Large and Small Business
Research and Development Tax Credits
Take Advantage of Research and Development Tax Credits
Innovation is the core of a growing economy, which is why the government encourages businesses to invest in research and development. Aside from producing better products and services, innovation creates technical jobs and improves the country’s global competitiveness.
The downside, however, is that research and development is a risky endeavor. It’s costly to fund an R&D arm—a significant amount of resources can be spent on testing, developing, experimenting, paying for third-party research institutions, and compensating specialists. The government, therefore, awards research and development tax credits to companies with research initiatives. R&D tax credits incentivize research endeavors, which promote innovation and produce technical jobs in the country. In fact, you don’t need an R&D department to take advantage of these incentives.
With Tri-Merit, you will avoid:
Unnecessarily High Fees
Losing Great Clients
Lack of Responsiveness
Poor Audit Results
You deserve an R&D Tax Credit & Cost Segregation Partner You Trust.
Determining Businesses that Qualify for R&D Tax Credits
R&D tax credits aren’t limited to major corporations with research arms. In fact, it’s open to businesses of all sizes, as long as they conduct R&D tax-credit qualified activities – specifically research.
Research activities that qualify for R&D tax credits must be conducted in the U.S. Moreover, the organization must prove that the purpose of the activities is to solve technological uncertainty. The activities must rely on hard sciences (like engineering, biology, physics, computer science, etc.), support the development of a business component, and employ stringent testing and experimentation. These rules are contained in the IRS Four-Part Test for Qualifying Business Activity.
Businesses that conduct research initiatives related to internal-use software (IUS) could also apply, given that the software being developed will be used for conducting the trade or business. For instance, financial institutions — banks, insurance companies, hedge fund companies — develop specialized software for their operations.
Businesses that develop software should also satisfy three additional criteria:
- The software must result in reduced company costs while speeding up processes.
- Software development must involve a huge economic risk. It must expend a significant amount of resources and must be subject to the uncertainty of recovery.
- The software should not be commercially available. The business shouldn’t be able to buy, lease, or license the software for its intended purpose without having to make modifications that satisfy the first two criteria.
Companies can get research and development tax credit from qualified research expenses like:
- Wages for employees whose services involve qualified research activities
- Supplies for qualified research activities
- Research payments to educational and scientific research organizations
The right people, the right process, the right partner.
Not all tax credit studies are created equal, so it’s important you feel confident when choosing a specialty tax partner.
Tri-Merit’s highly experienced team of engineers, attorneys and CPAs make your life easier by taking a customizable, flexible and thoughtful approach to produce the best possible outcome. We engage clients in the most efficient and effective way possible, requiring minimal time and effort that results in a refreshingly simple process.