Benefits of R&D Tax Credits & Cost Segregation in Manufacturing [Webinar]

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Undeniably, the manufacturing sector has a large footprint in the U.S. economy. It employed 12.0 million workers in 2013, equating to 8.8 percent of total U.S. employment. In particular, the manufacturing sector plays a key role in the evolution of innovation and the sector remains a critical force in both advanced and developing economies. However, many innovative manufacturing companies are unaware of the potential cash-saving tax benefits they are eligible for.

Therefore, to elaborate on this topic, Swanson Reed teamed up with Capstan Tax Strategies to provide a  free seminar  on the tips and tools you need for claiming the R&D tax credit in the manufacturing sector. This webinar also includes a comprehensive overview of cost segregation as it relates to the manufacturing industry.

To summarise, tune into the free webinar below to learn the following key topics:

  • An overview of the R&D Tax Credit;
  • R&D activities as they apply to the manufacturing industry;
  • Manufacturing case studies; and
  • The basics of cost segregation for the manufacturing sector.

Furthermore, previously, Swanson Reed hosted a free webinar the benefits of the R&D tax credit for those in the oil and gas industry. In this webinar, our specialists covered the basics of the credit, explored an oil and gas case study and detailed the qualifying activities in the oil and gas industry. This webinar can be found here.

Watch the manufacturing webinar below, or alternatively, watch on YouTube at: https://www.youtube.com/watch?v=Zqw6sUXZhPg

Swanson Reed specialises in the R&D Tax Credit – contact us today to discuss your eligibility and learn more about how the R&D Tax Incentive may benefit your business.

How to Claim the R&D Tax Credit for the Manufacturing Industry

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Not surprisingly, 60 percent of small-business owners say administrative burdens, like paperwork and confusing rules, are the worst part of filing — even more so than the financial cost of taxes, according to a recent survey by the National Small Business Association.

Nonetheless, there are many tax options available that may reduce the taxes you and your business owe — possibly by thousands of dollars.  In particular, the R&D Tax Credit is a frequently overlooked tax benefit, with companies often mistakenly believing they don’t qualify. The government lets you deduct the costs of research and experimentation to develop or improve a product, formula, invention, process or technique.

To expand on this, Swanson Reed is hosting a free webinar the benefits of the R&D tax credit for those in the manufacturing industry. In this webinar, Swanson Reed has teamed up with Capstan Tax Strategies to provide free live global seminar on June 22, 2016, at  1:00pm – 2:00pm CDT to cover tips and tools for claiming the R&D tax credit in the manufacturing sector.

Tune into the free webinar tomorrow to learn:

  • An overview of the R&D Tax Credit;
  • R&D activies as they apply to the manufacturing industry;
  • Manufacturing case studies; and
  • The basics of cost segregation for the manufacturing sector.

The structure of the day is as follows: 

  • 1:00pm – 1:25pm CDT – R&D Tax Incentives for the Manufacturing Industry
    • Presenter: Cherie Jones, Tax Director – Swanson Reed
  • 1:25pm – 1:50pm CDT – Cost Segregation for the Manufacturing Industry
    • Presenter: Terri Johnson, Managing Partner at Capstan Tax Strategies
  • 1:50pm – 2:00pm CDT – Interactive Q&A Session

*This webinar has now been, to watch this webinar online see: https://www.youtube.com/watch?v=Zqw6sUXZhPg 

Important Considerations for Mid-Year Tax Planning

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As the month of June advances, we are rapidly approaching October and the start of a new fiscal year. Although it may seem premature, now is a good time for businesses and individuals to take stock of their tax obligations and identify tax planning opportunities for the year ahead. Ultimately, creating a tax reduction strategy is much easier when you have time to put your plan into action.

In December 2015, the Protecting Americans from Tax Hikes Act of 2015 (PATH) was passed inhibiting a tax increase that would have impacted middle-income taxpayers and families, particularly those with small businesses. The PATH Act made many popular tax benefits permanent, yet the legislation included in the PATH Act is comprehensive and, in some cases, complex in nature.  Therefore, to receive the full benefit of the potential tax saving opportunities, we’ve highlighted a few of the major changes you should consider during your mid-year tax planning efforts.

Most notably, one of the biggest tax breaks included in the PATH Act is the renewal, and permanent extension, of the tax credit for increased research expenditures. The Research and Development Credit (R&D Credit) is valuable, but because of its intricacy, the credit is often misunderstood and overlooked. However, if your business undertakes research in correlation with developing new or improved products, technologies or processes, you may qualify for the R&D Credit. The credit is obtainable to businesses in an extensive range of industries, including manufacturing, technology, healthcare, construction, agriculture, and more.

Moreover, as many businesses that are involved in R&D activities are not yet profitable, the PATH Act now permits for the R&D credit to be claimed against payroll tax liabilities. This drastically changes the way in which the R&D tax credit can be claimed and will provide an instantaneous cash boost to those innovative businesses that need it most. Moreover,  starting 2016, businesses (and business owners) with less than $50 Million in gross receipts can now offset their AMT tax liability with R&D tax credits.

Ultimately, the enhanced capability for more small businesses to use the R&D credit should result in an economic boost to many taxpayers. Start-ups, in particular, can now enjoy current cash benefits rather than having to wait until their companies produce taxable income to take advantage of the credit savings. It is imperative, however, that businesses recognize what kinds of costs are eligible in order to maximize the credit so that appropriate records can be sustained throughout the year. Swanson Reed’s R&D tax professionals are available to discuss the R&D tax credit and the changes in the new PATH Act – contact us today if you would like to know if your company now qualifies.

 

 

3 Key Misconceptions About the R&D Tax Credit

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Unfortunately, only one out of twenty small and medium sized companies who are eligible for the United States R&D tax credit take advantage of it.  However, smaller companies should not be dissuaded from filing it – particularly as the tax credit could be worth up to $10 billion annually to firms. Don’t hold back your claim this year, here are three of the most common misunderstandings exposed:

#1: The R&D tax credit is only for white-coated scientists or companies conceiving a new invention

The R&D tax credit is intended to boost innovation and improve business processes. It is not confined to creating the latest tech products or getting a patent. The R&D tax credit also encompasses companies who are improving or modifying products or manufacturing processes, for example, making a product cleaner, quicker, greener, or cheaper. By no means does the development or improvement effort have to equate to rocket science.

Furthermore, companies involved in basic research are understandably primary candidates for the R&D tax credit; however, the credit is also serious about enhancing applied science – resolving a customer’s issue or a production problem using acknowledged scientific principles. Problem-solving on the site, in the field, on the shop floor, or even behind a computer – all may eligible for the R&D tax credit.

#2 The R&D tax credit won’t help state taxes

In most cases, if your company is qualified for the federal credit, it should also benefit from the state credit. Thirty-eight states have a state R&D tax credit – and several states are looking this year to increasing their R&D tax credit or producing one. Several companies have been able to use state R&D tax credits to eradicate or considerably reduce state income taxes.

#3 The R&D  tax credit is reserved for large companies

Historically, many startup companies and small businesses were unable to benefit from the research credit due to operating losses or alternative minimum tax limitations.  However, in addition to making the research credit permanent, the Protecting Americans from Tax Hikes (PATH) Act added two new provisions that are effective January 1, 2016. These two provisions are designed to increase the number of startups and small to mid-sized businesses that can benefit from the credit. In our last post, we went into details of both of these two modifications to the credit.

It is imperative, nonetheless, that businesses recognize what kinds of costs are eligible in order to maximize the credit so that appropriate records can be sustained throughout the year. Swanson Reed’s R&D tax professionals are available to discuss the R&D tax credit and the changes in the new PATH Act – contact us today if you would like to know if your company now qualifies.

R&D Tax Credit for Internal-Use Software (IUS)

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In the era of the digital age, there are few areas of our lives which are not impacted by the use of technology. The business world, in particular, is moving faster and becoming more global, more mobile, and more digitized.  Ultimately, as technology advances, the digitalisation of the corporate workplace is inevitable.

As a result of this digitalization, many companies have internal-use software (IUS) systems in place. To clarify, IUS includes software that has been acquired, internally developed, or modified exclusively to meet the entity’s internal need. Nonetheless the question remains, can companies capitalize on the costs incurred in developing this type of internal software?

Our latest video tutorial explores this question and covers the qualifications for R&D Tax Credit for internal-use software (IUS).

Watch below, or alternatively watch on YouTube at: https://www.youtube.com/watch?v=G9brpOrqkRc

Want more like this?

Check out our series so far:

 

Swanson Reed is a specialist R&D tax firm and has helped many clients across a diverse range of industries. Contact us for more information on how we can advance your company’s market value and boost its bottom line through the Research and Development Tax Credit.

Creativity vs Innovation in R&D

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Is the results of research and development (R&D) derived from creativity or ground-breaking innovation – or a combination of both?

“Creativity” and “innovation” are two words that frequently get pitched in brainstorming sessions or company mission statements. Without a doubt, these principles are highly esteemed in the modern workplace, but do leaders who use the expressions accurately know the difference between them?

The key disparity between creativity and innovation is the focus. Creativity is subjective – it is almost impossible to measure and is about releasing the possibilities of the mind to generate new ideas. Innovation, on the other hand, is completely measurable. Innovation is about implementing adjustments into moderately stable systems to make an idea practical. Thus, an organisation can use innovation to apply its creative assets to propose a suitable solution and acquire a return on its investment.

Therefore, to ensure companies remain competitive in a rapidly intensifying and accelerating technological market, businesses need to develop creativity and turn it quickly into innovation. However, it is an often overlooked fact that the expenditure incurred to bring these innovations to market is potentially available for a tax rebate.

To elaborate, the federal R&D tax credit  is a frequently overlooked tax benefit, with companies often mistakenly believing they don’t qualify. The government lets you deduct the costs of research and experimentation to develop or improve a product, formula, invention, process or technique. While the R&D deduction is relatively simple for small businesses to take, doing additional calculations to claim the “innovation” or R&D tax credit can be more complex but rewarding for entrepreneurs. The credit reduces taxes dollar for dollar, and entrepreneurs can generate the biggest credit by ramping up research activities over time.

Overall, creativity is vital in today’s business world to stimulate new ideas. However, driving business ultimately derives from sifting creative ideas through an innovation process to initiate those ideas into action.  Thus, stressing the importance of leveraging the data that surrounds people, organisations, products, and processes, to drive R&D and build new revenue streams and new commercial models. Indeed, creativity is the price of admission, but it’s innovation that pays the bills.

Creativity and innovation can create new opportunities for your business and allow for the creation of new products or solutions, via research and development. there were a host of tax breaks that Congress included in last December’s tax extenders legislation, the PATH Act. The new rules and regulations outlined in the PATH Act have made it easier for all types of businesses to profit from the R&D Tax Credit. Contact us today to see if you are eligible to claim the R&D Tax Relief.

Where Does The U.S. Rank in Economic Competitiveness?

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Citing a dwindling economic growth to high unemployment rates and stagnant wages, pessimists argue that the United States finest days are in the past. However, are they correct in this assumption?

A recent report from the Council on Foreign Relations, Keeping the Edge, claims otherwise. The report analyzes where the United States ranks in key dimensions of economic competitiveness. The findings reveal that on innovation, which upsurges living standards in advanced economies, no other country is close.

For instance, total US research and development (R&D) spending is higher as a share of the economy than since the 1960’s and, in absolute terms, no other country invests as much in R&D as the United States. In specific, at 2.8 percent of gross domestic product, the United States does spend heavily on R&D, however, major Asian economies – including Japan, Taiwan, and Korea – have ramped up R&D spending. In fact, according to the report, by 2020 China is projected to exceed the United States as the world’s largest R&D spender.

Moreover, the report highlights that of the top twenty universities in the world that generate the greatest consequences on scientific research, sixteen are in the United States. However, the report does find a red flag in the United States economic overview. Funding for public universities has struggled under exceptional financial pressure. If they are deprived of incentives or resources to perform high-risk but hypothetically high-impact research, scientists and academics are not as likely to produce transformative research. In light of this, the report concludes that where the United States deficiencies exist, is also where the government can have the largest part in guaranteeing the United States remains prevailing and innovative for decades to come by ensuring policies are put in place.

Nonetheless, the report reveals positive results in relation to the United State. In particular, the findings highlight that when it comes to scientific breakthroughs and commercial innovations, the United States is leading the way due to a heavy spend in research and development compared to other countries. If you have conducted research and development within your company you may be eligible for R&D Tax Credits. Contact us today to find out if you’re eligible.

How to Calculate The Alternative Minimum Tax (AMT)

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Tax season is over, but if you had to pay the federal Alternative Minimum Tax (AMT), there may still be work to do.

Essentially, the AMT is a separate federal income tax system with its own tax rates, and its own set of rules governing the recognition and timing of income and expenses. In our previous video tutorial, we described more about what the AMT is and how it impacts the R&D Tax Credit.

Now, our latest tutorial outlines how to calculate the AMT. Watch the video on YouTube at: https://www.youtube.com/watch?v=CYi14pGsiUM 

Or alternatively, watch below:

https://www.youtube.com/watch?v=CYi14pGsiUM 

Check out our series so far:

Swanson Reed is a specialist R&D tax firm and has helped many clients across a diverse range of industries. Contact us for more information on how we can advance your company’s market value and boost its bottom line through the Research and Development Tax Credit.

What is the Alternative Minimum Tax?

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Curious what alternative minimum tax is?

Watch our latest presentation to discover how the alternative minimum tax impacts the research and development (R&D) tax credit.

Watch on YouTube: https://www.youtube.com/watch?v=SXQv5379oRU

Want more quick video tutorials like this?

Check out our series so far:

Swanson Reed is the largest specialist R&D tax credit consulting firm in the United states.  We solely provide services related to the R&D credit and are the only firm in the United States to offer free live webinars on a daily basis. Click here for more information.

Gateway to Growth: R&D in the Oil & Gas Industry

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oil-field-76302_960_720From operating our vehicles to warming our homes, oil and gas is one the most commonly used and important commodities in the world. In 2014, oil provided approximately 38% of the world’s energy needs and is directly responsible for about 2.5% of world GDP. Indeed, oil and gas is a leading component of the world’s energy mix, a trend that will no doubt endure for many years to come.

However, in an increasingly technologically-driven world, the oil and gas industry is changing in two fundamental ways. Firstly, with majority of the world’s ‘easy oil’ already exhausted, the importance of utilizing sophisticated technologies to find and produce tomorrow’s hydrocarbons is becoming increasingly imperative. Secondly, high profile disasters such as Shell’s Brent Spar Incident in 1995 or the recent Deepwater Horizon accident (Perrons, 2014), has resulted in a significant shift in the expectations of the oil and gas industry in regards to safety, environmental stewardship and human welfare. Thus, in the face of these challenges, technology and innovation will play a pivotal role in the success or failure of the future of oil and gas firms.

Generating the question, how can oil and gas companies succeed in an industry where supply is limited and expectations are high? Ultimately, the oil and gas economy in the United States is at a critical juncture and innovation is what is going to push the economy forward.

Without a doubt, investing in R&D to create new and improved technologies is vital in enabling the industry to meet global energy demand. Moreover, with traditional forms of energy becoming harder to find, investing in new technologies will be vital in meeting the needs of an increasingly urbanised population and to combat environmental challenges in the decades ahead.

In addition, several companies may already be partaking in R&D activities and may not be aware of how the federal and state governments seek to support them through the Research and Development Tax Credit. Oil and gas companies are eligible for this credit, which presently values at almost 10 billion dollars, for work activities that are often already being conducted.

Below are some examples of qualifying research activities in the oil and gas industry:

  • Offshore structure design
  • Helidecks
  • Development and testing in a variety of areas including shutdown services, plug and abandonment solutions and turnaround
  • Plant design regarding safety, chemicals, pollution control and pressurization
  • Wastewater solutions
  • Designing and improving drilling

If you would like more information, Swanson Reed is hosting a free webinar on May 10th to discuss the benefits of the R&D tax credit for those in the oil and gas industry. Our specialists will be covering the basics of the credit, exploring an oil and gas case study and detailing the qualifying activities in the oil and gas industry. Could the R&D Tax Credit help your business?

If you’re interested in finding out more, register for our free webinar on EventBrite:
https://www.eventbrite.com/e/free-webinar-how-the-rd-tax-credit-can-benefit-the-oil-and-gas-industry-tickets-24977534478

Contact Swanson Reed’s R&D tax specialists today if you would like to know more about the R&D tax credit.