The Research Tax Credit Can Further Help Manufacturers Attract and Retain Employees
October 7, 2022 – Today, manufacturers located across the U.S. will celebrate “National Manufacturing Day.”
Recognized on the first Friday of October, “National Manufacturing Day” has grown to become a month-long celebration of manufacturing seminars and events put on by various U.S. manufacturing associations and manufacturing companies. The primary goal is to bring awareness of rewarding career opportunities to parents and educators, while simultaneously encouraging and inspiring students and young adults to actually pursue careers in the field.
Often remembered as the industry of our grandparents or parents – and one that offered low-paying and back-breaking jobs – a key focus during manufacturing month is to clear up long-standing misconceptions about what it’s actually like to work in today’s modern-day industrial sector. A sector that is projected to have a strong economic impact for years to come, yet continues to face dire worker shortages.
At Tax Credits Group, we’ve learned a thing or two over the years about what it’s like to work at a manufacturing company, along with the struggles that this industry faces finding and retaining employees. Nearly 80% of our clientele is comprised of U.S. manufacturers including innovative medical device manufacturers, skin care products manufacturers, electronics device manufacturers and injection molders.
We’ve had the opportunity to visit many of these companies, conduct dozens of on-site plant tours, and to simply talk with our clients about their development successes and challenges. These companies understand that in order to survive and ultimately thrive, they must develop new and improved products and improve upon outdated manufacturing processes. But like so many in the sector, they are dependent upon a strong and committed workforce to make it all happen, and often find themselves in desperate need of employees to fill a myriad of roles including that of product development and process engineering. To attract these employees, many are offering highly competitive salaries, career training opportunities and are coming up with other creative means to attract and retain workers.
The federal Research and Development (R&D) tax credit can be a great way to help fund these employee salaries or other worker benefits. For instance, in 2021, the majority of our small to mid-size manufacturing clients ended up with a tax credit in the range of $50,000-$100,000. With this extra cashflow, our clients were able to hire additional employees to fill open roles, and were able to offer long-standing employees raises to help retain them.
Unfortunately, many companies out there that are eligible for this incentive do not think of the work they do as research and development. In fact, we spend a large portion of our time helping to clear up long-standing misconceptions about what “R&D” is, and how it’s defined under our tax rules and requirements. Many manufacturers are surprised to learn that the activities that they partake in every day, along with the positions they are hiring for, typically meet these requirements. And with the savings we help them gain from this credit, they are able to further invest in their workforce.
If you are interested in learning more about how the R&D tax credit works, or scheduling out a free consultation call to learn if your company is eligible for it, please contact us today.