Plus More Telltale Signs Your Company is Eligible for the R&D Tax Credit
So you’ve heard about the Research & Development Tax Credit but you’re unsure whether your work qualifies. Sound familiar?
If so, don’t worry; you’re in good company.
The credit can be complex, and the requirements to claim it can be confusing. That’s probably why so many businesses miss the opportunity to benefit from this incentive. But it doesn’t have to be this way. In fact, there are a few clear cut signals that you are doing credit eligible research and development.
Here are five of them.
- You have an in-house R&D lab/department: This may sound like a given, but believe it or not, there are companies out there with their very own R&D labs who still aren’t claiming the credit. If your organization is conducting R&D on such a frequent basis that you need a dedicated location in which to do it, it’s time to start recouping some of that investment.
- You employ engineers or scientists: In most cases, the job of an engineer and a scientist are very different; and yet, both work every day to develop new or improved products, processes or formulations. All of these efforts are specifically identified in statutes as activity which qualifies for the credit.
- You’ve been awarded a patent: Projects that receive patent protection are usually held up as textbook examples of the kind of American innovation the R&D credit is trying to spur. If your organization has recently received a patent, is in the midst of applying for one or believes that work you’re doing could be eligible to receive a patent; the R&D credit could very likely be for you.
- You’ve won an industry award for innovation: While it’s always nice to receive an award of any type, receiving one for the pursuit of innovation is a telltale sign that you are doing unique work in your field. So, if you’re winning industry accolades, it’s very likely that you could be parlaying your innovative work into serious tax savings.
- You tried something new and failed: No one likes to fail, but we all know that the path to success is paved by previous setbacks. So if your development team has spent hours, weeks or months working to create or improve a product without success, it’s a good sign that you are working to break new ground. That’s why the credit allows you to recoup some of your costs for these efforts. It may just provide enough incentive to encourage you to regroup and try again.
These five telltale signs of R&D don’t guarantee that your business is sitting on a huge tax credit, but if any of them sound familiar, it’s definitely time to talk.
Have a question or comment about this article? We’d love to hear from you. Leave us a message below:
