Today, innovation is a necessity that plays a crucial role in the growth of any company regardless of its industry or sector.
For innovation and creative ideas, a company must have a Research and development (R&D) department that continuously works on innovative ideas, new technologies, and thoughts to enhance the company’s growth rate and revenue.
To encourage such activities, the U.S. government introduced a temporary funding program in 1981 in which eligible organizations can claim tax relief.
What is the R&D Tax Credit Program?
The R&D tax credit is a tax incentive program sponsored by the government of the United States of America. Companies and organizations that conduct R&D and investing in innovation are eligible to enjoy the benefits of this scheme.
It is one of the must-have ways for organizations and businesses to limit their tax liabilities. Companies can save thousands of dollars by saving federal and state tax if they qualify for the tax credit scheme.
Companies can claim between six to fourteen percent of their total research and development expenses.
These savings are enormous enough that companies can invest the saved money in new services and products, hiring new employees for their company, and try even more options.
The R&D tax credit is for all each type of business from small to large scale. Even companies with projects related to applied science and technical outlines from different sectors are eligible for it.
How Can Automated R&D Tax Credit Boost Your Company Growth?
The R&D Tax credit is a complicated process, but with the help of automated software, you can streamline the complete R&D process. This not only will help you to break the complicated process into manageable steps, but also boost your company’s growth and overall ROI.
Apart from the above, it will save you valuable time and money as everything will be technology-driven whether it includes documentation, real-time credit calculations, tax claim, or anything else.
Let’s check out all the benefits of automated R&D Tax Credit analysis –
1. Automate Your Tax Payments
One of the significant benefits of the automation systems is that it does substantial tasks automatically within the deadline. We as humans can forget essential tasks that come with a period, but the automation system doesn’t.
Tax payments are one such task that must be done within the time, else can bring some serious consequences.
Automated R&D tax payments and accounting systems not only can help with payments on time but also lets you track timesheets.
2. Automate Tax-credit Claiming Process
Tax-credit is a complicated process. Automation simplifies these complications by handling everything on behalf of the company and automates the tax credit claiming procedure.
3. Automates Proper Tax Documentation Management
According to the tax regulations, tax-credit must be submitted along with the tax returns of the company. For which, a company must gather the proper documents showing the eligibility for tax credit criteria.
Also, these documents came handy at the time of company audit. An automation system makes sure that your papers are IRS compliant. Also, it simplifies the tax credit process, maximizes its benefits and integrates with your payroll service manager for effortless monetization.
What Expenses Can Be Claimed With Automated R&D Tax Credit Analysis?
Companies can claim tax credits for expenses related to optimization, innovation, research, and development of the project. They include –
- The wages that have been paid to the employees of the R&D department of the company.
- The cost of the resources, raw materials, and supply used in the prototyping models during R&D.
- Money paid to the third-part contactor to analysis and research for the company.
- Money paid for cloud services and computer leasing to execute experiments and research.
What Tasks Qualifies Automated R&D Tax Scheme?
Below are the criteria a company must qualify to avail R&D credit scheme benefits –
- Companies that perform experiments
- Companies discovering new knowledge and information that eliminates technical difficulties in project development
- Companies that do technological research related to hard sciences including chemistry, physics, computer science, and engineering
- Companies that work on improvements of any existing technology, product, and process
The R&D tax credit scheme is now more accessible for any company that is working on innovation or improvement of an existing project. It should not be a blind spot for any small or large-scale business.
Companies that are working on creativity, innovation, and experiments must claim the tax credit if they haven’t claimed it yet. This not only will help you in saving money and time, but also let you hire more employees and investment in further innovations.
Just make sure that you are following the process properly that includes documentation, invoices, payrolls, timesheets, and other essential documents necessary for the eligibility of the R&D tax credit scheme.