WorldWide Drilling Resource

Drilling Into Money Not Boring by Mark E. Battersby Tax Deductible Internet Marketing Far too many small drilling businesses tend to lump advertising, promotions, public relations, and other sales support expenses under the heading of “marketing.” In the eyes of the Internal Revenue Service (IRS), advertising consists of paid, scripted messages directed at potential clients and customers. Promotion is paid exposure for the business - provided, of course that both are ordinary and necessary. It should be noted, the IRS has yet to issue formal guidance on the treatment of website develop- ment costs. However, informal internal guidance suggests one appropriate approach is to treat those costs like an item of software, and depreciate them over three years. The increased popularity of marketing via social media has been recognized in our tax laws and considered advertising expenses claimed as a tax deduction in the year paid or incurred. Consider a few examples: . Google AdWords™ used to attract new customers or clients instantly; a simple campaign can be setup in minutes and display search results within a couple of hours. . Pay-per-click (PPC) campaigns. While AdWords, like the other Internet marketing and advertising expenses, the cost for a PPC campaign also falls within the miscellaneous advertising section of the drilling operation’s tax return. . Facebook, Twitter, and display ad campaigns. . Costs for hiring an agency to conduct any of these campaigns. . On-Page and Off-Page Search Engine Optimization (SEO) - basic and ongoing. SEO campaign results are a long- term campaign to keep your website at the top of search engine result pages, but it takes time if it’s done properly. Don’t forget old-fashioned goodwill advertising. If a contractor or his or her business is expected to benefit in some shape or form from a promotional activity, the cost of institutional or goodwill advertising may be deducted because the motive is usually to get the name of the contractor or the drilling business in front of the public. If the website was purchased, the business is required to amortize the cost over a three-year period. Content or design updates and ongoing maintenance are considered advertising and can be deducted the same year. It is a similar story for hosting, domains, and other similar products which are usually deducted the same year. It’s important to remember, every drilling establishment should always consult with a tax professional about what is and is not deductible by their business. Keep documentation and detailed records of how things were used. Mark Mark E. Battersby may be contacted via e-mail to michele@worldwidedrillingresource.com 19 WorldWide Drilling Resource ® SEPTEMBER 2017