Gaining a Competitive Advantage With The R&D Tax Credit

If your company is operating at a 20% profit margin you must manufacture and/or sell $500K worth of merchandise in order to receive the same bottom line benefit as a $100K R&D tax credit.

A company that is properly documenting and claiming qualified expenses under the R&D tax credit creates for itself a significant competitive advantage over a company that is not or that is only claiming the bare minimum of qualified expenses. The R&D tax credit allows a company to claim qualified expenses in an amount up to 20% of their state and federal tax liability. The ability to claim a $100K R&D tax credit implies only a $500K state and federal tax liability, which for many medium size or even small businesses is not a hard burden to meet. However, in comparison, the time and effort required to generate $500k in new sales is considerably higher than the time and effort required to properly document qualified expenses. Further, companies that properly exploit all available R&D tax credits are able to significantly decrease the manufacturing cost of the products they produce, allowing for additional advantages within highly competitive fields.

Verax Law is able to help clients that are not currently claiming any R&D tax credits and those companies that feel they are not fully exploiting the credits’ potential. Verax Law reviews previous year returns and business structure to provided clients a detailed study on the possible qualified expenses that may be claimed. Companies that are currently claiming R&D tax credits may find it helpful for Verax Law to review qualified expenses being claimed and provide guidance on areas where additional credits may exist. Past client reviews have lead to some clients tripling the amount of qualified credits claimed in a single year. Also, it is important to remember that R&D tax credits can only be claimed for the previous three years (four years in some states), each passing tax year represents lost dollars for your company. If you would like to find out more about services Verax Law can provide to your company please contact us to discuss how we might be able to help you with R&D tax credit matters.