Illinois R&D Tax Credit Consultants

R&D Tax Credit | March 23, 2021 | 6 min read
Chicago skyline

The federal research and development (R&D) tax credit is one of the best opportunities for Illinois businesses to substantially reduce their tax liability. Many businesses engage in “qualified research” which enables them to reduce their tax liability by taking advantage of the R&D tax credit. Introduced in 1981, the federal R&D tax credit is the largest tax incentive available to Illinois taxpayers. Furthermore, Illinois has a state-sponsored R&D tax credit that can be claimed in conjunction with the federal R&D credit. In order for your Illinois business to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities. The best way to learn more about R&D activities and tax credit eligibility is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about R&D tax credits and find out if your Illinois business engages in R&D eligible activities. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

Contact us for additional information

The research and development tax credit is a government-sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the research and development (R&D) credit became a permanent part of the tax code.

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

Many taxpayers assume the R&D tax credit is available only to major corporations conducting tests in research laboratories. This, of course, is not the case. Businesses of all sizes across many industries are eligible for the incentive as long as they are engaged in qualified research activities. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of businesses that engage in eligible activities is ever-increasing as are the eligible activities that qualify for the credit. More and more Illinois businesses are engaged in qualified research activities making them eligible for the R&D tax credit. Clarus R+D is Illinois R&D tax credit consultant of choice to help your business take advantage of the research and development tax incentive.

Learn how to take advantage of the R&D tax credit

The R&D tax credit and your Illinois business

Businesses in the United States are battling in an intensely competitive global market. Tax incentives, like the research and development tax credit, are designed to protect American jobs and businesses while spurring ingenuity and innovation. The research and development tax credit helps by allowing you to take advantage of tax credits for the work your Illinois business is already doing. Smart businesses are taking those dollars saved via the tax credit and reinvesting in their growth. Many businesses are unaware expenses related to their daily operations could qualify for a dollar-for-dollar tax credit towards their annual income and/or payroll tax liability, irrespective of industry or company size. Additionally, Illinois offers an R&D tax credit that can supplement the federal R&D tax credit.

For most companies, the credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, and there must be a nexus between the expense and qualified project. 

Work with Clarus to claim your R&D tax credit

Determining R&D tax credit eligibility in Illinois  

What is considered qualified research for purposes of determining Illinois business’ R&D tax credit eligibility? In order to be eligible for the research and development tax credit, your business must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement.

Research activities that qualify for R&D tax credits must be conducted in the U.S (those activities must be conducted in the state of Illinois to be eligible for the state credit). If your Illinois business does any of the following, it likely qualifies for the R&D tax credit:

  • Develops or designs new products or processes
  • Enhances existing products or processes
  • Develops or improves upon existing prototypes and software

Learn how your business can claim the R&D tax credit

Claim the R&D tax credit for your Illinois business

A number of factors go into claiming the credit, but the potential savings on the table make exploring the credit a worthy endeavor. Since the credit may be claimed for current and prior tax years, companies can benefit from documenting their R&D activities to ensure they are positioned to claim the credit in both situations.

To claim the credit, the taxpayer must contemporaneously evaluate and document their research activities to establish the amount of qualified research expenses paid for each qualified research activity. While taxpayers may estimate some research expenses, they must have a factual basis for the assumptions used to create the estimates.

Examples of such documentation include:

  • Payroll records
  • General ledger expense detail
  • Project lists
  • Project notes
  • Other documents a company produces throughout the regular course of business

Contact Clarus R+D for additional information

Illinois Research and Development: The state R&D tax credit

The Illinois state R&D tax credit resembles the federal R&D tax credit.  The more notable features of the Illinois R&D tax credit are outlined below. 

  • Expenses must be incurred within the state of Illinois
  • The R&D tax credit equals 6.5% on the excess of Illinois qualified research expenses over the average amount of QREs for the three preceding taxable years.
  • Illinois R&D tax credit is due with tax return
  • Illinois R&D tax credit can be carried forward five years
  • The credit cannot be carried back
  • The Illinois R&D tax credit is authorized through 2026
  • Creates new apprenticeship tax credit for companies investing in Related Technical Instruction (RTI)
  • Credit is not based on gross receipts 
  • Adopts the federal definition of qualified research

IRS statistics show that R&D tax credits worth over $12 billion were claimed in 2014. While this sounds significant, a large number of eligible entities neglect to claim the R&D credit. One of the biggest drivers for the underutilization is likely a lack of knowledge by both taxpayers and their advisers. Many are unaware of the R&D credit or otherwise believe their business activities are not eligible.

Learn more about R&D tax credits

R&D tax credit consultants: What to expect

You can expect the following when selecting Clarus R+D as your R&D tax credit consultants:

  • Clarus provides a team of professionals with expert credentials able to answer all your R&D tax credit questions. 
  • Our proprietary software streamlines R&D studies which maximizes your ROI.
  • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
  • Clarus has extensive experience in recognizing qualified research activities and expenditures.
  • Our time-proven methodology has yielded maximum benefits to our clients.
  • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
  • We place emphasis on helping growth businesses take advantage of the tax incentive. 
  • Clarus does the work for you; our web-based app allows you to enter information at your own pace. 
  • We have extensive IRS and state audit experience, and provide our clients audit support.
  • We have maintained an exceptional success rate in applying for the R&D tax credit. 
  • We work directly with our clients and their respective accounting firm and payroll processor. 
  • Our process saves valuable time and resources within the engineering and finance departments.
  • Our fees are very competitive.
  • Our performance, success rate, and unparalleled quality of service result in high client loyalty.

Ready to get started?

Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

Schedule a call with Clarus R+D

Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

Richard Cumberland / Zupt

Share

ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

Back to Blog

Louisiana R&D Tax Credit Consultants

R&D Tax Credit | March 22, 2021 | 7 min read
New Orleans Louisiana

The federal research and development (R&D) tax credit is one of the best opportunities for Louisiana businesses to substantially reduce their tax liability. Many businesses engage in “qualified research” which enables them to reduce their tax liability by taking advantage of the R&D tax credit. Introduced in 1981, the federal R&D tax credit is the largest tax incentive available to Louisiana taxpayers. Furthermore, Louisiana has a state sponsored research and development incentive that can be claimed in conjunction with the federal R&D credit. In order for your Louisiana business to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities. The best way to learn more about R&D activities and tax credit eligibility is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about R&D tax credits and find out if your Louisiana business engages in R&D eligible activities. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

Contact us for additional information

Louisiana businesses need to take advantage of the R&D tax credit

The research and development tax credit is a government sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the research and development (R&D) credit became a permanent part of the tax code.

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

Many taxpayers assume the R&D tax credit is available only to major corporations conducting tests in research laboratories. This, of course, is not the case. Businesses of all sizes across many industries are eligible for the incentive as long as they are engaged in qualified research activities. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of businesses that engage in eligible activities is ever-increasing as are the eligible activities that qualify for the credit. More and more Louisiana businesses are engaged in qualified research activities making them eligible for the R&D tax credit. Clarus R+D is the Louisiana R&D tax credit consultant of choice to help your business take advantage of the research and development tax incentive.

Learn how to take advantage of the R&D tax credit

The R&D tax credit and your Louisiana business

Businesses in the United States are battling in an intensely competitive global market. Tax incentives, like the research and development tax credit, are designed to protect American jobs and businesses while spurring ingenuity and innovation. The research and development tax credit helps by allowing you to take advantage of tax credits for the work your Louisiana business is already doing. Smart businesses are taking those dollars saved via the tax credit and reinvesting in their growth. Many businesses are unaware expenses related to their daily operations could qualify for a dollar-for-dollar tax credit towards their annual income and/or payroll tax liability, irrespective of industry or company size. Additionally, Louisiana offers research and development incentive that can supplement the federal R&D tax credit.

For most companies, the credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, and there must be a nexus between the expense and qualified project.  

Work with Clarus to claim your R&D tax credit

Determining R&D tax credit eligibility in Louisiana  

What is considered qualified research for purposes of determining Louisiana business’ R&D tax credit eligibility? In order to be eligible for the research and development tax credit, your business must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement.

Research activities that qualify for R&D tax credits must be conducted in the U.S (those activities must be conducted in the state of Louisiana to be eligible for the state credit). If your Louisiana business does any of the following, it likely qualifies for the R&D tax credit:

  • Develops or designs new products or processes
  • Enhances existing products or processes
  • Develops or improves upon existing prototypes and software

Learn how your business can claim the R&D tax credit

Claim the R&D tax credit for your Louisiana business

A number of factors go into claiming the credit, but the potential savings on the table make exploring the credit a worthy endeavor. Since the credit may be claimed for current and prior tax years, companies can benefit from documenting their R&D activities to ensure they are positioned to claim the credit in both situations.

To claim the credit, the taxpayer must contemporaneously evaluate and document their research activities to establish the amount of qualified research expenses paid for each qualified research activity. While taxpayers may estimate some research expenses, they must have a factual basis for the assumptions used to create the estimates.

Examples of such documentation include:

  • Payroll records
  • General ledger expense detail
  • Project lists
  • Project notes
  • Other documents a company produces throughout the regular course of business

Contact Clarus R+D for additional information

 

Louisiana Research and Development Incentive: The state R&D tax credit

The Louisiana state research and development incentive (R&D tax credit) has some specific differences from the federal R&D tax credit. For instance, the Louisiana R&D tax credit provides up to a 30% tax credit on qualified research expenditures incurred in Louisiana — with no cap and no minimum requirement.

The more notable features of the Louisiana R&D tax credit are outlined below.

  • Qualified research expenses must be incurred in Louisiana.
  • The tax credit was refundable from 2009 through Jun30, 2015.
  • Certain businesses are excluded from eligibility
    • Professional services firm with no patents or patents pending
    • Businesses primarily engaged in custom manufacturing or custom fabricating
  • Credits can be carried forward five (5) years.
  • Credits claimed prior to 2009 that cannot be utilized may be carried forward, transferred or sold.
  • Louisiana defines its base amount as 70% of the average prior three years of Qualified Research Expenditures.
  • The credit amount is based upon the application type:
    • The credit amount is 40% for companies that employ up to 50 Louisiana residents.
    • The credit amount is 20% for companies that employ 50-99 employee.
    • The credit amount is 8% for companies with 100 or more employee.
    • For taxpayers with less than 50 employees a Federal Form 6765 must be filed for the current tax year or a completed Agreed Upon Procedures Report.
  • In order for the R&D Tax Credits to be awarded, a taxpayer must claim the expenditures within one year after December 31 in which the expenditures was incurred. 
  • Prior to claiming the R&D Tax Credits, a company must apply for and obtain a credit certification from Louisiana  Economic Development (LED).  The application costs $500.

IRS statistics show that R&D tax credits worth over $12 billion were claimed in 2014. While this sounds significant, a large number of eligible entities neglect to claim the R&D credit. One of the biggest drivers for the underutilization is likely a lack of knowledge by both taxpayers and their advisers. Many are unaware of the R&D credit or otherwise believe their business activities are not eligible.

Learn more about R&D tax credits

R&D tax credit consultants: What to expect

You can expect the following when selecting Clarus R+D as your R&D tax credit consultants:

  • Clarus provides a team of professionals with expert credentials able to answer all your R&D tax credit questions. 
  • Our proprietary software streamlines R&D studies which maximizes your ROI.
  • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
  • Clarus has extensive experience in recognizing qualified research activities and expenditures.
  • Our time-proven methodology has yielded maximum benefits to our clients.
  • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
  • We place emphasis on helping growth businesses take advantage of the tax incentive. 
  • Clarus does the work for you; our web-based app allows you to enter information at your own pace. 
  • We have extensive IRS and state audit experience, and provide our clients audit support.
  • We have maintained an exceptional success rate in applying for the R&D tax credit. 
  • We work directly with our clients and their respective accounting firm and payroll processor. 
  • Our process saves valuable time and resources within the engineering and finance departments.
  • Our fees are very competitive.
  • Our performance, success rate, and unparalleled quality of service result in high client loyalty.
    •  

Ready to get started?

Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

Schedule a call with Clarus R+D

 

Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

Richard Cumberland / Zupt

 

Share

ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

Back to Blog

Georgia R&D Tax Credit Consultants

R&D Tax Credit | March 15, 2021 | 6 min read
Georgia State Capitol

The federal research and development (R&D) tax credit is one of the best opportunities for Georgia businesses to substantially reduce their tax liability. Many businesses engage in “qualified research” which enables them to reduce their tax liability by taking advantage of the R&D tax credit. Introduced in 1981, the federal R&D tax credit is the largest tax incentive available to Georgia taxpayers. Furthermore, Georgia has a state sponsored R&D tax credit that can be claimed in conjunction with the federal R&D credit. In order for your Georgia business to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities. The best way to learn more about R&D activities and tax credit eligibility is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about R&D tax credits and find out if your Georgia business engages in R&D eligible activities. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

Contact us for additional information

Georgia businesses need to take advantage of the R&D tax credit

The research and development tax credit is a government sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the research and development (R&D) credit became a permanent part of the tax code.

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

Many taxpayers assume the R&D tax credit is available only to major corporations conducting tests in research laboratories. This, of course, is not the case. Businesses of all sizes across many industries are eligible for the incentive as long as they are engaged in qualified research activities. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of businesses that engage in eligible activities is ever-increasing as are the eligible activities that qualify for the credit. More and more Georgia businesses are engaged in qualified research activities making them eligible for the R&D tax credit. Clarus R+D is Georgia R&D tax credit consultant of choice to help your business take advantage of the research and development tax incentive.

Learn how to take advantage of the R&D tax credit

The R&D tax credit and your Georgia business

Businesses in the United States are battling in an intensely competitive global market. Tax incentives, like the research and development tax credit, are designed to protect American jobs and businesses while spurring ingenuity and innovation. The research and development tax credit helps by allowing you to take advantage of tax credits for the work your Georgia business is already doing. Smart businesses are taking those dollars saved via the tax credit and reinvesting in their growth. Many businesses are unaware expenses related to their daily operations could qualify for a dollar-for-dollar tax credit towards their annual income and/or payroll tax liability, irrespective of industry or company size. Additionally, Georgia offers an R&D tax credit that can supplement the federal R&D tax credit.

For most companies, the credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, and there must be a nexus between the expense and qualified project.  

Work with Clarus to claim your R&D tax credit

Determining R&D tax credit eligibility in Georgia  

What is considered qualified research for purposes of determining Georgia business’ R&D tax credit eligibility? In order to be eligible for the research and development tax credit, your business must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement.

Research activities that qualify for R&D tax credits must be conducted in the U.S (those activities must be conducted in the state of Georgia to be eligible for the state credit). If your Georgia business does any of the following, it likely qualifies for the R&D tax credit:

  • Develops or designs new products or processes
  • Enhances existing products or processes
  • Develops or improves upon existing prototypes and software

Learn how your business can claim the R&D tax credit

Claim the R&D tax credit for your Georgia business

A number of factors go into claiming the credit, but the potential savings on the table make exploring the credit a worthy endeavor. Since the credit may be claimed for current and prior tax years, companies can benefit from documenting their R&D activities to ensure they are positioned to claim the credit in both situations.

To claim the credit, the taxpayer must contemporaneously evaluate and document their research activities to establish the amount of qualified research expenses paid for each qualified research activity. While taxpayers may estimate some research expenses, they must have a factual basis for the assumptions used to create the estimates.

Examples of such documentation include:

  • Payroll records
  • General ledger expense detail
  • Project lists
  • Project notes
  • Other documents a company produces throughout the regular course of business

Contact Clarus R+D for additional information

Georgia Research and Development: The state R&D tax credit

The Georgia state R&D tax credit resembles the federal R&D tax credit.  The more notable features of the Georgia R&D tax credit are outlined below. 

  • Expenses must be incurred within the state of Georgia
  • Credits can be carried forward up to 10 years
  • In order for activities to be eligible, taxpayer must have claimed and be eligible for federal credits
  • Research expenses are limited to expenses incurred in manufacturing, warehousing and distribution, processing, telecommunications, broadcasting, tourism, and research and development industries
  • Defines gross receipts using an apportionment factor
  • Georgia tax credit equals 10%
  • Georgia does not permit the tax credit to be carried back
  • Excess R&D tax credits can be used against state payroll withholding 
  • Credit can be used to offset up to 50% of income tax liability

IRS statistics show that R&D tax credits worth over $12 billion were claimed in 2014. While this sounds significant, a large number of eligible entities neglect to claim the R&D credit. One of the biggest drivers for the underutilization is likely a lack of knowledge by both taxpayers and their advisers. Many are unaware of the R&D credit or otherwise believe their business activities are not eligible.

Learn more about R&D tax credits

R&D tax credit consultants: What to expect

You can expect the following when selecting Clarus R+D as your R&D tax credit consultants:

  • Clarus provides a team of professionals with expert credentials able to answer all your R&D tax credit questions. 
  • Our proprietary software streamlines R&D studies which maximizes your ROI.
  • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
  • Clarus has extensive experience in recognizing qualified research activities and expenditures.
  • Our time-proven methodology has yielded maximum benefits to our clients.
  • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
  • We place emphasis on helping growth businesses take advantage of the tax incentive. 
  • Clarus does the work for you; our web-based app allows you to enter information at your own pace. 
  • We have extensive IRS and state audit experience, and provide our clients audit support.
  • We have maintained an exceptional success rate in applying for the R&D tax credit. 
  • We work directly with our clients and their respective accounting firm and payroll processor. 
  • Our process saves valuable time and resources within the engineering and finance departments.
  • Our fees are very competitive.
  • Our performance, success rate, and unparalleled quality of service result in high client loyalty.

Ready to get started?

Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

Schedule a call with Clarus R+D

 

Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

Richard Cumberland / Zupt

 

Share

ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

Back to Blog

California R&D Tax Credit Consultants

R&D Tax Credit | March 15, 2021 | 7 min read
California State Capitol

The federal research and development (R&D) tax credit is one of the best opportunities for California businesses to substantially reduce their tax liability. Many businesses engage in “qualified research” which enables them to reduce their tax liability by taking advantage of the R&D tax credit. Introduced in 1981, the federal R&D tax credit is the largest tax incentive available to California taxpayers. Furthermore, California has a state sponsored R&D tax credit that can be claimed in conjunction with the federal R&D credit. In order for your California business to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities. The best way to learn more about R&D activities and tax credit eligibility is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about R&D tax credits and find out if your California business engages in R&D eligible activities. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

Contact us for additional information

California businesses need to take advantage of the R&D tax credit

The research and development tax credit is a government sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the research and development (R&D) credit became a permanent part of the tax code.

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

Many taxpayers assume the R&D tax credit is available only to major corporations conducting tests in research laboratories. This, of course, is not the case. Businesses of all sizes across many industries are eligible for the incentive as long as they are engaged in qualified research activities. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of businesses that engage in eligible activities is ever-increasing as are the eligible activities that qualify for the credit. More and more California businesses are engaged in qualified research activities making them eligible for the R&D tax credit. Clarus R+D is California R&D tax credit consultant of choice to help your business take advantage of the research and development tax incentive.

Learn how to take advantage of the R&D tax credit

The R&D tax credit and your California business

Businesses in the United States are battling in an intensely competitive global market. Tax incentives, like the research and development tax credit, are designed to protect American jobs and businesses while spurring ingenuity and innovation. The research and development tax credit helps by allowing you to take advantage of tax credits for the work your California business is already doing. Smart businesses are taking those dollars saved via the tax credit and reinvesting in their growth. Many businesses are unaware expenses related to their daily operations could qualify for a dollar-for-dollar tax credit towards their annual income and/or payroll tax liability, irrespective of industry or company size. Additionally, California offers an R&D tax credit that can supplement the federal R&D tax credit.

For most companies, the credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, and there must be a nexus between the expense and qualified project.  

Innovation across the state of California 

Silicon Valley

Silicon Valley is home to the world’s highest ranked technology and startup ecosystem; it is the global center for innovation.  The area is home to many of the world’s technology giants and high tech corporations.  The area hosts nearly 20,000 startups at any given time. 

San Francisco 

Much like the neighboring Silicon Valley, San Francisco is known for its free -spirit and innovation. It is the home to tech companies and startups alike.  San Fransisco’s economy is one of the largest in the United States. Its economy is diverse and is no longer predominated by finance and tourism.  High tech, biotechnology and medical research are the new drivers of the Bay Area economy.  The tech sector’s dominance in the Bay Area is recognized internationally and continues to draw entrepreneurs form all over the globe. 

Los Angeles, San Diego, and Southern California 

The Southern California economy is diverse and includes various sectors such as business and professional services, construction, healthcare, information technology, telecommunications, logistics and transportation, manufacturing, an emerging bio-technology/nanotechnology cluster, clean energy and green technologies –  all of which involve innovation.  San Diego’s economy may be best known for tourism and the military (given its deep sea port,) but it is a hub of telecommunications innovation. Likewise, Los Angeles is best known for the entertainment industry, but it is also the biggest manufacturing hub in the United States.  The manufacturing industry is a significant driver of innovation.  

Work with Clarus to claim your R&D tax credit

Determining R&D tax credit eligibility in California  

What is considered qualified research for purposes of determining California business’ R&D tax credit eligibility? In order to be eligible for the research and development tax credit, your business must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement.

Research activities that qualify for R&D tax credits must be conducted in the U.S (those activities must be conducted in the state of California to be eligible for the state credit). If your California business does any of the following, it likely qualifies for the R&D tax credit:

  • Develops or designs new products or processes
  • Enhances existing products or processes
  • Develops or improves upon existing prototypes and software

Learn how your business can claim the R&D tax credit

Claim the R&D tax credit for your California business

A number of factors go into claiming the credit, but the potential savings on the table make exploring the credit a worthy endeavor. Since the credit may be claimed for current and prior tax years, companies can benefit from documenting their R&D activities to ensure they are positioned to claim the credit in both situations.

To claim the credit, the taxpayer must contemporaneously evaluate and document their research activities to establish the amount of qualified research expenses paid for each qualified research activity. While taxpayers may estimate some research expenses, they must have a factual basis for the assumptions used to create the estimates.

Examples of such documentation include:

  • Payroll records
  • General ledger expense detail
  • Project lists
  • Project notes
  • Other documents a company produces throughout the regular course of business

Contact Clarus R+D for additional information

California Research and Development: The state R&D tax credit

The California state R&D tax credit is among the most robust state tax credit programs in the country. The non-refundable credit is equal to 15% of the incremental qualified research expenses incurred in the state over the calculated base amount, plus 24% of the basic research payments over the base amount paid to independent research institutions and universities. The more notable features of the California R&D tax credit are outlined below. 

  • Expenses must be incurred within the state of California
  • Several states impost a dollar limit to the amount of expenses that can qualify for the the credit.  Some state impose a limit on the number of credits a business can claim in any one year. The California research tax credit has no such limits
  • In California, the definition of qualified organizations includes hospitals run by public universities
  • Tax filing is due with the California tax return
  • The credit may be carried forward indefinitely
  • Taxpayers may elect the alternative incremental credit
  • There is no Alternative Simplified Credit method in California

IRS statistics show that R&D tax credits worth over $12 billion were claimed in 2014. While this sounds significant, a large number of eligible entities neglect to claim the R&D credit. One of the biggest drivers for the underutilization is likely a lack of knowledge by both taxpayers and their advisers. Many are unaware of the R&D credit or otherwise believe their business activities are not eligible.

Learn more about R&D tax credits

R&D tax credit consultants: What to expect

You can expect the following when selecting Clarus R+D as your R&D tax credit consultants:

  • Clarus provides a team of professionals with expert credentials able to answer all your R&D tax credit questions. 
  • Our proprietary software streamlines R&D studies which maximizes your ROI.
  • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
  • Clarus has extensive experience in recognizing qualified research activities and expenditures.
  • Our time-proven methodology has yielded maximum benefits to our clients.
  • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
  • We place emphasis on helping growth businesses take advantage of the tax incentive. 
  • Clarus does the work for you; our web-based app allows you to enter information at your own pace. 
  • We have extensive IRS and state audit experience, and provide our clients audit support.
  • We have maintained an exceptional success rate in applying for the R&D tax credit. 
  • We work directly with our clients and their respective accounting firm and payroll processor. 
  • Our process saves valuable time and resources within the engineering and finance departments.
  • Our fees are very competitive.
  • Our performance, success rate, and unparalleled quality of service result in high client loyalty.

Ready to get started?

Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

Schedule a call with Clarus R+D

 

Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

Richard Cumberland / Zupt

 

Share

ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

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Pennsylvania R&D Tax Credit Consultants

R&D Tax Credit | March 10, 2021 | 6 min read
dome of the Pennsylvania state capitol building

The federal research and development (R&D) tax credit is one of the best opportunities for Pennsylvania businesses to substantially reduce their tax liability. Many businesses engage in “qualified research” which enables them to reduce their tax liability by taking advantage of the R&D tax credit. Introduced in 1981, the federal R&D tax credit is the largest tax incentive available to Pennsylvania taxpayers. Furthermore, Pennsylvania has a state sponsored R&D tax credit that can be claimed in conjunction with the federal R&D credit. In order for your Pennsylvania business to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities. The best way to learn more about R&D activities and tax credit eligibility is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about R&D tax credits and find out if your Pennsylvania business engages in R&D eligible activities. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

Contact us for additional information

Pennsylvania businesses need to take advantage of the R&D tax credit

The research and development tax credit is a government sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the research and development (R&D) credit became a permanent part of the tax code.

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

Many taxpayers assume the R&D tax credit is available only to major corporations conducting tests in research laboratories. This, of course, is not the case. Businesses of all sizes across many industries are eligible for the incentive as long as they are engaged in qualified research activities. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of businesses that engage in eligible activities is ever-increasing as are the eligible activities that qualify for the credit. More and more Pennsylvania businesses are engaged in qualified research activities making them eligible for the R&D tax credit. Clarus R+D is Pennsylvania R&D tax credit consultant of choice to help your business take advantage of the research and development tax incentive.

Learn how to take advantage of the R&D tax credit

The R&D tax credit and your Pennsylvania business

Businesses in the United States are battling in an intensely competitive global market. Tax incentives, like the research and development tax credit, are designed to protect American jobs and businesses while spurring ingenuity and innovation. The research and development tax credit helps by allowing you to take advantage of tax credits for the work your Pennsylvania  business is already doing. Smart businesses are taking those dollars saved via the tax credit and reinvesting in their growth. Many businesses are unaware expenses related to their daily operations could qualify for a dollar-for-dollar tax credit towards their annual income and/or payroll tax liability, irrespective of industry or company size. Additionally, Pennsylvania offers an R&D tax credit that can supplement the federal R&D tax credit.

For most companies, the credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, and there must be a nexus between the expense and qualified project.  

Work with Clarus to claim your R&D tax credit

Determining R&D tax credit eligibility in Pennsylvania 

What is considered qualified research for purposes of determining Pennsylvania business’ R&D tax credit eligibility? In order to be eligible for the research and development tax credit, your business must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement.

Research activities that qualify for R&D tax credits must be conducted in the U.S. If your Pennsylvania business does any of the following, it likely qualifies for the R&D tax credit:

  • Develops or designs new products or processes
  • Enhances existing products or processes
  • Develops or improves upon existing prototypes and software

Learn how your business can claim the R&D tax credit

Claim the R&D tax credit for your Pennsylvania business

A number of factors go into claiming the credit, but the potential savings on the table make exploring the credit a worthy endeavor. Since the credit may be claimed for current and prior tax years, companies can benefit from documenting their R&D activities to ensure they are positioned to claim the credit in both situations.

To claim the credit, the taxpayer must contemporaneously evaluate and document their research activities to establish the amount of qualified research expenses paid for each qualified research activity. While taxpayers may estimate some research expenses, they must have a factual basis for the assumptions used to create the estimates.

Examples of such documentation include:

  • Payroll records
  • General ledger expense detail
  • Project lists
  • Project notes
  • Other documents a company produces throughout the regular course of business

Contact Clarus R+D for additional information

 

Pennsylvania Research and Development: The state R&D tax credit

The Pennsylvania state R&D tax credit very nearly mirrors the federal R&D tax credit.  There are, of course, some differences – the most significant of which are outlined below:

  • Pennsylvania caps its total R&D credit at $55 million ($11 million set aside for qualified small businesses)
  • The credit rate in Pennsylvania is 10% (20% for qualified small businesses)
  • Pennsylvania offers a modified Alternative Simplified Credit
  • Qualified research must take place in Pennsylvania
  • Unused Pennsylvania research credits can be carried forward for fifteen years
  • The Pennsylvania credit cannot be carried back

Eligibility to apply

Taxpayers must meet four criteria in order to submit an application to the Department of Revenue by the September 15 deadline for the R&D tax credit in Pennsylvania:

  • Must be an entity subject to personal income tax or corporate net income tax 
  • Must have research expenses incurred for qualified research and development conducted within Pennsylvania
  • Must be in state tax compliance with the laws and regulations of the Commonwealth as determined by the Department of Revenue
  • Must have at least two years of R&D expenditures 

IRS statistics show that R&D tax credits worth over $12 billion were claimed in 2014. While this sounds significant, a large number of eligible entities neglect to claim the R&D credit. One of the biggest drivers for the underutilization is likely a lack of knowledge by both taxpayers and their advisers. Many are unaware of the R&D credit or otherwise believe their business activities are not eligible.

Learn more about R&D tax credits

R&D tax credit consultants: What to expect

You can expect the following when selecting Clarus R+D as your R&D tax credit consultants:

  • Clarus provides a team of professionals with expert credentials able to answer all your R&D tax credit questions. 
  • Our proprietary software streamlines R&D studies which maximizes your ROI.
  • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
  • Clarus has extensive experience in recognizing qualified research activities and expenditures.
  • Our time-proven methodology has yielded maximum benefits to our clients.
  • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
  • We place emphasis on helping growth businesses take advantage of the tax incentive. 
  • Clarus does the work for you; our web-based app allows you to enter information at your own pace. 
  • We have extensive IRS and state audit experience, and provide our clients audit support.
  • We have maintained an exceptional success rate in applying for the R&D tax credit. 
  • We work directly with our clients and their respective accounting firm and payroll processor. 
  • Our process saves valuable time and resources within the engineering and finance departments.
  • Our fees are very competitive.
  • Our performance, success rate, and unparalleled quality of service result in high client loyalty.

Ready to get started?

Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

Schedule a call with Clarus R+D

 

Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

Richard Cumberland / Zupt

Share

ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

Back to Blog

R&D Tax Credits for the Food & Beverage Industry

R&D Tax Credit | March 10, 2021 | 7 min read
Robots making food

Consumer demands are driving innovation in the food and beverage industry across the globe. A substantial percentage of companies within the food and beverage industry invest in innovation. What many of the food and beverage companies do not realize is that those dollars spent on innovation may make those companies ideal candidates for the research and development tax credit. The R&D tax credit was essentially authorized for the specific purpose of encouraging the research and development of new products and processes. That said, a majority of food and beverage industry companies fail to take advantage of America’s largest tax incentive. In 2016 alone, nearly $16 billion in R&D tax credits were claimed, yet food and beverage companies continue to leave money on the table by not claiming the research and development tax credits made available to them. The primary reasons food and beverage companies aren’t claiming R&D tax credits are they either don’t know the credits exist or don’t believe they qualify to claim the R&D tax credits. The best way to learn whether your food and beverage company activities are R&D tax credit eligible is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about the benefits of the R&D tax credit program or to discuss whether you are eligible to claim the credit. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

Contact us for additional information

Food & beverage industry companies can claim R&D tax credits

Whether your food and beverage company develops or enhances new food products, systems or processes, it has likely engaged in qualifying research activities which would make those activities R&D tax credit eligible.  From microbrewers and distillers to those companies on the frontlines of producing innovations in organic farming, the companies eligible to claim R&D tax credits within the food and beverage industry is increasing. Furthermore, the Covid-19 pandemic has forced the hand of innovation, particularly within the food and beverage industry. as it races to create innovations in the packaging and processing of food to make it safer for both the handler and the consumer. The opportunities for companies to benefit from the credit continue to grow. Clarus R+D has worked with food and beverage companies across the country to help them claim the R&D tax credit. Examples of food and beverage industry activities that may be considered qualified research include:

Food and Beverage

  • Improving the taste, texture, or nutritional content of food product formulations
  • Incorporating new or sustainable ingredients in a formula
  • Producing sample batches in a test kitchen or a pilot run

Manufacturing and Other Processes

  • Developing techniques that will reduce costs and/or improve product consistency
  • Innovation in tracking food waste similar to LeanPath
  • Redesigning processes to comply with new federal or state regulations
  • Improving machinery and equipment to ensure safe handling of food
  • Use of technology to reduce or replace service elements in restaurants

Packaging

  • Creating new packaging to improve shelf life, durability, and/or product integrity
  • Reducing materials or using more environmentally friendly materials in packaging
  • Introducing new or alternative materials to improve packaging
    • Zero waste packaging
    • Self chilling cans
    • Self heating food packaging
    • Compostable packaging 
    • Skin packaging
    • Enhancements in modified atmosphere packaging

Sustainability Efforts

  • Aquaponics
  • Hydroponics
  • Aeroponics
  • Development of Sustainable Future Food Systems
  • Developing processes to convert waste to energy
  • Vertical farming, precision agriculture and the use of drones to enhance production

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

You don’t have to be among the largest food and beverage industry innovators to take advantage of the research and development tax credit. Small food and beverage companies and startups are even eligible to claim the R&D tax credit. In fact, recent changes to the applicable laws have made it easier than ever for more food and beverage companies to take advantage of the R&D tax credit.

Learn how your business can claim the R&D tax credit

Benefits of R&D tax credits for the food and beverage industry

The research and development tax credit is a government-sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the Country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the Research and Development (R&D) credit became a permanent part of the tax code

Many people within the food and beverage industry assume the R&D tax credit is available only to the big innovators within the food and beverage industry. This, of course, is not the case. You don’t have to be as large as Nestle or PepsiCo to be eligible for the credit. A food and beverage company is eligible for the incentive as long as they are engaged in qualified research activities, regardless of the size of their company. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of food and beverage companies who engage in eligible activities is ever-increasing, especially in light of innovations driven by the global pandemic. Clarus R+D is the tax credit consultant of choice to help your food and beverage company take advantage of the research and development tax incentive.

Food and beverage industry companies may be unaware of the tremendous benefits of R&D tax credits. The credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, but there must be nexus between the expense and qualified project. Additionally, most states offer an R&D tax credit that can supplement the federal R&D tax credit.

Schedule a demo with Clarus R+D to learn more

Food and beverage industry innovation and R&D tax credit eligibility

Working with a professional R&D tax credit consultant, like Clarus R+D, is the best way for you to determine your tax credit eligibility. In order to be eligible for the research and development tax credit, your food and beverage industry company must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four-part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement. Research activities that qualify for R&D tax credits must be conducted in the U.S. If your business does any of the following, it likely qualifies for the R&D tax credit:

      • Develops or designs new products or processes
      • Enhances existing products or processes
      • Develops or improves upon existing prototypes and software

Exclusions

Even if your work passes the four-part test, there are a few exclusions to the R&D tax credit. Expenses incurred under the exclusions will not qualify for the incentive. Some of these already appear in the four-part test, including the need to rely on hard sciences. The activity must take place in the U.S. and cannot include routine data collection or market research. Also, activities cannot receive funding from an unrelated third party because your company might not retain ownership of the resulting intellectual property. 

Clarus R+D will work with you to help you understand what is considered qualified research for purposes of determining R&D tax credit eligibility for your food and beverage company.

Learn more about R&D tax credits

R&D tax credits: Food and beverage industry and innovation

There have been significant strides in food and beverage innovations over the last several years. The first innovations that come to mind are those probably related to innovations in sustainability and sustainable agriculture. One can also easily imagine innovations related to manufacturing processes.  What about innovations in your favorite restaurant?  Consider these examples of food and beverage industry innovation that may soon be featured in a restaurant near you.  

  • Use of robots in stocking
  • Drone food delivery
  • Restaurant app expansions
  • Interactive cafe tables
  • Mind reading menus
  • Apps to match food to music
  • Video integrated dining rooms
  • Robot wait staff
  • Multi-sensory dining experiences
  • 3D printing cafes
  • Drone bartenders

The examples of innovation within the food and beverage industry are almost too many to even imagine. Your company’s work on these and other innovations will likely be considered qualified research for R&D tax credit eligibility purposes.  As long as your company activities satisfy the four-part test described above, you may be eligible to claim tax credits for your work.  Clarus R + D will work with you and your team to help determine if your food and beverage industry company is eligible to claim R&D tax credits. 

Contact Clarus R+D for additional information

R&D tax credit consultants: What to expect

Working with a professional R&D tax credit advisor is the best way to determine eligibility and maximize your benefit. Here is what you can expect by selecting Clarus R+D as your R&D tax credit consultants:

      • Clarus R+D provides a team of professionals with expert credentials able to answer all your R&D tax credit questions.
      • Our proprietary software streamlines R&D studies which maximizes your ROI.
      • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
      • Clarus has extensive experience in recognizing qualified research activities and expenditures.
      • Our time-proven methodology has yielded maximum benefits to our clients.
      • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
      • We place emphasis on helping growth businesses take advantage of the tax incentive.
      • Clarus does the work for you; our web-based app allows you to enter information at your own pace.
      • We have extensive IRS and state audit experience and provide our clients with audit support.
      • We have maintained an exceptional success rate in applying for the R&D tax credit.
      • We work directly with our clients and their respective accounting firm and payroll processor.
      • Our process saves valuable time and resources within the engineering and finance departments.
      • Our fees are very competitive.
      • Our performance, success rate, and unparalleled quality of service result in high client loyalty

Learn more about R&D tax credits

Ready to get started?

Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

Schedule a call with Clarus R+D

Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

Richard Cumberland / Zupt

 

Share

ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

Back to Blog

R&D Tax Credits for Computer Science Companies

R&D Tax Credit | March 5, 2021 | 7 min read
Types of computer code

Computer science companies are in the business of innovation. As such, they are ideal candidates for the research and development tax credit. The federal R&D tax credit was essentially authorized for the specific purpose of encouraging the research and development of new products and processes. That said, a majority of computer science companies fail to take advantage of America’s largest tax incentive. In 2016 alone, nearly $16 billion in R&D tax credits were claimed, yet computer science companies continue to leave money on the table by not claiming the research and development tax credits made available to them. The primary reasons computers science companies aren’t claiming R&D tax credits are they either don’t know the credits exist or don’t believe they qualify to claim the R&D tax credits. Computer science companies may also be unaware of some recent changes in the R&D tax credit laws that have expanded the scope of the program so that more taxpayers are able to claim R&D tax credits than ever before. The best way to learn whether your computer science activities are R&D tax credit eligible is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about the benefits of the R&D tax credit program or to discuss whether you are eligible to claim the credit. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

Contact us for additional information

Computer science companies can claim R&D tax credits

Computer science embodies innovation. Computer science is a remarkably young field, yet a revolutionary one. For a substantial period of time, computer science wasn’t event recognized as a field separate from engineering and mathematics. As computers gained popularity, their functionality expanded and a new field was born. Computer science is essentially the science of solving problems with the aid of a computer. It is the the study of computers, algorithmic processes, computation, and all the associated applications and impact of the same. Computer scientists seek innovation and their research activities are perfectly well-suited to take advantage of the R&D tax credit. It is the single largest tax credit available to computer science companies. In order for your computer science company to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities.

Clarus R+D has worked with computer science companies across the country to help them claim the R&D tax credit. Examples of industries that employ computer scientists or engage in computer science activities include:

  • Research companies
  • Large computer and software companies
  • Social media companies
  • The government
  • Large manufacturers
  • Financial service providers

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

You don’t have to be among the largest computer science companies to take advantage of the research and development tax credit. Small computer science companies and startups are even eligible to claim the R&D tax credit. In fact, recent changes to the applicable laws have made it easier than ever for more CS companies to take advantage of the R&D tax credit.

Learn how your business can claim the R&D tax credit

Benefits of R&D tax credits for computer science companies

The research and development tax credit is a government-sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the Country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the Research and Development (R&D) credit became a permanent part of the tax code

Many computer science companies assume the R&D tax credit is available only to the big software development companies. This, of course, is not the case. You don’t have to be as large as Amazon, CSC or Microsoft to be eligible for the credit. A computer science company is eligible for the incentive as long as they are engaged in qualified research activities, regardless of the size of their company. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of computer science companies who engage in eligible activities is ever-increasing; computer science is, by its very nature, innovative. Clarus R+D is your tax credit consultant of choice to help your computer science company take advantage of the research and development tax incentive.

Many computer science companies are unaware of the tremendous benefits of R&D tax credits. The credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, but there must be nexus between the expense and qualified project. Additionally, most states offer an R&D tax credit that can supplement the federal R&D tax credit.

Schedule a demo with Clarus R+D to learn more

Computer science and R&D tax credit eligibility

Working with a professional R&D tax credit consultant, like Clarus R+D, is the best way for you to determine your tax credit eligibility. In order to be eligible for the research and development tax credit, your software development company must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four-part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement. Research activities that qualify for R&D tax credits must be conducted in the U.S. If your business does any of the following, it likely qualifies for the R&D tax credit:

      • Develops or designs new products or processes
      • Enhances existing products or processes
      • Develops or improves upon existing prototypes and software

Exclusions

Even if your work passes the four-part test, there are a few exclusions to the R&D tax credit. Expenses incurred under the exclusions will not qualify for the incentive. Some of these already appear in the four-part test, including the need to rely on hard sciences. The activity must take place in the U.S. and cannot include routine data collection or market research. Also, activities cannot receive funding from an unrelated third party because your company might not retain ownership of the resulting intellectual property. 

Clarus R+D will work with you to help you understand what is considered qualified research for purposes of determining R&D tax credit eligibility for your computer science company.

Learn more about R&D tax credits

R&D tax credits: Computer science and innovation

The field of computer science explores the practical and theoretical aspects of computational processes. Areas of research within the field include algorithms, architecture, artificial intelligence, computer vision, computational biology, concurrency and distributed computing, database systems, machine learning, machine vision, natural language processing, networks, numerical analysis, programming environments, programming languages and methodology, robotics, and theory of computation. Those who know how to create and improve software are highly marketable and are in demand. Here is just a brief list of careers that likely engage in qualified research within the computer science industry.  

  • Data scientist
  • Software tester
  • Web developer
  • Systems analyst
  • Business analyst
  • Product manager
  • Network architect
  • Software engineer
  • Software developer
  • Full-stack developer
  • Engineering manager
  • User interface designer
  • Database administrator
  • Cloud computing engineer
  • Information security analyst
  • Computer science professor
  • Chief information security officer
  • Information technology specialist
  • Software quality assurance manager
  • Mobile application designer or developer
  • Research and development (R&D) scientist
  • Computer scientist or computer science researcher
  • Artificial intelligence and machine learning engineer

In order to be eligible to claim the R&D tax credit, computer science activities must satisfy the four-part test described above. Clarus R + D will work with you and your team to help determine if your computer science company is eligible to claim R&D tax credits. 

Contact Clarus R+D for additional information

R&D tax credit consultants: What to expect

Working with a professional R&D tax credit advisor is the best way to determine eligibility and maximize your benefit. Here is what you can expect by selecting Clarus R+D as your R&D tax credit consultants:

      • Clarus R+D provides a team of professionals with expert credentials able to answer all your R&D tax credit questions.
      • Our proprietary software streamlines R&D studies which maximizes your ROI.
      • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
      • Clarus has extensive experience in recognizing qualified research activities and expenditures.
      • Our time-proven methodology has yielded maximum benefits to our clients.
      • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
      • We place emphasis on helping growth businesses take advantage of the tax incentive.
      • Clarus does the work for you; our web-based app allows you to enter information at your own pace.
      • We have extensive IRS and state audit experience and provide our clients with audit support.
      • We have maintained an exceptional success rate in applying for the R&D tax credit.
      • We work directly with our clients and their respective accounting firm and payroll processor.
      • Our process saves valuable time and resources within the engineering and finance departments.
      • Our fees are very competitive.
      • Our performance, success rate, and unparalleled quality of service result in high client loyalty.

Learn more about R&D tax credits

Ready to get started?

Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

Schedule a call with Clarus R+D

Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

Richard Cumberland / Zupt

 

Share

ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

Back to Blog

R&D Tax Credits for Biotech Companies

R&D Tax Credit | March 4, 2021 | 7 min read
DNA

Biotech companies are in the business of innovation. As such, they are ideal candidates for the research and development tax credit. The federal R&D tax credit was essentially authorized for the specific purpose of encouraging the research and development of new products and processes. That said, a majority of biotech developers and companies fail to take advantage of America’s largest tax incentive. In 2016 alone, nearly $16 billion in R&D tax credits were claimed, yet biotech companies  continue to leave money on the table by not claiming the research and development tax credits made available to them. The primary reasons biotech companies aren’t claiming R&D tax credits are they either don’t know the credits exist or don’t believe they qualify to claim the R&D tax credits. The best way to learn whether your company’s biotech activities are R&D tax credit eligible is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about the benefits of the R&D tax credit program or to discuss whether you are eligible to claim the credit. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

Contact us for additional information

Biotech companies can claim R&D tax credits

The R&D tax credit is the biggest tax incentive available to developers of new biotechnology. Since its introduction in 1981, the R&D tax credit has expanded so that more and more biotech companies are able to claim the tax credits. In order for your biotech company to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities.

Clarus R+D has worked with biotech companies across the country to help them claim the R&D tax credit. Examples of biotechnology activities that may be eligible for the R&D tax incentive include:

  • Developing and testing new pharmaceuticals
  • Design and manufacturing of prototype medical devices, drug delivery systems, or pharmaceutical packaging apparatuses
  • Development and testing new therapies, biologics, or medical compounds
  • Improving existing products to increase shelf life
  • Improving existing products to reduce side effects 
  • Improving existing products to enhance effectiveness
  • Conducting clinical tests to satisfy government regulatory requirements prior to commercialization
  • Support of direct research activities, such as quality testing, maintaining lab equipment, data collection, and regulatory compliance work
  • Design and development of new or improved scaled-up manufacturing processes
  • Designing and developing certain hardware and software systems for use in research and clinical development
  • Developing new uses for existing drugs
  • Designing a new production system or new manufacturing techniques
  • Developing technology for compliance with regulatory requirements
  • Developing technology to produce pharmaceuticals more cost effectively
  •  

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

You don’t have to be among the largest biotech companies to take advantage of the research and development tax credit. Small biotech companies and startups are even eligible to claim the R&D tax credit. In fact, recent changes to the applicable laws have made it easier than ever for more developers of new biotechnology to take advantage of the R&D tax credit.

Learn how your business can claim the R&D tax credit

Benefits of R&D tax credits for biotech companies

The research and development tax credit is a government-sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the Country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the Research and Development (R&D) credit became a permanent part of the tax code

Many biotech companies assume the R&D tax credit is available only to the big biotech companies. This, of course, is not the case. You don’t have to be as large as Moderna or Vertex to be eligible for the credit. A biotech company is eligible for the incentive as long as they are engaged in qualified research activities, regardless of the size of their company. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of biotech developers who engage in eligible activities is ever-increasing; biotechnology is, by its very nature, innovative. Clarus R+D is your tax credit consultant of choice to help your biotech company take advantage of the research and development tax incentive.

Many biotech developers and companies are unaware of the tremendous benefits of R&D tax credits. For most biotech companies, the credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, but there must be nexus between the expense and qualified project. Additionally, most states offer an R&D tax credit that can supplement the federal R&D tax credit.

Schedule a demo with Clarus R+D to learn more

Biotech innovation and R&D tax credit eligibility

Working with a professional R&D tax credit consultant, like Clarus R+D, is the best way for you to determine your tax credit eligibility. In order to be eligible for the research and development tax credit, your biotech company must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four-part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement. Research activities that qualify for R&D tax credits must be conducted in the U.S. If your business does any of the following, it likely qualifies for the R&D tax credit:

          • Develops or designs new products or processes
          • Enhances existing products or processes
          • Develops or improves upon existing prototypes and software

Exclusions

Even if your work passes the four-part test, there are a few exclusions to the R&D tax credit. Expenses incurred under the exclusions will not qualify for the incentive. Some of these already appear in the four-part test, including the need to rely on hard sciences. The activity must take place in the U.S. and cannot include routine data collection or market research. Also, activities cannot receive funding from an unrelated third party because your company might not retain ownership of the resulting intellectual property. 

Clarus R+D will work with you to help you understand what is considered qualified research for purposes of determining R&D tax credit eligibility.

Learn more about R&D tax credits

R&D tax credits: Biotechnology and innovation 

Biotechnology is a broad area of biology. Defined most simply, biotech is the technology of biology. Biotechnology harnesses cellular and biomolecular processes to develop technologies and products that help improve our lives. It is the branch of applied science that utilizes living organisms and their derivatives in order to produce those very products and processes. The production of those products and processes is, in and of itself, innovative. 

The R&D tax credit was introduced as a means to spur innovation. There is, perhaps, no other field that embraces innovation quite like biotechnology. Since biotech encompasses such a broad area of biology, there are many careers within the biotechnology industry where qualified research is likely to occur.  

Examples of careers within the field of biotechnology that might engage in qualified research activities.  

  • Biomedical engineer
  • Environmental engineer
  • Analytical chemist
  • Analytical scientist 
  • Lead drug product engineer
  • Mechanical engineer
  • Process engineer
  • Quality assurance/control
  • Manufacturing
  • Clinical research
  • Software engineering
  • Environmental scientist
  • Sales and technical support
  • Business management
  • Project management
  • Integration manager
  • Quality Assurance/Control 
  • Research Scientist
  • Validation Engineer
  • Epidemiologist
  • Microbiologist
  • R&D scientist

Clarus R + D will work with you and your team to help determine if your biotech activities satisfy the four-part eligibility test and are, therefore eligible.   

Contact Clarus R+D for additional information

R&D tax credit consultants: What to expect

Working with a professional R&D tax credit advisor is the best way to determine eligibility and maximize your benefit. Here is what you can expect by selecting Clarus R+D as your R&D tax credit consultants:

  • Clarus R+D provides a team of professionals with expert credentials able to answer all your R&D tax credit questions.
  • Our proprietary software streamlines R&D studies which maximizes your ROI.
  • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
  • Clarus has extensive experience in recognizing qualified research activities and expenditures.
  • Our time-proven methodology has yielded maximum benefits to our clients.
  • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
  • We place emphasis on helping growth businesses take advantage of the tax incentive.
  • Clarus does the work for you; our web-based app allows you to enter information at your own pace.
  • We have extensive IRS and state audit experience and provide our clients with audit support.
  • We have maintained an exceptional success rate in applying for the R&D tax credit.
  • We work directly with our clients and their respective accounting firm and payroll processor.
  • Our process saves valuable time and resources within the engineering and finance departments.
  • Our fees are very competitive.
  • Our performance, success rate, and unparalleled quality of service result in high client loyalty. 

Learn more about R&D tax credits

Ready to get started?

Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

Schedule a call with Clarus R+D

Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

Richard Cumberland / Zupt

Share

ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

Back to Blog

R&D Tax Credits for Architects

R&D Tax Credit | February 25, 2021 | 7 min read
Windows

Architects are innovators. As such, they are ideal candidates for the research and development tax credit. The R&D tax credit was essentially authorized for the specific purpose of encouraging the research and development of new products, processes, and design. That said, a majority of architects fail to take advantage of America’s largest tax incentive. In 2016 alone, nearly $16 billion in R&D tax credits were claimed, yet architecture firms leave money on the table by not claiming the research and development tax credits made available to them. The primary reasons architects aren’t claiming R&D tax credits are they either don’t know the credits exist or don’t believe they qualify to claim the R&D tax credits. The best way to learn whether your architecture services are R&D tax credit eligible is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about the benefits of the R&D tax credit program or to discuss whether you are eligible to claim the credit. Clarus’ technology-driven solution helps architecture firms fuel their growth with America’s largest tax incentive.

Contact us for additional information

Architects can claim R&D tax credits

The R&D tax credit is the biggest tax incentive available to architects. Since its introduction in 1981, the R&D tax credit has expanded so that more and more architects and software development companies are able to claim the tax credits. In order for your software development company to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities.

Clarus R+D has worked with architects across the country to help them claim the R&D tax credit. Examples of potentially innovative architecture and engineering services that may be eligible for the R&D tax incentive include:

  • Leadership in Energy and Environmental Design (LEED) certification
  • Designing foundation and earthwork for site conditions
  • Developing new or improved designs for structures
  • Developing elevations
  • Developing drawings
  • Developing construction documents
  • Developing new software applications to use internally to interact with customers/vendors
  • Developing preliminary design, development plan
  • Developing preliminary computer-aided design (CAD) modeling and testing
  • Developing schematic designs
  • Developing unique functional and energy-efficient designs
  • Developing a site plan
  • Energy efficiency development
  • Design of building systems
  • Developing a lighting plan
  • Developing innovations through environmental site design/landscaping
  • Design incorporating the use of new materials 
  • Value engineering
  • BIM modeling
  • Design-build construction

I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

Jeff Wilkins / FMX

You don’t have to be among the largest architecture firms to take advantage of the research and development tax credit. Small architecture firms are even eligible to claim the R&D tax credit. In fact, recent changes to the applicable laws have made it easier than ever for more architects to take advantage of the R&D tax credit.

Learn how your business can claim the R&D tax credit

Benefits of R&D tax credits for architects 

The research and development tax credit is a government-sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the Country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the Research and Development (R&D) credit became a permanent part of the tax code

Many architecture firms assume the R&D tax credit is available only to the big firms. This, of course, is not the case. An architect is eligible for the incentive as long as they are engaged in qualified research activities, regardless of the size of their firm. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of architects who engage in eligible activities is ever-increasing; architect services are, by nature, innovative. Clarus R+D is your tax credit consultant of choice to help your architecture firm take advantage of the research and development tax incentive.

Most architects are unaware of the tremendous benefits of R&D tax credits. For most A&E firms, the credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, but there must be nexus between the expense and qualified project. Additionally, most states offer an R&D tax credit that can supplement the federal R&D tax credit.

Schedule a demo with Clarus R+D to learn more

Architects and R&D tax credit eligibility

Working with a professional &D tax credit consultant, like Clarus R+D, is the best way for you to determine your tax credit eligibility. In order for an architect to be eligible to receive the research and development tax credit, the architect’s services must have included activities that are deemed qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four-part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

Permitted Purpose

The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

Elimination of Uncertainty

The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

Process of Experimentation

The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

Technological in Nature

The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement. Research activities that qualify for R&D tax credits must be conducted in the U.S. If your business does any of the following, it likely qualifies for the R&D tax credit:

          • Develops or designs new products or processes
          • Enhances existing products or processes
          • Develops or improves upon existing prototypes and software

Exclusions

Even if your work passes the four-part test, there are a few exclusions to the R&D tax credit. Expenses incurred under the exclusions will not qualify for the incentive. Some of these already appear in the four-part test, including the need to rely on hard sciences. The activity must take place in the U.S. and cannot include routine data collection or market research. Also, activities cannot receive funding from an unrelated third party because your company might not retain ownership of the resulting intellectual property. 

Clarus R+D will work with you to help you understand what is considered qualified research for purposes of determining R&D tax credit eligibility.

Learn more about R&D tax credits

R&D tax credits: Innovative Architectural Design

In order to be eligible to claim the R&D tax credit, architecture and engineering activities must satisfy the four-part test described above. Most of our clients are able to identify innovation that constitutes qualified research in an early development phase. For instance, the American Institute of Architects’ (AIA) standard contract outlines five phases of design that are typically part of the basic services an architect provides. The innovation is generally identified in the schematic design or design development phases.

1. Schematic Design

Schematic design is fairly conceptual in nature. In this phase, an architect will begin to lay out the site, design the interior spaces, and develop basic exterior designs, assuming the project has exterior work. Typically a design professional will prepare a cost estimate as part of this phase. Information regarding the use of the space, programming, is also shared by the owner with the architect during this phase.

2. Design Development 

In this phase, the architect advances the design significantly. The main goal of this phase is to define and develop the important aspects of the project. The exterior, interior layouts, room sizes, and materials are more fully designed. The engineers will more fully develop the HVAC, plumbing, and electrical systems.

3. Construction Documents

In the construction document phase, the architect finalize all the technical design and engineering including structural engineering and detailing, heating air conditioning and ventilation systems, plumbing, electrical, gas, energy calculations, and all products and materials are selected.  All necessary technical information is finalized.

4.  Bidding/Procurement

This stage is self explanatory. The owner begins the process of evaluating and selecting the contractors. During the bidding or procurement phase, an architect will answer contractors’ questions, issue formal clarifications to the drawings or specifications, if necessary, and help evaluate the bids.

5. Construction Administration 

Architects monitor construction to ensure the work is being done according to specifications and that the work is progressing according to schedule. The architect will take photos and write field reports to document the progress, and will also verify that the contractor’s billings accurately reflect the amount of work they’ve done. The architect will also work with the contractor to answer questions and issue formal modifications and corrections to the construction documents,

Clarus R + D will work with you and your team to help determine if your services satisfy the four-part eligibility test and are, therefore eligible for the research and development tax credit.   

Contact Clarus R+D for additional information

R&D tax credit consultants: What to expect

Working with a professional R&D tax credit advisor is the best way to determine eligibility and maximize your benefit. Here is what you can expect by selecting Clarus R+D as your R&D tax credit consultants:

  • Clarus R+D provides a team of professionals with expert credentials able to answer all your R&D tax credit questions.
  • Our proprietary software streamlines R&D studies which maximizes your ROI.
  • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
  • Clarus has extensive experience in recognizing qualified research activities and expenditures.
  • Our time-proven methodology has yielded maximum benefits to our clients.
  • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
  • We place emphasis on helping growth businesses take advantage of the tax incentive.
  • Clarus does the work for you; our web-based app allows you to enter information at your own pace.
  • We have extensive IRS and state audit experience and provide our clients with audit support.
  • We have maintained an exceptional success rate in applying for the R&D tax credit.
  • We work directly with our clients and their respective accounting firm and payroll processor.
  • Our process saves valuable time and resources within the engineering and finance departments.
  • Our fees are very competitive.
  • Our performance, success rate, and unparalleled quality of service result in high client loyalty. 

Learn more about R&D tax credits

    Ready to get started?

    Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

    Schedule a call with Clarus R+D

    Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

    Richard Cumberland / Zupt

    Share

    ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

    Back to Blog

    R&D Tax Credits for Software Developers

    R&D Tax Credit | February 23, 2021 | 7 min read
    Mind with Numbers

    Software developers are in the business of innovation. As such, they are ideal candidates for the research and development tax credit. The R&D tax credit was essentially authorized for the specific purpose of encouraging the research and development of new products and processes. That said, a majority of software developers or software development companies fail to take advantage of America’s largest tax incentive. In 2016 alone, nearly $16 billion in R&D tax credits were claimed, yet software developers continue to leave money on the table by not claiming the research and development tax credits made available to them. The primary reasons software developers aren’t claiming R&D tax credits are they either don’t know the credits exist or don’t believe they qualify to claim the R&D tax credits. Software developers may also be unaware of some recent changes in the R&D tax credit laws that have expanded the scope of the program so that more taxpayers are able to claim R&D tax credits than ever before. The best way to learn whether your software development activities are R&D tax credit eligible is to work with an experienced and well-qualified R&D tax credit consultant. Schedule a free consultation with Clarus R+D to learn more about the benefits of the R&D tax credit program or to discuss whether you are eligible to claim the credit. Clarus’ technology-driven solution empowers companies to fuel their growth with America’s largest tax incentive.

    Contact us for additional information

    Software developers can claim R&D tax credits

    The R&D tax credit is the biggest tax incentive available to software developers. Since its introduction in 1981, the R&D tax credit has expanded so that more and more software developers and software development companies are able to claim the tax credits. In order for your software development company to be eligible to qualify for the R&D tax credit, it must engage in certain qualified research activities.

    Clarus R+D has worked with software developers across the country to help them claim the R&D tax credit. Examples of software development activities and innovations eligible for the R&D tax incentive include:

    • Programming software source code
    • Designing and developing the structural software architecture
    • Application design and testing
    • Establishing electronic interfaces and functional relationships between various software modules
    • System software development 
    • Evaluating and establishing functional specifications
    • Conducting unit, integration, functional, performance and regression testing
    • Compiling and testing source code
    • Developing new or improved technologies
    • Alpha/Beta testing

    I encourage any entrepreneur or company with significant dev expenses to pursue the R&D tax credit. The ROI compared to the amount of time spent is worth it.

    Jeff Wilkins / FMX

    You don’t have to be among the largest software developer companies to take advantage of the research and development tax credit. Small software developers and startups are even eligible to claim the R&D tax credit. In fact, recent changes to the applicable laws have made it easier than ever for more software developers to take advantage of the R&D tax credit.

    Learn how your business can claim the R&D tax credit

    Benefits of R&D tax credits for software developers

    The research and development tax credit is a government-sponsored tax incentive available to companies who conduct research and development within the United States. The credit was implemented as a Congressional response to the decline in research spending which negatively impacted the Country’s economic growth, productivity gains, and overall global competitiveness. The R&D tax credit was initially implemented in 1981 and has since been reauthorized several times. In 2015, when the Protecting Americans from Tax Hikes (PATH) Act was adopted, the Research and Development (R&D) credit became a permanent part of the tax code

    Many software developers assume the R&D tax credit is available only to the big software development companies. This, of course, is not the case. You don’t have to be as large as Microsoft or IBM to be eligible for the credit. A software developer is eligible for the incentive as long as they are engaged in qualified research activities, regardless of the size of their company. Under the current tax code, any company that develops or improves products or processes may be eligible for the credit. The number of software developers who engage in eligible activities is ever-increasing; software development is, by its very nature, innovative. Clarus R+D is your tax credit consultant of choice to help your software development company take advantage of the research and development tax incentive.

    Many software developers are unaware of the tremendous benefits of R&D tax credits. For most software development companies, the credit is worth 7-10% of qualified research expenses. This is a dollar-for-dollar credit against taxes owed. Plus, it carries forward 20 years. For startups, applying the credit against payroll taxes is a valuable, non-dilutive funding opportunity. Eligible expenses for the R&D tax credit include U.S.-based wages, contracting, and supply costs. Most typically, wages are the largest qualified expense, but there must be nexus between the expense and qualified project. Additionally, most states offer an R&D tax credit that can supplement the federal R&D tax credit.

    Schedule a demo with Clarus R+D to learn more

    Software development and R&D tax credit eligibility

    Working with a professional R&D tax credit consultant, like Clarus R+D, is the best way for you to determine your tax credit eligibility. In order to be eligible for the research and development tax credit, your software development company must engage in qualified research. Qualified research generally is private sector or commercially driven development intended to yield innovation within a scientific or technological field. The following four-part test determines whether an activity is considered qualified research and, thus, eligible for the R&D tax credit.

    Permitted Purpose

    The purpose of the activity or project must be to create new (or improve existing) functionality, performance, reliability, or quality of a business component. A business component is defined as any product, process, technique, invention, formula, or computer software that the taxpayer intends to hold for sale, lease, license, or actual use in the taxpayer’s trade or business.

    Elimination of Uncertainty

    The taxpayer must intend to discover information that would eliminate uncertainty concerning the development or improvement of the business component. Uncertainty exists if the information available to the taxpayer does not establish the capability of development or improvement, method of development or improvement, or the appropriateness of the business component’s design.

    Process of Experimentation

    The taxpayer must undergo a systematic process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities. Treasury Regulations define this as broadly as conventional implementation of the scientific method to something as informal as systematic trial and error process.

    Technological in Nature

    The process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement. Research activities that qualify for R&D tax credits must be conducted in the U.S. If your business does any of the following, it likely qualifies for the R&D tax credit:

        • Develops or designs new products or processes
        • Enhances existing products or processes
        • Develops or improves upon existing prototypes and software

    Exclusions

    Even if your work passes the four-part test, there are a few exclusions to the R&D tax credit. Expenses incurred under the exclusions will not qualify for the incentive. Some of these already appear in the four-part test, including the need to rely on hard sciences. The activity must take place in the U.S. and cannot include routine data collection or market research. Also, activities cannot receive funding from an unrelated third party because your company might not retain ownership of the resulting intellectual property. 

    Clarus R+D will work with you to help you understand what is considered qualified research for purposes of determining R&D tax credit eligibility.

    Learn more about R&D tax credits

    R&D tax credits: Understanding the software development life cycle

    In order to be eligible to claim the R&D tax credit, software development activities must satisfy the four-part test described above. In general, software development follows a seven part life cycle described more fully below.  

    1. Planning

    In a software development project, planning comes first. Typically, the outputs from the planning stage include project plans, cost estimations, and the identification of procurement requirements

    2. Feasibility or requirements analysis 

    The second phase in a software development project is where businesses will work on the source of their problem or the need for a change. This is where a system analysis is conducted to determine a business’s needs, define how those needs can be met, and identify responsible parties.   These activities related to gathering requirements and analysis likely qualify as R&D:

    • Gathering Detailed Information
    • Defining Requirements
    • Prioritizing Requirements
    • Developing User-Interface (UI) Dialogs
    • Defining Functional Requirements

    3. Systems Design and Prototyping

    The third phase describes, in detail, the necessary specifications, features and operations that will satisfy the functional requirements of the proposed system which will be in place. This is the step for end users to discuss and determine their specific business information needs for the proposed system.

    4. Software Development

    The fourth phase is when the real work begins—in particular, when a programmer, network engineer and/or database developer are brought on to do the major work on the project. Software development turns your project’s requirements and prototypes into working code.

    5. Software Testing

    The fifth phase involves systems integration and system testing (of programs and procedures)—normally carried out by a Quality Assurance (QA) professional—to determine if the proposed design meets the initial set of business goals.

    Testers check for:

    • Code quality
    • Code meets the stated requirements
    • Code performs per the specifications
    • Evidence of secure development principals

    6. Implementation and Integration

    The sixth phase of the software development life cycle involved the deployment of code on a server or its integration across multiple systems.  

    7. Operations and Maintenance 

    The seventh and final phase involves maintenance and regular required updates. This step is when end users can fine-tune the system, if they wish, to boost performance, add new capabilities or meet additional user requirements. In the operations and maintenance phase, developers watch software for bugs or defects.

    Clarus R + D will work with you and your team to help determine if your software development activities  satisfy the four-part eligibility test and are, therefore eligible.   

    Contact Clarus R+D for additional information

    R&D tax credit consultants: What to expect

    Working with a professional R&D tax credit advisor is the best way to determine eligibility and maximize your benefit. Here is what you can expect by selecting Clarus R+D as your R&D tax credit consultants:

        • Clarus R+D provides a team of professionals with expert credentials able to answer all your R&D tax credit questions.
        • Our proprietary software streamlines R&D studies which maximizes your ROI.
        • Clarus has expert knowledge of the IRS regulations relating to the research and development tax credit, IRC Section 41, as well as the regulations pertaining to state-specific research and development credits.
        • Clarus has extensive experience in recognizing qualified research activities and expenditures.
        • Our time-proven methodology has yielded maximum benefits to our clients.
        • The Clarus team has helped hundreds of clients claim millions in R&D tax credits.
        • We place emphasis on helping growth businesses take advantage of the tax incentive.
        • Clarus does the work for you; our web-based app allows you to enter information at your own pace.
        • We have extensive IRS and state audit experience and provide our clients with audit support.
        • We have maintained an exceptional success rate in applying for the R&D tax credit.
        • We work directly with our clients and their respective accounting firm and payroll processor.
        • Our process saves valuable time and resources within the engineering and finance departments.
        • Our fees are very competitive.
        • Our performance, success rate, and unparalleled quality of service result in high client loyalty.

    Learn more about R&D tax credits

    Ready to get started?

    Schedule a free consultation with our team of experts to learn more. We’ll discuss the R&D tax credit and help you determine if our solution is a fit for your company.

    Schedule a call with Clarus R+D

    Clarus R+D gave us tremendous ROI. Easy software. Helpful people. Reasonable fees.

    Richard Cumberland / Zupt

     

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    ABOUT CLARUS R+DWith custom software backed by a team of tax experts, Clarus R+D specializes in tax credits for growth businesses. Our technology-driven solution simplifies the process, maximizes benefit, and ensures compliance. We partner with accounting firms, financial advisors, investors, payroll providers, and more.

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