Ignite Innovation with the Research & Development Tax Credit

Claim your R&D Tax Credit with Confidence

Unlock Your R&D Tax Credit with Confidence Is your business at the forefront of creating new and improved products, processes, or techniques? With eligibility spanning across more than 65 industries, it’s time to seize the opportunity. Begin by securing a complimentary consultation to uncover the potential of R&D credits for your business.

Understanding the R&D Tax Credit

The R&D Tax Credit stands as a federal incentive that enables businesses to lower their income tax liability in the current tax year and even secure a cash refund for taxes paid within the last three years.

Expanding its reach, several states have introduced their own versions of the R&D Tax Credit, allowing qualifying businesses to harness both benefits. The enactment of the Protecting Americans From Tax Hikes (PATH) Act marked a significant stride, rendering the R&D Tax Credit a permanent fixture while broadening its qualifications and enlarging the scope of eligibility. Furthermore, numerous qualifying small businesses can avail themselves of the Payroll Tax Credit to offset portions of their payroll tax obligations.

What’s often overlooked is that numerous everyday business operations might be eligible for dollar-for-dollar Tax Credits, regardless of industry or company size. To lay claim to the R&D Tax Credit, an activity must align with a comprehensive 4-part test designed to validate the research endeavor.

Our Comprehensive and Compliant R&D Tax Credit Process

Initial Consultation

Kick off the process with a complimentary consultation led by a member of our proficient R&D Team. We'll assess your eligibility and gather essential financial documentation.

Step 01

Eligibility Assessment

Our dedicated tax experts will meticulously analyze your specific data to project potential credits you qualify for and outline the expected claim timeline. If no credits are applicable, you incur no cost.

Step 02

Qualification Verification

Should you meet the eligibility criteria, our team will meticulously review all Qualified Research Expenditures (QREs) to ensure precision.

Step 03

Precise Calculations

Our collaborative efforts will result in precise calculations and an audit-ready file. This package includes a comprehensive technical report replete with supporting guidelines and documentation.

Step 04

Tax Credit Application

Once the requisite documentation is submitted to the IRS, your current tax year's income tax liability will be reduced. Furthermore, you may become eligible for a refund for the preceding 3 years. Any remaining credits can be carried forward for up to 20 years.

Step 05

Future-Proofing

Forge an optimized future by partnering with Small Business Lending Source to streamline the process of claiming future credits with enhanced efficiency.

Step 06

Common Questions About the R&D Tax Credit

Understanding the Research & Development Tax Credit

The Research and Development (R&D) tax credit, alternatively known as the Research and Experimentation (R&E) tax credit, is a tax incentive backed by the United States government. This initiative translates into a direct reduction of a company’s tax obligations on a dollar-for-dollar basis, making it a highly beneficial strategy for American businesses seeking to mitigate their tax liability. Businesses can initiate the process by submitting pertinent documentation through the IRS Form 6765.

The essence of the research and experimentation tax credit lies in its purpose to encourage research endeavors within businesses. By offering financial incentives, this credit aims to render research activities more financially feasible for enterprises, thus reinforcing the landscape of American innovation.

How to Determine Eligibility

Many businesses remain uncertain about their eligibility for R&D tax credits, often assuming that intricate rules must be met to qualify. In reality, while accurate documentation is essential, more than 60 industries spanning over 30 states can potentially qualify for R&D credits to offset tax obligations. Surprisingly, certain everyday business operations could even render them eligible for basic research credit, particularly if it elevates them beyond a certain foundational amount. This valuable opportunity isn’t limited to established businesses; even start-ups can harness its advantages.

Here are some of the activities that both small and large businesses should engage in to potentially qualify:

Develop new or innovative products
Enhance existing products
Innovate new processes, techniques, prototypes, or software development
Employ engineers and designers for internal purposes or contract research to accomplish tasks

What key points should you focus on?

When proceeding with the filing process, it’s crucial to understand that a portion of the credit must be claimed as a payroll tax credit against the employer’s share of social security taxes. This calculation is derived from the growth observed in research expenditures and activities. Small businesses also have the intriguing opportunity to utilize the R&D credit to offset payroll taxes for the ongoing tax year, provided their expenditures surpass a specific foundational amount. Additionally, it’s noteworthy that companies are no longer permitted to immediately deduct costs categorized as IRC Section 174 research expenses. These costs are now allocated to a capital account and are spread out for deduction over a 5-year span.

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Can Startups Qualify for R&D Credits?

Yes, startups can indeed qualify for R&D tax credits. The eligibility criteria are not limited to established businesses; even startups can take advantage of these credits to offset their tax liabilities and promote innovation.

R&D Credit 101: Defining Business Component A “business component” in the context of R&D tax credits refers to a product, process, software, formula, invention, or technique that a business intends to develop, improve, or innovate. This component must be intended for use in the business’s trade or business operations.

Research & Development Tax Credit: The Basics for Employers The Research & Development Tax Credit is a government-sponsored initiative that allows businesses to reduce their tax liability by accounting for qualified research expenditures. It encourages innovation and technological advancement within various industries.

Is Your Manufacturing Business Getting the (R&D) Credit it Deserves?

Manufacturing businesses are often eligible for R&D tax credits, as they frequently engage in research activities to improve processes, develop new products, or enhance existing ones. These credits can help offset tax liabilities and support continued growth.

FAQs About R&D Tax Credits Frequently Asked Questions (FAQs) about R&D Tax Credits cover a range of inquiries related to this tax incentive. They provide valuable information on eligibility, qualifying activities, filing procedures, benefits, and more.

What is the R&D Tax Credit?

The Research & Development (R&D) Tax Credit is a government-sponsored program aimed at encouraging research and innovation across various industries. It offers tax incentives to businesses that engage in qualified research activities, ultimately promoting technological advancement and economic growth.