Is a Research and Development Tax Credit Study Worth It?

4 Minute Read
Posted by Randy Eickhoff on Jul 2, 2019 9:26:15 PM

For small and mid-sized companies, focusing primarily on core, mission-critical initiatives proves essential to help boost corporate cost-effectiveness. However, this practice of continually streamlining operations and processes to remain as efficient as possible does have a downside. Not setting aside enough time to consider periphery programs and incentives often means missing out on potentially significant lucrative cash flow opportunities that can drive growth and bottom-line dollars.

Is the R&D Tax Credit More Trouble Than it’s Worth?

The Research and Development (R&D) tax credit can be a great way to maximize cash flow by lowering taxes. This federal tax credit is designed to help businesses offset the costs associated with conducting research and development activities by providing tax credits in return for their R&D efforts. Depending on the type of business you have, the amount of your R&D expense, and other factors, these credits can be worth thousands or even millions of dollars each year. Ultimately, an R&D tax credit Study will help maximize the available R&D credits for you.

R&D Tax Credit: What You Need to Know About Time Investment

The research and development tax credit is a common example of available and earned working capital that's often overlooked by small and mid-sized business owners. Developing the necessary documentation may require minimal changes to gather the information already captured through current product development efforts. With a little forethought, business owners can implement the systems needed to harvest this information.

Yes, documenting a company's eligibility for the innovation tax credit will require dedicated hours and resources. However, the potential ROI of this dollar-for-dollar tax credit often makes it a viable effort for companies of every size and in every field. 

Work With a Reputable R&D Tax Specialist to Pinpoint Eligibility for Credit

Fortunately, partnering with an innovation tax specialist can help business owners quickly (and inexpensively) determine if it makes sense for a company to conduct a full tax credit study. The process begins with a preliminary qualification assessment. The feasibility phase of the R&D tax credit study requires bringing in an outside research and development tax specialist to assess your business processes, ask specific operational questions, and evaluate current organizational tasks and initiatives to determine if there are potential eligible activities within the company that would qualify for the credit.

As part of the preliminary feasibility phases, your chosen R&D tax professional will carefully analyze various projects within your organization that typically qualify for tax credit. Some common activities may include:

  •       Developing or designing new products, formulas, or processes
  •       Creating or improving internal processes
  •       Developing or improving software solutions
  •       Testing new concepts or materials
  •       Custom Toolmaking
  •       Refining engineering processes
  •       Developing product alternatives

After a preliminary assessment of your company, a careful evaluation of internal procedures, and interviews with designated stakeholders, an experienced and reputable R&D tax professional will develop an outline that identifies the approximate costs and expected effort needed from your company compared to the potential overall tax savings. This estimate typically provides business owners with enough insight on whether the prospective payout makes the process worth the time, resources, and focus required to move forward with the actual R&D case study.

Let Us Help! Contact Acena Consulting Today to Assess R&D Tax Credit Eligibility 

Acena Consulting teams up with companies of every size to pinpoint R&D tax credit eligibility and maximize cash flow opportunities across every internal operation. Don't miss out on the working capital your organization has earned through the innovation tax program. Contact Acena Consulting to schedule your no-risk consultation today.

Randy Eickhoff

Randy Eickhoff

Acena Consulting President Randy Eickhoff, licensed CPA, has partnered with more than 200 companies during more than 20 years of experience securing tax credits and other government incentives. His corporate partners range from multinational technology firms to smaller, privately held manufacturing, sports, and technology enterprises.