With over 722 million members worldwide, LinkedIn has become an invaluable tool for networking and growing a professional online presence. LinkedIn Premium offers additional features beyond the basic free account, like expanded search filters, unlimited InMail messages, and profile highlighting. But can self-employed professionals and small business owners write off the cost of a LinkedIn Premium subscription as a business expense on their taxes? Let’s take a closer look.
What is LinkedIn Premium?
LinkedIn Premium is LinkedIn’s paid subscription service that provides users with additional features and capabilities beyond the free version. Here are some of the key benefits of LinkedIn Premium:
- InMail Messages – Send unlimited direct messages to anyone on LinkedIn, even if you’re not connected.
- Profile Highlights – Your profile appears at the top of search results and stands out with a Premium badge.
- Advanced Profile Filters – Use filters like location, company size, job function, and more to narrow your search results.
- Contact Info Access – View full contact info for your 3rd-degree connections so you can connect directly.
- Premium Insights – See who’s viewed your profile, get conversation starter suggestions, and measure content performance.
- Learning Courses – Access over 16,000 expert-led video courses to build new skills.
There are three tiers of LinkedIn Premium accounts – Career, Business, and Sales. Pricing ranges from $29.99 to $99.99 per month depending on the plan.
Tax Write-Off Rules for Businesses
In order for a business expense to be tax deductible, it must be considered an “ordinary” and “necessary” expense. Here are the key criteria the IRS uses to determine if a business expense qualifies:
- Ordinary – The expense must be common for your type of business or work. It can’t be unusual or rare.
- Necessary – The expense must be essential for your business, not just helpful. You need to show a clear business need.
- Directly related – The expense has to directly tie back to operating your business. If the purpose is mixed or indirect, deductibility becomes limited.
- Properly documented – You must maintain proper receipts and records for tax documentation.
In addition to these criteria, the IRS also looks at whether the expense is recurring vs. one-time. Recurring expenses have a stronger case for deductibility.
Arguments For Writing Off LinkedIn Premium
Here are some potential arguments that could justify deducting the cost of LinkedIn Premium as a business expense:
Enhances Your Professional Reputation
A LinkedIn Premium account can help present a more professional image through profile highlights and the Premium badge. Since your online reputation is critical for attracting business, this investment in self-promotion could be considered “ordinary and necessary.”
Expands Your Networking Opportunities
With open access to more LinkedIn members through advanced filters and InMail messages, a Premium account facilitates networking with potential clients and key industry contacts. Networking is essential for generating new business.
Saves You Time
The advanced search capabilities of Premium allow you to quickly find prospects and useful contacts for your business. The ability to easily message connections saves you time over traditional email outreach. Saving time ultimately enhances productivity.
Provides Valuable Insights
Premium Insights like seeing profile viewers and content performance metrics provide you with useful data to evaluate your LinkedIn activity and reach. These insights can directly inform your business strategy.
Access to Learning Courses
Premium includes unlimited access to over 16,000 professional development courses. Continuing education often benefits a business by enhancing skills.
Arguments Against Writing Off LinkedIn Premium
Here are some of the counter-arguments on why LinkedIn Premium may not be tax deductible:
Considered a Personal Expense
Some tax professionals argue that Premium’s benefits are more valuable on a personal level, helping advance your career rather than directly benefiting the business. This casts doubt on it being an “ordinary” business expense.
Hard to Prove “Necessity”
LinkedIn’s free account already provides substantial professional networking abilities. Premium offers helpful additional features, but it could be difficult to prove those specific features are truly “necessary” for operating your particular business.
Mixed Personal and Business Use
For self-employed professionals, their LinkedIn account often blends personal and professional uses. This muddies the water on whether the expense is exclusively business-related and calls deductibility into question.
Pro Rata Deduction Limit
Even if arguable as partially deductible, Premium would likely be subject to pro rata deduction limits since it involves both business and personal benefit.
Key Factors That Strengthen the Argument for Deductibility
While not a slam dunk case, under the right circumstances there are factors that can strengthen the argument for deducting LinkedIn Premium as a business expense:
- You maintain a separate, dedicated LinkedIn account solely for business purposes rather than blending personal use.
- You can quantify how Premium has directly increased your business activities like networking, prospecting, and lead generation.
- You use Premium Insights to analyze the ROI of your LinkedIn activity and make data-driven business decisions.
- The advanced features of Premium play an essential role in your overall business systems and activities.
- You use Premium predominately during working hours versus personal time.
Documentation Needed to Claim the Deduction
To claim a business expense deduction for LinkedIn Premium on your taxes, you should maintain supporting documentation. Here are some key records to keep:
- Receipts showing each monthly Premium subscription payment.
- Invoices if purchasing an annual Premium subscription.
- Records tracking specific business activities and leads generated through Premium features.
- Analysis reports using Premium Insights to quantify business impact.
- Explanation of the business rationale behind your Premium subscription.
Talk to a Tax Professional
Claiming tax deductions requires clearly satisfying the IRS criteria. Given the nuanced case of LinkedIn Premium expenses, it is wise to consult a qualified tax professional to review your situation before claiming the write-off. They can help determine if the deduction is likely justifiable and answer any questions during the filing process.
Key Takeaways
- LinkedIn Premium offers helpful features but has arguments both for and against deductibility.
- To write off LinkedIn Premium, you must prove an “ordinary” and “necessary” business expense.
- Usage exclusively for business purposes strengthens the case for deductibility.
- Maintain thorough records such as receipts, invoices, and activity reports.
- Talk to a tax professional for guidance on claiming the deduction.
The Bottom Line
Claiming LinkedIn Premium as a business expense deduction involves nuance. There are reasonable arguments on both sides. Maintaining separate business use of the account and tracking Premium’s impact on business activities tilts the scales toward justifying deductibility. But given the ambiguity, it’s wise to consult a tax pro rather than simply claiming the write-off yourself. With proper documentation and their guidance, the subscription cost may qualify as a deductible business expense.