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Turning compost into compostable bioplastics: the startup that’s changing the cycle of waste

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Plastic. We use it in virtually everything from our toys, cooking ware, food packaging, and all else in-between. But proper disposal of oil-based plastics  is an ongoing challenge, especially given its harmful effects on the environment. Not only does plastic production take up energy and resources, the product itself does not biodegrade but simply breaks down into smaller and smaller pieces, making it poisonous for wildlife consumption and our ecosystem by extension. In recent years, scientists and entrepreneurs have explored developing bioplastics as alternatives to oil-based ones. While the bioplastic industry currently only accounts for 1% of global plastics production, it is quickly expanding and is expected to grow to a worth of $7.2 billion by 2022.

Bioplastics are made from polyhydroxyalkanoates (PHAs) which are produced in nature by microorganisms, such as by bacterial fermentation of sugars and lipids. When disposed, these plastics degrade faster than plastic. However, there is still confusion among consumers about the limits of bioplastics and what constitutes as “biodegradable”. For many, there is a misconception that “biodegradable” means these plastics degrade quickly and can be disposed anywhere. As Rob Opsomer from the Ellen MacArthur Foundation told The Guardian, “It is important that any claims made for these products are really clear, so people won’t be throwing things on the street because they think it will degrade. It won’t.” Jo Ruxton, co-founder of Plastic Oceans, asserted that some of these bioplastics are as harmful in the ocean as oil-based plastics: “They can be mistaken for food and ingested. They can entangle animals. They can do everything that plastic does – they just don’t last as long.”

One company in California, Full Cycle Bioplastics, is working to improve bioplastics. Twin brothers Jeff and Dane Anderson has successfully tested a PHA technique to convert organic waste like food scraps into fully compostable material. In other words, not only is it able to biodegrade, the bioplastic is literally made from compost. Jeff Anderson, the COO of the company, said, “PHA [plastic] is extremely compostable and it’s also marine degradable. Meaning if it ever falls into the ocean it actually acts as fish food and has no toxic effects.” While not yet in full-scale production, Full Cycle Bioplastics presents an improvement to a common problem posed not only by oil-based plastics but also bioplastics. It is cheaper than other bioplastics because it’s made from organic waste and not more costly sources like algae or shrimp. While bioplastics are a good start, there still needs to be a shift in the culture.  According to The Guardian, these bioplastics “may simply help to perpetuate the disposable culture at the root of our waste crisis.”

Are you experimenting with ways to improve bioplastics or to change how plastics are disposed? Your experiments, even the unsuccessful ones, could qualify for the R&D Tax Credit and you could receive up to 14% of your research expenses. To find out more, please contact a Swanson Reed R&D Specialist today or check out our free online eligibility test.

Swanson Reed regularly hosts free webinars and provides free IRS CE credits as well as CPE credits for CPA’s.  For more information please visit us at www.swansonreed.com/webinars or contact your usual Swanson Reed representative.

 

Saving Lives with Smartphone Apps: Earthquakes in California and Mexico

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Two powerful earthquakes struck Mexico earlier this month, ravaging the country and resulting in hundreds of casualties. Thankfully, fewer lives were lost compared to 1985’s earthquake that claimed thousands of lives and billions of dollars in damages. Smartphone apps may have been a contributing factor.

After 1985, the Mexican Seismic Alert System (Sasmex) was developed, an alert system detecting seismic tremors along the Western coast and sending at least a minute’s notice to residents of an impending quake via radio and television. Sasmex has since connected to smartphone apps like Sismos Mexico and Earthquake Alert, improving its speed and accessibility. The sooner the warning reaches residents, the faster they can safely take cover.

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California company spends US$24 Million on R&D

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SunPower is a US high-efficiency PV cell and module producer. The company has recently invested approximately US$25 million over the past 12-months towards a research and development and pilot line facility located at its headquarters in San Jose, California.

The facility includes several high-volume production-sized manufacturing tools and automation, and specialized testing equipment, designed to support its next generation of high efficiency N-type monocrystalline IBC (Interdigitated Back Contact) solar cells and modules, which are being designed with greater emphasis on lower cost manufacturing.

SunPower places significant emphasis on producing the world’s best solar panels with technology developed and tested in Silicon Valley. In addition to this, SunPower also facilitates significant job creation, capital investment opportunities from equipment manufacturers and deals, and more affordable solar energy options for homes and businesses worldwide.

SunPower had the second highest expenditure from a basket of module manufacturers analysed in 2016, investing US$116.1 million, which is up from $99 million in 2015. Although the company’s R&D staffing levels did slightly fall from 449 in 2015 to 406 in 2016, the job opportunities to be created from the new R&D facility will significantly increase this number once again.

An R&D Tax credit can significantly support a business to further develop its research. If you would like to find out more about R&D tax and whether your company may qualify for an R&D tax credit, contact a Swanson Reed R&D tax specialist today, we look forward to speaking with you.

The Best and Worst CyberStates for 2017

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The Computing Technology Industry Association (CompTIA) is a leading not-for-profit technology association. Their 18th edition of the Cyberstates report aims to provide a representation of the size and scope of the US tech sector. The report analyses the industry and workforce by state and uses metrics such as tech patents, venture capital funding, business establishments and job postings.

Here is a summary of the results by state:

Tech Industry Employment

There were around 6.9 million US tech workers in 2016, up from 6.7 million in 2015.

Top 5

  1. California
  2. Texas
  3. New York
  4. Florida
  5. Massachusetts

Bottom 5

  1. Wyoming
  2. South Dakota
  3. Alaska
  4. North Dakota
  5. Montana

Tech Patents Granted

Top 5

  1. California
  2. Texas
  3. Washington
  4. New York
  5. Massachusetts

Bottom 5

  1. Alaska
  2. South Dakota
  3. Mississippi
  4. Montana
  5. West Virginia

Innovation Score Per Capita

The number of tech startups and new tech establishments grew to 36,508 in 2015. Many were IT services covering data processing, hosting and web search portals.

Top 5

  1. California
  2. Massachusetts
  3. Washington
  4. Colorado
  5. New Jersey

Bottom 5

  1. West Virginia
  2. Mississippi
  3. Arkansas
  4. South Dakota
  5. Ohklahoma

Tech Gross State Produce (GSP) As A Percent of Total State Product (in billions)

Top 5

  1. Oregon
  2. Washington
  3. Massachusetts
  4. California
  5. Colorado

Bottom 5

  1. Wyoming
  2. Louisiana
  3. Oklahoma
  4. Mississippi
  5. West Virginia

Average Tech Industry Wages Rank

The average tech sector wage was 105 percent higher than the average national wage of $53,130 in 2016.

Top 5

  1. California
  2. Washington
  3. Massachusetts
  4. New Jersey
  5. New York

Bottom 5

  1. South Dakota
  2. Mississippi
  3. Wyoming
  4. West Virginia
  5. Montana

The full report is available at Cyberstates.

US tech companies undertaking qualified activities can apply for the state and/or federal R&D tax credit. To check whether your projects meet the necessary criteria, contact a Swanson Reed representative today.

Manufacturing company expands R&D center in CA

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The organic flavor and ingredient manufacturer, Blue Pacific Flavors, has announced the opening of it’s expanded research and development laboratory, named the Flavor Creation and Culinary Innovation Center.

Blue Pacific develops natural, organic and organic compliant fruit and sweet flavors for a broad range of food applications. The expanded lab will handle all product development and flavor creation for the company’s global operations in the U.S and Asia.

The company’s initial space has been doubled to 3,100 square feet in the expansion and a total of $1.5M has been invested. The expanded R&D center aims to increase the company’s application, creation, sensory testing and compliance capabilities for natural and organic flavor and finished food development. It will consists of labs, quality assurance offices, quality control spaces, regulatory and product safety areas and space for new equipment.

The center is a collaborative space for Blue Pacific Flavors clients to create clean-label, plant-based, natural and organic food and beverage applications. The company’s vision was to build a world-class innovation center, which would be the core of the organization. This is a reflection of the food manufacturing renaissance taking place in Southern California and the company’s commitment to meet the needs of a growing organic flavors business.

The company has already hired a substantial amount of staff in regulatory and quality control and has plans to hire for additional positions in R&D for its next phase of investment.

An R&D Tax incentive can significantly support a business to further develop its research. To find out more about R&D and to determine whether your business is eligible for a tax credit, contact a Swanson Reed R&D Tax Advisor today.

Top States for Doing Business 2016

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How does your state rank for doing business? CNBC ranked all 50 states for business using a range of publicly available data.  They used a points-based system for each of the 10 categories of competitiveness.

Here are the results:

Workforce

Rating based on education level of the workforce, the numbers of available employees, and the states’ demonstrated abilities to retain college-educated workers.

Top 5

  1. Colorado
  2. Massachusetts
  3. Virginia
  4. North Dakota
  5. Arizona

Bottom 5

  1. Maine
  2. Missouri
  3. Hawaii
  4. Vermont
  5. Kentucky

Cost of Doing Business

Rating based on the competitiveness of each state’s tax climate, as well as state-sponsored incentives that can lower the cost of doing business. Utility costs can add up to a huge expense for business, and they vary widely by state. Also considered was the cost of wages, as well as rental costs for office and industrial space.

Top 5

  1. Indiana
  2. Iowa
  3. Mississippi
  4. South Dakota
  5. Kentucky

Bottom 5

  1. Hawaii
  2. California
  3. Maryland
  4. Connecticut
  5. Massachusetts

Infrastructure

Rating based on the vitality of each state’s transportation system by the value of goods shipped by air, waterways, roads and rail. The availability of air travel in each state, the quality of the roads and bridges, and the time it takes to commute to work was taken into account, as was the condition of each state’s drinking water and wastewater systems.

Top 5

  1. Indiana
  2. Tennessee/Texas
  3. Tennessee/Texas
  4. Georgia
  5. Minnesota

Bottom 5

  1. Rhode Island
  2. New Hampshire
  3. Maine
  4. Connecticut
  5. Hawaii

Economy

Rating based on economic growth, job creation, consumer spending, and the health of the residential real estate market. Each state’s fiscal health was measured by looking at its credit ratings and outlook, as well as its overall budget picture. Also considered was the number of major corporations headquartered in each state.

Top 5

  1. Texas
  2. Colorado
  3. Utah
  4. Florida
  5. Oregon

Bottom 5

  1. Mississippi
  2. Maine
  3. Alabama
  4. West Virginia
  5. Louisiana

Quality of Life

Rating based on livability, including several factors, such as the crime rate; inclusiveness, such as antidiscrimination protections; the quality of health care; the level of health insurance coverage and the overall health of the population. Also evaluated were local attractions, parks and recreation, as well as environmental quality.

Top 5

  1. Hawaii
  2. Minnesota
  3. Vermont
  4. New Hampshire
  5. Maine

Bottom 5

  1. Arkansas
  2. Missouri
  3. Oklahoma
  4. Louisiana
  5. Tennessee

Technology and Innovation

Rating based on support for innovation, the number of patents issued to their residents and the record of high-tech business formation. Also considered were federal health, science and agricultural research grants to the states.

Top 5

  1. Washington
  2. California
  3. Massachusetts
  4. New York
  5. Maryland

Bottom 5

  1. Mississippi
  2. West Virginia
  3. Wyoming
  4. Arkansas
  5. Louisiana

Education

Rating based on the number of higher-education institutions in each state, as well as long-term funding trends for higher education. Also evaluated were several measures of K–12 education, including test scores, class size and spending, as well as digital and lifelong learning opportunities in each state.

Top 5

  1. Massachusetts
  2. Minnesota
  3. Wyoming
  4. Illinois
  5. Virginia

Bottom 5

  1. Nevada
  2. Idaho
  3. Mississippi
  4. Arizona
  5. Alabama

Business Friendliness

Rating based on the freedom each state’s legal and regulatory frameworks provide for business.

Top 5

  1. New Hampshire
  2. South Dakota
  3. Virginia
  4. North Dakota
  5. Idaho

Bottom 5

  1. California
  2. West Virginia
  3. Illinois
  4. Mississippi
  5. Hawaii

Cost of Living

Rating based on cost of housing, food and energy.

Top 5

  1. Mississippi
  2. Kentucky
  3. Arkansas
  4. Alabama
  5. Tennessee

Bottom 5

  1. Hawaii
  2. New York
  3. Delaware
  4. California
  5. Connecticut

Access to Capital

Rating based on venture capital investments by state, as well as small-business lending on a relative basis.

Top 5

  1. Illinois
  2. North Carolina
  3. California
  4. Michigan
  5. New Jersey

Bottom 5

  1. Wyoming
  2. Vermont
  3. West Virginia
  4. Delaware
  5. New Mexico

Many US businesses can take advantage of the state and/or federal R&D tax credit. Please contact a Swanson Reed representative to find out what is available in your state and whether your business qualifies.

U.S. Universities Spending More on Research and Development

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U.S. universities are spending more and more on R&D these days. In 2015 alone, colleges and universities spent a combined $68.8 billion on research and development with the top 20 colleges accounting for 30% of that.

To discover the universities spending the most in research and development, 24/7 Wall St. assessed R&D expenditure by university for the 2015 fiscal year with data from the National Science Foundation. Of the 1,871 major colleges and universities reviewed, 10 schools spent more than $1 billion on R&D.

Top 10 Universities for R&D Expenditure

  1. Johns Hopkins University in Baltimore, Maryland
    • Annual R&D spend: $2.31 billion
  2. University of Michigan
    • Annual R&D spend: $1.37 billion
  3. University of Washington
    • Annual R&D spend: $1.18 billion
  4. University of California, San Francisco
    • Annual R&D spend: $1.13 billion
  5. University of California, San Diego
    • Annual R&D spend: $1.10 billion
  6. University of Wisconsin – Madison
    • Annual R&D spend: $1.07 billion
  7. Duke University in Raleigh, North Carolina
    • Annual R&D spend: $1.04 billion
  8. Stanford University in Stanford, California
    • Annual R&D spend: $1.02 billion
  9. University of California, Los Angeles
    • Annual R&D spend: $1.02 billion
  10. Harvard University in Cambridge, Massachusetts
    • Annual R&D spend: $1.01 billion

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If your company is conducting R&D through a local university or college, you may be eligible for a higher R&D tax credit rate. Contact a Swanson Reed specialist to find out more information.

How Does Your State Rank on the Innovation Scale?

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Innovation Is Key

Innovation is crucial to sustainable economic growth, but for innovation to occur businesses must have both the incentive and the capacity to invest.

As innovation is key to the United States’ economy as a whole, many U.S. states are showing off while others are falling short when it comes to patents, R&D, venture capital and academics.

So which states are excelling in innovation and which ones are lacking, you ask?

Patents

The top states in patents per population include:

  1. Wisconsin
  2. Washington
  3. Texas
  4. Utah
  5. California
  6. Massachusetts

The bottom five patented states include:

  1. Alaska
  2. Mississippi
  3. Tennessee
  4. West Virginia
  5. Wyoming

Venture Capital

The top states for venture capital are:

  1. Massachusetts
  2. California
  3. Utah
  4. Washington
  5. Colorado

The lowest are:

  1. Arkansas
  2. Alaska
  3. Hawaii
  4. Wyoming
  5. Iowa
  6. South Dakota

R&D Spending

The leaders in R&D spending are:

  1. Delaware
  2. Michigan
  3. California
  4. Connecticut
  5. Massachusetts

The states that spent the least on R&D include:

  1. Arkansas
  2. Wyoming
  3. Louisiana
  4. Alaska
  5. Mississippi

Academics

As for academics, the top states include:

  1. New Mexico
  2. Maryland
  3. Rhode Island
  4. Massachusetts
  5. Alabama

The lowest academic rankings were for:

  1. Louisiana
  2. Arkansas
  3. Delaware
  4. Wyoming
  5. Nevada

If you are a U.S. based company conducting R&D you may be eligible for the federal and/or state research tax credit. Please contact a Swanson Reed representative to find out further information.

How wineries can utilize the R&D tax credit

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Estimated at more than $12 billion annually, the research and development (R&D) tax credit is one of the biggest tax incentives available to businesses. The potential tax savings for wineries could be in the hundreds of thousands of dollars. However, many Californian wineries are missing out, with some completely unaware of the credit’s existence.

Wineries that fail to realize the maximum benefits of the R&D tax credit often do so because of a lack of understanding about what activities qualify as research, what expenditures qualify and what documentation is required to substantiate their claims.

Can you use this credit?

Understanding what classifies as qualified research is the starting point for any company looking to claim the credit. Eligibility can often quickly and easily be estimated by answering simple questions in the IRS’ four-part test:

1. Elimination of uncertainty. You must demonstrate that you’ve attempted to eliminate uncertainty about the development or improvement of a product or process.

2. Process of experimentation. You must demonstrate — through modeling, simulation, systematic trial and error, or other methods — that you’ve evaluated alternatives for achieving the desired result.

3. Technological in nature. The process of experimentation must rely on the hard sciences, such as engineering, physics, chemistry, biology and/or computer science.

4. Qualified purpose. The purpose of the research must be to create a new or improved product or process, resulting in increased performance, function, reliability or quality.

Documenting activities and expenses

Eligible expenses for the R&D tax credit are wages (as reported on Form W-2, box 1), supplies used in the research process, and contractor expenses that would be eligible if the same services were performed in-house.

After identifying qualified research, it’s critical to document the activities and demonstrate a connection between your qualified activities and your eligible expenses. The importance of this documentation cannot be overstated. Accurately tracking qualified activities and their related expenses can help your company realize the full benefit of the R&D tax credit.

Your company may already be documenting its R&D efforts, in which case it may just be a matter of improving the records you keep or making adjustments to your documentation processes to ensure that you capture the records necessary to properly support the tax credit.

Examples could include project notes, lab reports, emails or other documents that help demonstrate how your activities meet the four-part test.

Using the R&D tax credit

Companies that are not currently taxable should still take advantage of the R&D tax credit, since the federal credit can be carried back one year and forward 20 years. And many state R&D tax credit programs also have lengthy carry forward provisions.

Certain elections must be made on your tax returns, and it’s much easier to collect documentation and support for credits identified and claimed contemporaneously than to look back and do so historically. Recently, the R&D credit was enhanced and made permanent.

One enhancement allows eligible small businesses to use their credits to offset the alternative minimum tax, and another allows qualified small businesses to use up to $250,000 in credits against their payroll taxes. Both enhancements are a windfall for companies and business owners who haven’t been able to use their credits in the past.

 The amount of R&D tax credit that wineries can claim will depend on many factors, but the potential tax savings make it well worth the time it takes to investigate. Companies that haven’t previously taken advantage of the credits can look back to all open tax years — typically three to four years — to claim the missed opportunity.

A Tax Credit to Benefit the Wine Industry

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The age old question: to wine or not to wine?

While the answer is always “yes” to wine, the Research and Development (R&D) tax credit should be giving winemakers (and wine drinkers) even more reason to celebrate.

The R&D tax credit could be making Northern California Wineries hundreds of thousands of dollars in tax credits each year, many winemakers are failing to even realize its existence. Those that are aware of the credit are unsure of its meaning and eligibility requirements.

Any company within in any industry is eligible for the credit if they substantiate their activities and satisfy the 4-part test.

With our video database, it is easy to understand the credit. The specialists at Swanson Reed have also put together case studies outlining real business situations and explaining how and why these businesses qualify for the credit.

If you’re a winemaker then the manufacturing and food beverage case studies should be of great help.

Want to find out if you are eligible for the tax credit? Click here

Are you a start-up business that is conducting in R&D, but just hasn’t made a profit yet? No problem, click here.

Our specialists at Swanson Reed are always on hand to discuss the best options for you and your business. Contact us now to learn more about the tax credit and your opportunities.