Can I claim expenses for business-related Google Workspace or Microsoft 365?

Can I claim expenses for business-related Google Workspace or Microsoft 365?

If you run a business, freelance, or manage a small team, chances are you pay for a productivity suite. Google Workspace and Microsoft 365 aren’t just “nice to have” tools anymore—they’re how you communicate, store files, collaborate, schedule meetings, and run day-to-day operations. The practical question that usually follows is simple: can you claim these subscription costs as business expenses?

In most cases, if the cost is incurred “wholly and exclusively” (or the equivalent standard in your country) for business purposes, it’s claimable. But the real world is rarely that tidy. You might have a plan that mixes work and personal use, you might pay annually, you might have multiple users, you might have add-ons, and you might have to deal with partial deductions when there’s dual use. You may also need to decide how to record these costs in your bookkeeping and how to keep evidence for them.

This article explains how claiming Google Workspace or Microsoft 365 expenses generally works, what’s usually allowed, what triggers complications, and how to stay on solid ground with recordkeeping. It’s written in plain language so you can apply it to your circumstances, even if your tax rules differ slightly by location.

What “claiming expenses” actually means

Claiming an expense usually means reducing your taxable profit by deducting costs that were necessary for earning business income. If your tax system allows it, a deductible cost reduces the profit you’re taxed on. The end result is that you pay tax on a smaller number, because you’ve recognized that certain costs were incurred to generate revenue.

Software subscriptions like Google Workspace or Microsoft 365 are typically considered ongoing operating costs rather than long-term assets, especially when you pay monthly or annually for continued access. In many jurisdictions, that makes them “revenue expenses” (ordinary business expenses) rather than “capital expenses” (things you buy once and use over years). That distinction matters because operating costs are usually deductible as you incur them, while capital costs can involve different treatment.

Even if you don’t think about it in accounting terms, the practical takeaway is this: if the subscription is genuinely for business, you generally can claim it. The trickier part is proving business use and handling anything that isn’t purely business-related.

Are Google Workspace and Microsoft 365 business expenses?

Most tax systems allow deductions for software and digital services used for business. Google Workspace and Microsoft 365 are typically used for:

• Business email hosting (custom domain email) and calendars

• Cloud storage and file sharing

• Video meetings and messaging

• Office apps, document editing, spreadsheets, and presentations

• Admin controls, security tools, and compliance features

If you use these functions to run your business—communicating with clients, producing deliverables, managing internal documents, preparing proposals, and so on—then the cost is generally a business expense.

Where complications arise is when you subscribe to a plan but use it for both business and personal purposes, or when you pay for users who are not involved in the business, or when the suite includes add-ons that are personal in nature. Those cases are still often claimable, but the claim may need to be adjusted or apportioned.

“Wholly and exclusively” and the idea of business purpose

Many places use a concept similar to “wholly and exclusively for the purposes of the trade” (or “ordinary and necessary” in other systems). Regardless of the phrase, the core idea is the same: the expense should be incurred for business reasons rather than personal benefit.

For a subscription suite, think about why you pay for it. If you can answer “I need it to run the business” and that’s credible based on your activity, you’re likely in safe territory.

Examples of clearly business-related use include:

• A Google Workspace plan to host your business email address (you@yourdomain.com)

• Microsoft 365 to create and edit client deliverables in Word/Excel/PowerPoint

• OneDrive or Google Drive storage used primarily for business documents

• Teams or Google Meet used to hold client meetings and internal calls

Examples that could create questions include:

• A family subscription where only one account is used for business

• Using the same storage account for business files and personal photo backups

• Paying for several user seats, but some are for non-business family members

• Buying premium add-ons that mostly support personal projects

None of those automatically disqualify the expense, but they can reduce what you can reasonably claim and increase the importance of good records.

Mixed personal and business use: when you need to apportion

Mixed use is the most common “grey area.” Many self-employed people use one suite for everything because it’s convenient. If you use the subscription partly for personal use, you may need to claim only the business portion.

Apportionment means splitting the cost between business and personal use. How you do that depends on what’s reasonable and defensible.

Common ways to apportion a productivity suite

1) By user seats

If you pay for multiple licensed users, and some are exclusively business users while others are personal, the simplest split is often “business seats divided by total seats.” For example, if you pay for five users but only three are used for business, you might claim 3/5 of the subscription cost.

2) By usage pattern

If you have one account used for both business and personal activity, you might estimate a percentage based on how you actually use the services. For example, if 80% of stored data relates to business, or 80% of meetings are business-related, you might claim 80%. The key is having a basis for the percentage rather than guessing.

3) By separate accounts

A practical approach is to separate business and personal use at the account level. For instance, you might keep a dedicated Google Workspace or Microsoft 365 tenant for business and use a separate free personal Google account or a separate consumer Microsoft account for personal activities. When you do this, the business subscription is much easier to justify as 100% business.

From a risk-management perspective, separation tends to be the cleanest option. It also makes it easier to protect client confidentiality and maintain compliance, because you aren’t mixing sensitive business files with personal content.

What if you use Google Workspace or Microsoft 365 at home?

Using the tools at home doesn’t automatically make them “personal.” Many people run their business from a home office. The place you use the tools is less important than why you use them.

If the suite supports your business activity—writing proposals, managing accounts, emailing customers—then it remains a business tool even if you use it on a personal laptop at the kitchen table. The key issue is still business purpose and whether there’s personal use mixed in.

However, home-based working often increases the likelihood of dual use because the same devices and accounts may serve both life and work. If you’re regularly using the same suite for personal matters, a partial claim may be more appropriate.

Google Workspace vs. Microsoft 365: does the provider matter?

For tax deductibility, the provider usually doesn’t matter. Both are software and digital services used to run a business. What matters is:

• The cost is actually incurred by the business (paid by you or the business account)

• The subscription supports business activity

• You keep evidence of the expense

• You treat mixed use appropriately

Where the provider can indirectly matter is in the structure of plans. Some Microsoft 365 offerings are consumer-focused (for example, family plans) while others are business-focused (Business Basic, Business Standard, etc.). Google Workspace is generally positioned as a business suite. If you’re on a consumer plan but using it for business, that can still be deductible, but it may be more likely to involve mixed-use questions.

Which parts of the subscription are usually claimable?

When people say “Google Workspace” or “Microsoft 365,” they may mean different things. You might pay for the core plan plus extras. Generally, the following are commonly claimable when business-related:

Core user licenses — monthly or annual per-user subscription fees.

Storage add-ons — extra Google Drive storage or OneDrive storage if used for business files.

Security and compliance add-ons — tools for archiving, data loss prevention, endpoint management, identity security, and similar features.

Meeting and telephony upgrades — advanced meeting features, calling plans, conferencing add-ons, or business phone integrations.

Domain-related costs (sometimes adjacent) — you might also pay for a domain name and DNS hosting. Those costs are often claimable too if the domain is used for the business. While not part of Workspace or 365, they often appear alongside them in your accounts.

Less clearly claimable items are those that are not genuinely business-related or are primarily personal. But if an add-on supports a business workflow—like storing customer contracts securely, managing shared calendars, or maintaining audit logs—it’s normally within the scope of business expenses.

Annual payments vs. monthly payments: does timing matter?

Many businesses pay monthly for cashflow reasons, but annual billing is common because it can be cheaper. From a tax perspective, the main question is how your accounting handles prepaid expenses and the period the subscription covers.

In some cases, you may be allowed to deduct the annual cost in the period you pay it, especially if you use cash-basis accounting. In other cases, you may need to spread it over the subscription period (for example, if you use accrual accounting or if your rules require matching costs to the period of benefit).

Practically, small businesses often keep it simple, but the “right” treatment can vary depending on your accounting method and local rules. If you’re unsure, ask your accountant how they want you to record annual subscriptions, because consistency matters and the proper treatment is usually straightforward once decided.

VAT, sales tax, and digital services tax considerations

Taxes on top of the subscription—like VAT, GST, or sales tax—can change how much you can claim, and how you record it. Whether you can reclaim VAT (or a similar consumption tax) depends on whether you’re registered and on the nature of the purchase and local rules.

If you’re registered for VAT/GST/sales tax and the subscription is for business, you may be able to recover the tax component. If you’re not registered, the tax you pay usually becomes part of the cost of the subscription and is part of the deductible expense (again subject to local rules).

Digital services also sometimes involve cross-border supply rules, meaning the invoice may show a “reverse charge” mechanism or a tax ID field. This can be especially relevant if you’re buying from a large international provider. Your bookkeeping should capture the invoice details correctly, and you should keep the invoices in case your tax authority asks.

How to document the expense properly

Documentation is what turns “I think this is deductible” into “I can confidently claim this if asked.” For Google Workspace and Microsoft 365, good documentation is usually easy because everything is billed electronically.

What records you should keep

Invoices or receipts

Download invoices from the Google Admin console billing area or Microsoft 365 admin center (or wherever you manage subscriptions). Keep copies in your accounting records. Ideally, store them in a folder dedicated to expenses, organized by year.

Proof of payment

Your bank statement or card statement showing the payment supports the invoice. Many accounting tools reconcile the payment automatically.

Business rationale

You don’t need an essay, but it helps to have a clear description in your bookkeeping category or memo field, such as “business email and document suite.” If there is mixed use, keep a note on how you calculated the business portion.

User list and seat allocation (if relevant)

If you’re apportioning by seats, maintain a record of which users are business-related and why. A simple export of user accounts or an admin screenshot can support your approach. You don’t need to overdo it; you just want something you can point to if questioned.

Choosing the right account and billing profile

To keep things clean, it’s usually best to:

• Pay the subscription from a business bank account or business credit card

• Set the billing name and address to the business (where appropriate)

• Use a business email domain and admin tenant tied to the business

When the subscription is paid from a personal account and the invoice is in an individual’s name, it can still be deductible if you’re a sole proprietor and the cost is for business. But it’s easier to defend when the billing footprint clearly matches the business.

What about sole traders, freelancers, and limited companies?

The broad principles are similar, but the “who paid” and “who benefits” questions become more important depending on your business structure.

Sole proprietors and freelancers

If you operate as an individual (sole proprietor, freelancer, self-employed), you and the business are often treated as the same person for many practical tax purposes. You can typically claim business expenses that you personally pay, provided they’re for business purposes.

Mixed use is common here, so apportionment is often the key issue. If you can separate business from personal accounts, you reduce the need for apportionment and lower the chance of disputes.

Limited companies

If you operate through a company, the company’s expenses should be for the company’s business purposes. Ideally, the company pays for the subscriptions and the accounts are configured for business use. If you personally pay and later reimburse yourself, there should be a clear expense claim process and evidence that the subscription is for company business.

If a company pays for a subscription that is heavily used for personal reasons, that can create additional issues such as a taxable benefit or a disallowed expense, depending on local rules. In a company setting, it’s particularly important to avoid paying for personal licenses through the company unless your accountant has a clear plan for handling it.

Can you claim Microsoft 365 Family or a personal Google account used for business?

Many small operators start with whatever is cheapest or already available. You might have Microsoft 365 Family because it came with your household setup, and then you start using it for your business. Or you might use a personal Gmail address and Google Drive for business documents.

In general, you can often claim the portion attributable to business use. The more personal the plan looks, the more likely you’ll need to justify apportionment.

For example, if you have a family plan covering multiple users and only one person uses it for business, claiming 100% of the cost is hard to justify unless you can show that the plan is, in practice, entirely business-related. A more realistic approach might be to claim a portion based on the business user’s share, or to move the business onto a business plan and treat the family plan as personal.

From a business efficiency perspective, a business plan often pays for itself in clarity and admin control. Even if the total cost is higher, you may save time and reduce risk by keeping business data in a dedicated tenant.

Bundled services and overlapping subscriptions

Sometimes you end up paying for overlapping tools—Google Workspace plus Microsoft 365, or Microsoft 365 plus separate Zoom/Slack/Dropbox subscriptions. Overlap doesn’t automatically mean the cost is disallowed. If each tool has a business reason (for example, you need Excel for certain client formats but your team prefers Google Docs for collaboration), you can typically claim both.

However, if you’re paying for multiple suites and barely using one of them, it may be harder to argue it’s necessary for business. Not impossible, but it raises the “why are you paying for this?” question. Keeping a short note in your bookkeeping about the business reason can help.

Home office and device considerations

A productivity suite often ties into other business costs: laptops, phones, internet, and home office costs. These are separate categories, but they interact in terms of how you demonstrate business use.

If you’re already apportioning your internet bill because you use the connection for personal streaming as well as business calls, you might also be apportioning the software suite for similar reasons. The more your business is integrated with personal life, the more important it becomes to adopt a consistent approach across categories.

Consistency doesn’t mean every category uses the same percentage. It means your approach makes sense overall. For instance, if you claim 100% of Workspace as business but only 20% of internet as business, that might be perfectly reasonable if Workspace is a dedicated business tenant but your internet is shared with the household. The goal is that your story matches the reality.

Practical examples

Example 1: Freelance designer with Google Workspace

A freelance designer pays for Google Workspace to host a custom email domain, store client files, and run video calls. They keep personal photos in a separate personal Google account. The Workspace tenant is used only for business. In this scenario, claiming 100% of the subscription is usually straightforward.

Example 2: Consultant using Microsoft 365 on a single account

A consultant pays for Microsoft 365 Business Standard and uses it for client deliverables, but also stores some personal documents on OneDrive and uses Outlook for personal emails. The account is mixed use. They estimate business usage at 70% based on file storage breakdown and calendar usage. They claim 70% and keep a note of how they calculated it. This is typically more defensible than claiming 100% when personal use is significant.

Example 3: Small company with multiple seats

A small company pays for 10 Microsoft 365 licenses. Eight are for staff, two are for family members who occasionally help but are not formally involved. The company claims 8/10 of the cost and either removes the non-business seats or treats them separately. The seat-based apportionment is simple and easy to explain.

Example 4: Startup paying for both suites

A startup uses Google Workspace for email and collaboration and also has Microsoft 365 for Excel-heavy financial models and client compatibility. Both subscriptions are actively used for business. Claiming both is generally reasonable as long as they can show business purpose.

How to categorize the expense in your bookkeeping

Most bookkeeping systems have categories like “Software subscriptions,” “Office expenses,” “IT expenses,” or “Cloud services.” Google Workspace and Microsoft 365 usually fit into “Software subscriptions” or “IT/Cloud services.” The specific label matters less than consistency and clarity.

It’s helpful to keep these subscriptions grouped so you can review them periodically. Subscriptions can quietly multiply, and an annual review often reveals unused seats or overlapping tools you can cancel.

What if you cancel mid-year or change plans?

Upgrades, downgrades, and cancellations are common. From an expense perspective, you usually claim what you actually paid for the business portion during the period. Keep the invoices that show the changes, and make sure your accounting reflects the right amounts.

If you receive a refund or credit, record it as a reduction of expense (or as other income, depending on how your system handles it). The goal is that your net expense matches reality.

Common mistakes to avoid

1) Claiming 100% when personal use is obvious

The biggest avoidable risk is overclaiming. If you’re on a family plan, or your storage is mostly personal media, it’s hard to defend a full business claim. A reasonable apportionment is often safer and more credible.

2) Not keeping invoices

Bank statements show payments, but invoices show what you actually bought. For digital services, downloading and storing invoices is easy and can save a lot of hassle later.

3) Paying from personal accounts without a trail

Mixing personal and business payments is common in early-stage businesses, but it increases confusion. If you do pay personally, keep a clear record, and if you operate through a company, follow an expense reimbursement process.

4) Forgetting add-ons and extra seats

It’s easy to add storage or security features, or to forget to remove a user when someone leaves. Regularly check your subscription admin console for unused seats and redundant add-ons.

5) Inconsistent approach across categories

If you apportion internet, phone, and software in wildly different ways without a reason, it can look careless. Aim for a consistent and logical approach based on actual use.

So, can you claim these expenses?

In most situations, yes—Google Workspace and Microsoft 365 costs are claimable business expenses when they are incurred for business purposes. If the subscription is dedicated to business and you can show that, claiming 100% is often reasonable. If there’s mixed use, you may need to apportion the cost, and the safest approach is to use a method that’s simple, rational, and backed by some form of evidence.

As a final practical checklist, you’re usually in good shape if you can answer “yes” to most of these:

• Is the subscription used to support business activity (email, documents, storage, meetings)?

• Is the billing and payment trail clear (invoice + bank/card record)?

• If there’s personal use, have you limited your claim to the business portion?

• Could you explain your approach in a few sentences without hand-waving?

If you can, your claim is likely to be defensible. And if your situation is unusual—heavy personal use, complex company arrangements, or cross-border tax complications—an accountant can quickly confirm the right treatment and help you set up a clean system going forward.