Why is understanding the R&D tax credit important?

For many companies in Texas, the subject of R&D tax credits is a murky one. There are many complexities with any taxation subject and it is hard to get an in-depth understanding of the regulations and definitions that affect companies. The R&D tax credit is available to a myriad of industries and business types, but unfortunately a lack of understanding means that many companies are missing out on receiving the incentive because they simply do not think they are entitled to it.

What is the R&D Tax Credit?

The R&D Tax credit is a federal and state incentive designed to encourage companies of any size to undertake research and development within their business activities. The definition of what is meant by research and development is now subject to a fairly wide interpretation. This means that companies which may have previously felt they were not eligible actually are and can make a claim, so long as they can provide evidence that they meet the criteria as defined in the IRS guidelines.

Having staff within a company who understand the concepts of R&D tax credits is important to ensure that projects are correctly evidenced with the correct documentation and opportunities for receiving the incentive are realized.

A Substantial Boost to Finances:

Understanding and knowing the criteria for receipt of the R&D tax credit means that companies are able to plan project finances in advance. If a project falls into the area of research and development then the additional financial support that the tax credit brings can be a massive boost to a company’s financial well being and stability.

This has an ongoing effect on any company, the receipt of tax credits allowing for investment and growth. For the state of Texas, this means in the longer term that the more companies claiming the credits to which they are entitled, the better it will be for the economy.

Knowing that there is an entitlement to the R&D tax credits is not the end of the story. Having the ability and knowledge to make a valid claim is also a key element. This is where having the support of those with the expertise to put together the documentation required by the IRS is often appreciated and it is a service that Texas R&D Tax Credit Solutions is happy to provide. The dedicated team of professionals can ensure that R & D tax claims are put together quickly and efficiently giving companies the confidence that projects are correctly financed.