The cost of doing business is high, but it’s possible to bring cash back into your business through the Research and Development (R&D) Tax Credit. Overall, any company that develops a new or improved product or process can realize substantial tax savings through the R&D Tax Credit.
One of the biggest misconceptions around the R&D Tax Credit is that companies need a dedicated internal R&D department to qualify, but that’s not the case. It’s the activities your business is performing, not the industry or the departments, that matter.
benefits of an R&D Tax Credit include:
- Reduction in federal and state income tax liability
- Improved cash flow
- Increase in earnings-per-share
- Reduction of effective tax rate
- Credit carried forward up to 20 years
- Ability to claim credits from prior years
- Reduction in Payroll Tax (applicable to startup companies)
Qualifying activities may include the following:
- Development of new, improved, or more reliable products, processes, and techniques
- Development of prototypes or models
- Design of tools, jigs, molds, fixtures, and dyes
- Development or customization of software (licensed or sold)
- Improving processes or the manufacturability of a product
- Creating more efficient and environmentally friendly designs
- CAD or 3D Modeling
- Supervising technical personnel engaged in R&D
- Attempting to use new materials
- Automation and/or streamlining of internal processes
R&D Study – For companies that have not claimed R&D credits previously, our process is designed to maximize your credit benefit while mitigating exam risks. Recent changes in the law and new court cases are challenging to navigate. Our specialists focus on delivering sustainable credits.
Credit Review – The R&D credit is extremely complex, even for the largest accounting firms. Technical errors or missed costs, including non-qualified costs, can ruin a claim. Our specialists can review your credit to help prioritize areas to improve.
Federal and State Exam Support – An exam can come anytime and require extensive time and resources from a company. With our experience with federal and local exams your company will be able to focus more on the business while we help guide the exam process to a successful close.
CohnReznick Tax: Alerts and Webinars