The truth about the R&D Tax Credit is that it provides a tangible means of maximizing your research and development efforts while minimizing the associated financial risks; and the numbers are staggering.
In tax year 2005:
$6.6 billion in Federal Research & Experimentation Tax Credits were granted to 17,700 corporations.
84% were less than $50 million dollars in total assets and 54% were less than $5 million in total assets.
14,953 corporations with less than $50 million in total assets claimed more than $891 million in Federal R&D Tax Credits.
71.2% of these corporations had a SIC in some type of Manufacturing; the remaining 28.8% include Services, Information, and Agriculture.
These numbers demonstrate that lucrative R&D incentives are available to small and medium-sized companies to the tune of approximately $891 million or 3.2% of their total assets. While the prospect of receiving a tax credit for conducting what may seem to be normal business operations is appealing… the R&D Tax Credit is not easily obtainable or intended for every company.
How does Hull & Knarr fit in?
Like in most specialty services, an expert is needed to consult on issues such as documentation, qualification, contract language and compliance. With an unequaled audit record, H&K’s engineering-based approach will meet your company’s specific needs.
However, in order to reap the benefits, a company must be engaging in activities that meet the four-part definition for qualified research and experimentation. Next the company must agree to accept additional audit exposure and additional work to substantiate credit claims. For those companies that have qualified expenditures and are willing to accept the risks, the rewards can be significant:
immediately increase your cash flow
receive refund checks for previously overpaid tax
recover costs tied to R&D projects and prototypes (even failed ones)
