MORE COMPANIES QUALIFY THAN YOU THINK
We hear this every day: “I don’t think I qualify”, or “my CPA says he/she doesn’t think I qualify.”
In layman’s terms, if you make, modify, invent, innovate, create or make better ANY aspect of your business, and perform research activities either in house or hire contractor(s), congratulations, you probably qualify! So, ask yourself, “Do I do any of these?” 19 out of 20 businesses qualify. The real questions are:
- How much do I qualify for? Answer: We have no idea how until the no cost initial analysis is done.
- How much is this going to cost me? Answer: $0 dollars to see if you qualify. If you qualify, we work off a contingency fee that ranges from 18%-33%
Industries such as software development, aerospace, tech and biopharmaceuticals can take advantage as there are no restrictions on the type of industry. The R&D incentive may apply to any taxpayer that incurs expenses for performing Qualified Research Activities (QRA) on U.S. soil. The incentive is a percentage of qualified research expenses (QRE) above a base amount established by the IRS in a four-part test as follows:
- Elimination of Uncertainty (do you know the results of?)
- Process of Experimentation (do you test/experiment with to find the desired results)
- Technological in Nature (Technology refers to methods, systems, and devices which are the result of scientific knowledge being used for practical purposes, i.e.; biology, chemistry, computer science, formulations and/or physical science)
- Qualified Purpose (to be used by you, licensed or leased)
IF YOUR COMPANY IS INVOLVED IN ANY OF THE FOLLOWING QUALIFIED RESEARCH ACTIVITIES (QRA), YOU MAY BE ABLE TO CLAIM THE R&D INCENTIVE
- Developing an innovative product that is new to the market
- Research aimed at discovering new knowledge for inhouse use, or to license or lease
- Designing product alternatives or improvements to existing products
- Significant modifications to the concept or design of a new or improved product or process
- Experimenting with new technologies and materials
- Developing and modifying research methods / formulations / products
- Engineering and designing a new product
- Materials testing
- Certification Testing
- Environmental Testing
QUALIFIED RESEARCH EXPENSES (QRE)
The following are Qualified Research Expenses (QRE):
- Wages paid to employees for qualified services (this includes amounts considered to be wages for federal income tax withholding purposes), basic research payments made to qualified educational institutions and various scientific research organizations, allowable up to75% of the actual cost.
- Supplies (this may include any property not subject to depreciation) used and consumed in the R&D process.
- Third party contractors’ expenses for performing QRAs on behalf of the taxpayer, regardless of the success of the research, allowable up to 65% of the actual cost.