Handling Money Smartly: How a Business Owner can Qualify for a Research and Development Tax Credit
There may not be a better feeling for business owners than finding an avenue that can help them save money on their company taxes. Why would any business want to spend excess money if they know they don’t have to? One way a company can save money is through the research and development (also known as R&D) tax credit.
The research and development tax credit is an incentive that rewards companies efforts’ to advance their innovation, technical design, and manufacturing. It’s one of the most significant domestic deductions under tax law that can make a huge difference in its cash flow if the business qualifies for it.
Not all companies qualify for an incentive like this, mind you, but that does not mean it’s not worth looking into. Industries of all shapes and sizes now qualify for such a financial boost. They range from software developers to construction contractors to food processors. If your business is in the same ballpark as those three, then see if you qualify for the research and development tax credit is worth looking into.
So one would think that companies would know about this supposed research and development tax credit if legitimate. Unfortunately, the answer is, a fair amount don’t. Believe it or not, almost a third of the companies that are eligible for the incentive are unaware of the fact. That same one may also think that this incentive is only exclusive to companies that are non-startups. Rest assured, that also is false.
How would a business know if it qualifies for the research and development tax credit? There is a four-part test created by the Internal Revenue Service to determine if it does.
1. Permitted Purpose
2. Technological in Nature
3. Elimination of Uncertainty
4. Process of Experimentation
However, the IRS requires an encyclopedia-like amount of documentation for a business to get the research and development tax credit. Hence, businesses need consultants who can do that digging to save the business both the time and the effort.
If you’re a business owner looking into this, Engineered Tax Services is who you want to ensure so that research and development tax credit is yours in full. To see if your business qualifies, look up their webpage on the research and development tax credit. If you think you qualify, get started as soon as possible. They say time is money, so don’t waste any time saving your money!
Engineered Tax Service is a consultant company that can help certain businesses money with incentives such as the research and development tax credit.