Internet Charges

This Overheads code records the cost of internet charges incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).

Real-world examples

Digital or tech agency

A leased line with guaranteed uptime and a failover backup connection is critical infrastructure, not a nice-to-have, and priced accordingly. A £3,450 invoice (£2,875 net of VAT) is a debit of £2,875 to 7551 (Internet Charges), a debit of £575 to 2201 (Purchase Tax Control Account), and a credit of £3,450 to 2100 (Creditors Control Account).

Sole trader working from home

Running the business on a personal broadband contract changes the treatment entirely. Because the invoice is addressed to the individual and covers private use too, only a reasonable business-use proportion is claimed — say 20% of an £80 monthly bill, £16 — and no VAT is normally reclaimed since there's no VAT invoice issued to the business. This is usually posted as a journal from drawings or the director's loan account rather than from a purchase invoice: a debit of £16 to 7551 and a credit of £16 to the director's loan account, with nothing through 2201 or 2100.

Commonly confused with

Because code 7550 (Telephone and Fax) sits right next to this one in Overheads, it's a common mis-posting target. Code 7551 is specifically for internet charges, while 7550 covers telephone and fax — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Internet Charges won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.

Other codes in Overheads