R&D Tax Credit Resource Center

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Welcome to the R&D Tax Credit Resource Center.

What is the R&D Tax Credit?

The R&D tax credit was instituted in 1981 as a part of an economic recovery bill designed to incentivize technological innovation. The R&D credit is a general business tax credit which means that any and all businesses which meet the universal standards can take advantage of its benefits. The federal R&D credit used to be a temporary measure and over the years expired eight times, and was extended fifteen times. For 34 years the prospect of the research and development tax credit expiration loomed. However, In late 2015 the research & development tax credit was made permanent. This comes as no surprise as the R&D tax credit has enjoyed significant bipartisan support since it was created. Now that the credit is a permanent fixture in the tax code, the added security makes it even more sensible to start taking advantage of the credit.

According to Bloomberg, the types of companies best positioned to take advantage of the R&D credit are those in tech, software development, software as a service, biotech, and cloud based technology and services. Bloomberg states a good rule of thumb is that if you have an engineer on staff, there is a good chance you have research costs you should be tracking. Architecture, engineering, and manufacturing companies are also well positioned to take advantage of the tax credit.

Startup companies are often the best positioned to take advantage of the R&D tax credit because of the disproportionate amount of money they spend on R&D. However many startup companies don’t believe they can benefit from the credit because they aren’t profitable in their early years. However, the research tax credit can be saved up and applied in later years, once the company becomes profitable. In many cases this means it makes sense to catalogue and record all your startup’s research.

Large companies tend to receive more benefit than smaller companies for a variety of reasons. Qualifying for the tax credit requires quantifying your R&D expenses which can be very costly in proportion to what those expenses are for smaller companies. According to IRS statistics, 80% of the companies that take advantage of this credit are companies that do over $250 million per year in business. This does not, however, mean that smaller businesses can’t benefit from the credit.

Small businesses can take advantage of a simpler application process tailor made to help cut down on the overhead costs associated with claiming the credit. Historically, many small and even medium sized companies avoided utilizing the research tax credit because of its complexity. Many of these companies feared making an honest mistake and triggering an IRS audit. However, this started to change in 2007 when a new method for utilizing the credit became available. This method is known as ASC (alternative simplified credit computation). This process makes it easier for small and mid-sized businesses to report and track their R&D expenses. While it’s not as easily maximized by large businesses as the more complex method research and development tax credit calculation used to claim the R&D tax credit, small businesses often see an overall gain because the ASC method is more cost effective up front.

Research and Development Tax Credit Resource Center

This R&D tax credit resource center is intended to help small business owners determine whether or not they should look into the benefits of claiming the Research and Development Tax Credit. The R&D tax credit is a complex credit that is intended to benefit companies performing innovative research and development activities. The credit benefits companies in a wide range of industries. The following articles are intended to help professionals and business owners in these various industries determine if they can benefit from the research and development credit.

Who is Eligible for the R&D Tax Credit?

This article gives a brief overview of how various industries engage in activities that qualify for R&D tax credits. While many industries qualify, they tend to do so in their own unique way. Architecture is different from software development which is different from engineering. This article is intended to help you understand the ways in which your company may qualify for R&D tax credits.

Five R&D Tax Credit Myths Entrepreneurs Need to Forget

This article is intended to dispel some of the most common myths believed about the R&D tax credit. These myths often keep companies who have work that qualifies for the credit from even checking into the matter. With the myths in this article dispelled, hopefully more business owners will better understand their potential to benefit from the R&D tax credit.

R&D Tax Credit for Architecture Firms

This article is intended to help owners of architecture businesses how their business may qualify for the R&D tax credit. The article details the basic ways in which architecture companies can qualify. While the qualification process for architecture companies can be complex, there are a surprising number of activities that have the potential to qualify for this tax credit. Many architecture companies have been able to claim hundreds of thousands of dollars under the credit, even smaller firms that qualify are often able to save large sums of money.

R&D Tax Credit for Engineering Firms

This article deals with the general ways in which engineering firms can qualify for the R&D tax credit. Because engineering is a broad field with many different emphases, this article also breaks down how each major area of engineering can qualify for the R&D tax credit. The types of engineering discussed in the article are mechanical and industrial engineering, civil engineering, electrical engineering, environmental engineering, and structural engineering. Each of these types of engineering tends to qualify for the tax credit in different ways.

R&D Tax Credit for Small Businesses

This article focuses specifically on how small businesses can benefit from the R&D tax credit. The article tackles the issue from a small business perspective. Many small business owners do not fully understand the ways in which their companies can benefit from the R&D tax credit. This article was written to help clear the air on the issue. This article will help you determine if your company is engaged in the type of research that might qualify for the credit, and the ways in which small businesses in particular will benefit from the credit.

R&D Tax Credit for Software Development

Software developers are one of the most obvious types of companies that qualify for the R&D tax credit. That’s not to say that the matter is simple for software developers. Qualifying for the credit can be easy for some types of software developers, and next to impossible for others. This article gives the reader a rundown of the different types of software development, how they qualify, and details the R&D tax credit four part test every project must pass. The types of software development categories discussed in this article are proprietary software development, web development, custom software development, mobile app development, and internal use software development.

Directory of R&D Tax Credit Specialist Firms

This isn’t an article so much as it is a list of tax firms that specialize in the R&D tax credit. We list the firms alphabetically by state. The list includes some of the most illustrious r&d tax credit companies in the United States, some of which do work on the R&D tax credit for large corporations like Clorox.




Wall Street Journal

Journal of Accountancy


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