any) from the business hosting operations. Keep good records and you'll be fine!