R&D Tax Credits - 5 Critical Items to Document (part 4)

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Posted by Randy Eickhoff, CPA, Founder & Head Coach on Jul 19, 2011 2:01:00 AM

Randy_Eickhoff,_President,_Acena_ConsultingWhile there are many ways to document activities for the R&D tax credit, ideally, a company should try to document each qualified activity individually. If we keep in mind that the R&D timeline begins at concept inception and ends when the project is ready for commercial production, these dates become important and should be standardized. Many times, initial R&D concept development can come from sales meetings with customers and be the origin of the next R&D project. While sales people typically document their meetings, not all meetings result in a new R&D project. A centralized system should include a standard approach to opening a new project and documenting how the concept started.

At the same time, the end of the project should also be documented consistently. If a company requires and documents approval of design, prototype, testing, etc. this information should be consistently gathered and documented in the samedesign_is_critical_to_innovation centralized system. In our next blog, we will discuss project qualification and how these dates will form the structure to collecting expenses for each project. In terms of a process and audit trail, standardizing the process provides a clean clear story in the event of an audit.

Additionally, it is important to document the name of the project manager, whether the company retains substantial rights to the research, if the research was done for a specific customer or as part of a contract and whether any part of the research was funded by another. As every company is different, the system that will work best in your company varies greatly. Working with consultants that can evaluate your current processes and help you design the right system can pay significant dividends in terms of strong processes that do not interfere with your operations.

 Randy Eickhoff, CPA is President of Acena Consulting. With more than 20 years of tax and consulting experience, Randy focused on helping companies successfully document and secure tax incentives throughout the US. He has been a long-time speaker nationally as well as conducted numerous training sessions on R&D tax credits and other US tax incentives.

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Randy Eickhoff, CPA, Founder & Head Coach

Randy Eickhoff, CPA, Founder & Head Coach

Randy boasts over two decades of experience in securing tax credits and government incentives, having collaborated with over 500 companies throughout his career. He kickstarted his journey in the tax practice of Arthur Andersen in southern California before co-founding Acena Consulting. Randy leverages his extensive expertise to provide industry insights to middle-market and Fortune 500 companies, fostering both direct partnerships and indirect relationships through CPA firms. Outside of his professional pursuits, Randy is deeply involved in the swimming community, serving as a Masters swim coach for Cal Lutheran University and achieving recognition as a top-ten Masters swimmer.