The federal government wants to encourage companies to conduct research and development to improve products, processes, formulas, and software. To promote these worthy endeavors, they created the R & D tax credit to give back to the companies making a difference. This tax credit can put money back into your business.
Reduce Your Payroll Taxes
Companies must pay taxes on the money they pay employees to work for them. If your company qualifies for the R & D tax credit, you may use your credit to offset your payroll taxes up to $250,000 per year. This reduction can provide significant savings that increase your bottom line and help you invest more in your company’s future.
Use as Non-Dilutive Capital
Many start-up businesses seek investors to build capital to grow their companies. However, this often means giving investors a stake in your company. The R & D tax credit can serve as non-dilutive capital to provide you with the money required to help your business grow without giving up shares in your company. You can make improvements without losing income.
Carry Your Credit Forward
Tax liabilities can change year after year. If you claim the R & D tax credit during a year when your obligations are already low, you can carry it forward to the following tax year, allowing you to reduce your liabilities for another year. It’s an excellent way to protect your company and ensure you don’t owe too much tax at the end of the year.
If you think you qualify for the R & D tax credit for your business, visit the B. Riley Financial website to learn more.