Every year, tax season is a time in which accounting firms are burning the midnight oil to meet the filing deadline. That time can be stressful, emotionally draining and even physically exhausting as the clock winds down.
With so many things to juggle, it’s key for accounting firms to find support for their never-ending to-do list. One great partnership: a research tax credit specialist that can assist their clients that qualify for the credit. The research tax credit process is time-intensive, exactly when time is of the essence for tax firms.
But adding a research tax credit expert to your partnerships isn’t just about time savings. Below are three ways that it can benefit accounting firms.
- ELIMINATE RISK
In a previous blog, we addressed common misconceptions about the research tax credit and one was that the study is an engineering function, not an accounting function. The secret to the process is being able to identify and qualify the research activities performed and then properly document those activities. Correctly documenting the research activities will be the first line of defense against an audit.
While there may be several reasons why accounting firms are hesitant to partner with a research tax credit specialist, one of the biggest concerns is the risk of signing off on work they didn’t complete. One of the ways to alleviate that risk is by partnering with an expert that offers to defend their work under audit on their own dime and possesses a high success rate on audit claims. Not only does that eliminate risk for the firm, but it ensures that the client doesn’t have to pay additional costs that can eat into their credit.
- ADDING A COMPETITIVE ADVANTAGE
Competitors use the research tax credit to steal clients away from other firms.
In an effort to provide additional value to your clients (and keep them safely in your portfolio), partnering with a research tax credit expert can add knowledge and experience to your team.
The belief is that research tax credit specialists should have expertise in specific industries that a CPA firm serves. While having clients in a certain industry may provide comfort, again, the key comes down to having a partner in place who is a research credit process expert. They need to know the technology and be able to determine whether the activities meet the necessary requirements to be qualified.
Focusing more on expertise and knowledge than specific industry can also open the door to new clients for accounting firms. When a company asks their research tax credit specialist for accounting firm recommendations, your team will be first on the list.
In the Eliminating Risk section above, we discussed how choosing a provider that can defend you under audit is valuable for accounting firms. The other reason that is important is because providers who charge contingency fees for their services can be seen as having a vested interest in inflated credit amounts. In addition, if a provider offers a contingency fee (where they base their fee off the potential credits a company can claim), their pricing structure should indicate that in the event of an audit that the burden of that audit defense will fall either on you (the accounting firm) or the client. That’s a no-win situation.
As an accounting firm, search for research tax credit experts that offer fixed pricing. Typically, fixed pricing is based off of time and resources devoted to completing the project rather than capitalizing off projected credits. Not to mention, fixed pricing provides a client a potentially higher return on their investment, if more credits are identified through the investigative process.
Confusion comes from a lack of clarity. As an accounting firm, if there is understanding in what a potential provider’s pricing structure uncovers, you have clarity in a complex process. That protects both yourself and your clients.
If you have lost clients because you have decided not to specialize in the credit or competing firms have used the credit to take away clients, contact us.
About: John, Business Development Specialist, has a finance degree from Miami University. He lives in Indianapolis with his wife and three kids. When not spending time with his family, you can usually find him on a golf course.