Is a website still a capital expense?
During our annual budgeting process, we were discussing funding of the replacement website for thenetimpact.com that we planned to do this year. In years past, the complete development would be a capitalized expense (i.e. expected to have a lifetime greater than 1 year) which would be depreciated over it’s lifetime which historically has been from 2 to 5 years. This year we will be building our site in our newly developed content management system myimpactCMS rather than as a static site as in years past.
It is clear that the cost of the content management system product itself should be capitalized since it will last a long while. However, I no longer believe that the cost of the content development should be part of the capital expense and rather should be treated as an ordinary operating expense no different than writing a blog post or running a pay per click campaign. With CMS tools enabling the rapid deployment and modification of web content and the highly competitive nature of business on the web, it no longer makes sense to develop a static site that simply sits there for a couple of years and then gets replaced again. The constant updating of your web content should be built into your operating budgets and not treated as a occasional one time expenditure.