Research and Development Tax Credit

If your business is developing new products and processes or improving existing products and processes, you may qualify for the R&D Tax credit

What is the R&D Tax Credit?

The Research and Development Tax Credit, introduced in 1981, is a general business credit that incentivizes development of new products and processes.

One of the problems with the R&D Tax Credit is that most businesses aren’t aware that they qualify. Most businesses picture white coats and complicated lab equipment when they think “R&D,” but that’s not how Congress intended for the credit to be defined. They intended for a much broader definition of R&D, one that included work on products and processes new to your business.

If you’re working on something new to you, the R&D Tax Credit is worth a look.

Qualifying Industries

The most common industries in which businesses of all sizes qualify for the R&D Credit are:

Qualifying Activities

Qualifying activities show up in nearly every industry.

Some examples include:

1) conceptualizing and brainstorming new or improved products or processes,

2) designing and developing new or improved products or processes, and

3) direct support of development through data collection, machining of prototypes, and immediate supervision.

R&D Study

How do you claim the tax credit?

That’s where we step in. Your business can claim the R&D Credit for current and previous tax years via a study in which your accounting and operations teams collect documentation of research activities and the hours spent by employees on those activities, including payroll records, expense detail, project lists, and more.

Benefits

The R&D tax credit typically equates to 7-15% of the overall project cost, leaving you with increased cash flow for future projects.

The credit can provide your business with dollar-for-dollar income tax liability reduction, offset payroll costs, and a reduction of your current effective tax rate. The credit can also help you reduce your current estimated tax payments. Any unused credits can also be carried forward up to 20 years.

Learn More

At Adams Consulting, LLC, we have a combined 15 years of experience conducting R&D studies with a wide variety of businesses across multiple industries. We’re confident that our three-step process consisting of Qualification, Quantification, and Nexus can help us maximize the amount of the R&D credit available to companies.

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