Technology and the R & D Tax Incentive

There are a lot of companies which would describe themselves as technological in nature. Surprisingly though there are still many companies out there in the state of Texas who are missing out on claiming the tax credits to which they are entitled. As well as federal tax credits, companies will find that there is also a state wide tax incentive which is also available to companies in the technology and media communications sector.

What Does My Company Need to Claim R & D Tax Credits?

It needs to show that the project or work that has been completed is of a technological or scientific nature that creates, designs, or improves new products and processes. The idea is that in encouraging innovation and development we all benefit as a society. The guidelines that cover this can be interpreted in a way that means that it is not just the companies with big research laboratories and research projects that can benefit from this credit, but also the smaller companies who spend time on improving their processes and products.

The Four Part Test:

In order to qualify for the tax credits it must be shown that the company who is applying meets the criteria stated in the four part test specified by the government:

  • The Technical Uncertainty Test – this is an activity used to eliminate any uncertainties about whether the product or process is fit for purpose
  • Process of Experimentation Test – An activity designed to evaluate one or more processes or products with the intention of achieving a defined end result
  • Technological in Nature – the activity must come under a defined definition and may include activities within one or more of the following areas, physical or biological science, engineering or computer science
  • New or Improved Business Component – this can mean the development of new products, processes  or techniques

Take Advantage of your Entitlements:

It is unfortunate that many companies still assume that they are not entitled to receive the tax credits. This especially seems to apply to smaller companies who feel that the credits are only applicable to large companies with big research and development projects. This is entirely not the case and it should be appreciated that the tax credit is especially useful to companies which are starting up and designing their own new processes and procedures.

In order to ascertain whether your company is entitled to receive these valuable tax credits, why not speak to an expert in the field at Texas R&D Tax Credit Solutions? These are tax credits which can make a big difference to your company’s ongoing cash flow and visibly improve your finances and investment opportunities.