R & D Tax Credits – What You Need To Know
The R&D tax credit was designed to reward research and development by providing a financial incentive to companies aiding the advancement of this country. However, many companies in the state of Texas, and in the entire nation, do not realize that they are eligible to receive it. This means that companies who are eligible for financial rebates, do not even make an application and are therefore missing out on important tax breaks that could provide ongoing support to their operations.
Misconceptions about the R&D Tax Credit: You are more likely to be eligible than you think!
It is a common misconception that companies who receive the R&D tax credit must be large firms using cutting edge technology. However the IRS definitions and guidelines are a lot more flexible than you might think. Any qualified R&D professional will inform you that your company is likely, at some point, to become eligible to claim the R&D tax credit through the activities performed on a day-to-day basis. The R&D tax credit is designed to reward companies in any industry for innovation and development. Eligibility for the credit ranges over all industries and is also just as applicable to public sector companies as it is to the private sector.
Preparation is key
The most important thing to remember when claiming the R&D Tax Credit is that you must be prepared. The IRS requires specific documentation for all tax credit claims so your company must ensure it has a strategy in place to identify and store the required documentation. This means your company must either spend time educating staff on the required processes or hire a specialist R&D tax advisor to inform your process. The latter option can make the claim process a lot less work and a lot more efficient.
Avoiding potential issues
The most common problems that occur for companies claiming the R&D tax credit relate to a lack of understanding about the required documentation. It can be extremely useful to have an advisor to help you set up the process in the beginning and monitor your progress throughout your R&D project. Having the right support can help your company gain access to the R&D tax credit and avoid the costly mistake of not having appropriate documentation to support your claim.
If you need more information or have questions about your company’s eligibility the please use the contact form to contact us.