Companies often look for tax credits to reduce tax liabilities and increase profits. Working with experienced tax professionals can help you pinpoint credits you didn’t know about or were unsure you could receive. Understanding who qualifies for the federal R&D credit will help you decide if you can use it for your business.
Develop or Design New Processes or Products
The federal R&D credit benefits companies that design or develop new products or processes that improve their industry. Some companies dedicate time, money, and resources to finding better ways of doing things or adding beneficial products to the market. You may qualify for this tax credit if your company contributes to your industry with research and development in this category.
Enhance Existing Processes or Products
You don’t have to develop or design something entirely new to qualify for the federal R&D credit. This tax credit is also available to companies that enhance existing products or processes. You may use a product or process that could benefit from a few improvements. If your team dedicates time to improving existing products or methods, you can file for a tax credit to compensate for some of your costs.
Improve Prototypes or Software
Another area that typically qualifies for the federal R&D credit is improvements to existing prototypes or software. Sometimes companies develop a prototype or software solution and stop working on it. If your company makes improvements to these products, you may qualify for a tax credit to recover some costs.
If you think you qualify for the federal R&D credit, visit the Business Name website to speak with a tax professional.
