Three Ways the R&D Tax Credit Gives Your Business a Competitive Edge

3 Minute Read
Posted by Randy Eickhoff on May 21, 2019 9:59:08 AM

Most entrepreneurs recognize that competition in industry is often great for business. Yes, going head-to-head with marketplace leaders can be stressful. However, competitive turbulence in any respective vertical can make an organization stronger, more agile, highly focused, and better equipped to successfully manage any pending disruption, making it a necessity in virtually every operational niche.


The Research and Development Tax Program Includes Dozens of Business Industries

Unfortunately, each year, countless U.S. companies miss out on mission-critical tax programs explicitly designed to help drive competition within their specific operational fields. Case in point: the research and development tax credit. Many business owners (wrongfully) assume the innovation tax credit is a "lab only" incentive, created solely to reduce the tax burden for scientific companies. They don't realize this initiative offers federal and state credits, as well as special deductions for companies across multiple industries and in a majority of states.

The broad definition of eligible R&D expenditures as outlined in the Internal Revenue Code states that the development or improvement of a product, process, technique, formula, technology, or invention can qualify for the program. Additionally, the research and development tax credit legislation provides opportunity for a diverse range of industries, such as construction, electronics, manufacturing, food services, software, agricultural, apparel, plastics, financial services, and many others.

How the Innovation Tax Credit Drives Healthy Competition

Are you leveraging the competitive advantages offered from the R&D tax credit? If not, you may be missing out on several significant business benefits, including:

Increased Cash Flow Opportunities

Depending on where your business is located, you may be able to utilize both federal and state dollar-for-dollar tax reductions for amplified cash flow within your organization that can be used for extended operations and corporate growth. Many entrepreneurs reinvest their R&D tax refunds in the business to purchase capital equipment, lower operating expenditures, or expand their brand reach.

Extended Staff and Innovation Efforts

The research and development tax credit's primary purpose is to lower tax burden and maximize cash flow opportunities for all qualifying R&D expenditures. While some business owners opt to use their refunds to grow their inventory of assets, many corporate executives choose instead to grow their teams, using their newfound capital to add employees to their staff. Additionally, some organizations also allocate their R&D tax refunds toward new research and development initiatives, ultimately creating higher paying positions and increasing the company's intellectual assets. This surge in domestic research and development efforts can ultimately support an overall increase in innovation success based in the U.S.

Maintained Foothold in Global Markets

Most industrialized countries offer its business owners various funding opportunities to support research and development efforts. In fact, when comparing our innovation tax credit program to other worldwide nations, the U.S. actually ranks lower than several countries in Europe and Asia. Maximizing all opportunities offered through the R&D tax credit program can help domestic enterprises compete in a global marketplace where production and materials costs can vary significantly.

Want to hear more about leveraging the research and development tax credit to maintain your company's competitive edge? Contact Acena Consulting today.


Cheat Sheet Banner
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.