For those businesses looking to stay ahead of the curve, there’s a certain incentive to keep you going. The federal R&D Tax Credit has sweetened the deal even more – now reaching more companies in more industries. That includes you, Florida.
Surprisingly enough, only one in twenty eligible businesses actually apply for the R&D tax credits. Which means many of these businesses are missing out on valuable funds to continue to grow and succeed. Did we mention it’s mostly those small to medium sized companies that are unfamiliar with the ins-and-outs of claiming the tax credits.
Our team at Swanson Reed acts as a guiding light through the confusion and technicalities of applying for those lucrative tax credits so businesses of all sizes are able to reap the rewards of their R&D investments.
To shed a little bit more light here are the top five (5) tips to help your Florida business thrive and squeeze out every last tax dollar they deserve.
Don’t overlook your business’ activity: Most people associate R&D with mad professors in lab coats however the Florida Tax Credit covers all manner of R&D – including mad scientists. Companies from industries as diverse as software/technology, manufacturing, agriculture, architecture, engineering and contracting (electrical, mechanical, etc.) can qualify and start applying for federal and state R&D credits.
Identify all qualifying activities: So if R&D tax incentives are so expansive, what kinds of activities make businesses from so many industries eligible? Well, if a company engages in practical problem-solving or experimentation to improve a product or process, there is a good chance they qualify. When it comes to R&D, applied sciences definitely count and the trial-and-error experimentation that occurs on the factory floor or the modeling and prototyping taking place behind a computer screen are as eligible as any other activity. For businesses making even the simplest of improvements to their products or processes, there can be substantial tax benefits, so it’s wise to consider all of your qualifying activities.
Take advantage of every R&D credit coming your way: Remember your state’s R&D credit when applying for the federal incentive, particularly considering eligibility for the state credit depends in part on if you have received federal credits. It is important to note that Florida’s R&D incentive sets a $9 million cap on the amount of credits it distributes in a given year. Assuming a company meets qualifications, the Florida credit works on a first-in, best-dressed notion; meaning all web-based applications must be submitted the day the Florida Department of Revenue begins accepting applications. So it’s important to have someone on your side to get those application in quick smart.
Keep up with the latest laws and regulations: The Department of Treasury recently announced regulations that will allow businesses to take the Alternative Simplified Credit (ASC) on amended returns, a regulatory change that will allow thousands of small and medium businesses to take further advantage of the federal R&D Tax Credit. Follow the Swanson Reed Knowledge Center to keep up to date with state and federal legislation.
Work with a consultant: With so many constant policy changes occurring to an already complex section of the tax code, it can be difficult for businesses to keep up with every individual change. Qualifying for R&D requires both technical industry knowledge and experts familiar with such a specialized section of the tax code. To maximize your results, seek the services of a Swanson Reed adviser with expertise in both areas.
