R&D Tax Credit for Software Companies

code 1839406 1280

Research and development (R&D) tax credits can make a significant difference to a company’s tax return, with the US government providing billions of dollars worth of credits annually. Despite the financial benefits, many software companies are not taking advantage of the credit, as they believe that their work does not qualify.

While this may have been the case in the past, changes to the PATH Act of 2015 expanded eligibility to include small and medium sized businesses who may not have previously qualified, allowing them to offset their regular and alternative minimum tax liabilities and use the credit against payroll taxes. Prior to these changes, many tech start-ups could not claim the credit as they were not yet profitable. The Startup Provision amendment acknowledged the fact that start-ups are some of the country’s most innovative companies. Further changes to the PATH Act also made the credit permanent, so that innovative companies could continue to invest in R&D with confidence.

Another incorrect assumption is that the software needs to be developed for commercial use. The R&D tax credit can be applicable to the development of improved internal business systems. Any applied science and technology that is used to solve a practical business problem can be considered qualified R&D. This means that the software should be new to the business, but does not need to be groundbreaking. Improvements to a program, new iterations, coding solutions and developing algorithms can be considered eligible activities. The work does however need to differ from existing software and there needs to be substantial financial risk if the project proves to be unsuccessful.

Finally, it is also possible to claim for paid work. For government contracts, eligibility will depend on the terms of the contract. For instance, the contract must state that the work will only be paid for if successful, otherwise there is no financial risk to the company for the research.

It is a good idea to consult a tax advisor to determine your eligibility. Contacting Swanson Reed R&D Tax Advisors for a free assessment is a fantastic first step. They will guide you through the process, taking away any uncertainty or stress in claiming the R&D tax credit.

3D-Fuel Introduce a New Water-Soluble 3D Printing Filament

15760663749 6f445d6535 b

HydroSupport is a new water-soluble 3D printing filament created by the manufacturing company 3D-Fuel. The filament takes between 12 and 24 hours to dissolve entirely, and can be expedited by using agitation and warm water, such as a heated ultrasonic tank. It is non-toxic, as 3D-Fuel attempt to create sustainable printing filaments that won’t harm wildlife or the environment. The company make various environmentally friendly 3D printing filament including coffee, beer, landfill and hemp filament.

Available in 1.75 and 2.85mm diameters, Hydro-Support is strong and the end result feels like PLA. It is clear in color and is vacuum sealed to protect it from moisture in transit.

3D-Fuel manufacture all printer filament in their own manufacturing facilities in Fargo, North Dakota and Moville, Ireland. The quality is tested extensively on a range of 3D printers including MakerBot, FlashForge and LulzBot and the width is carefully controlled using a multi-axis laser measurement system to help prevent issues caused by fluctuating diameter.

HydroSupport is designed as an easy-to-use support material for printing complex inner geometry, deep cavities or large extensions. It is allegedly easier to print with than other water-soluble filaments on the market, like PVA, which has high water retention that can make print jobs harder. Support structures are used when a design consists of complex shapes that can’t be printed on their own. They are then removed after the object is printed. However, removing the supports can be difficult and dangerous when requiring chiseling or chemical bathing. Alternatively, HydroSupport does not require manual removal and does not contaminate the environment with chemicals.

3D printing is a great indicator of R&D expenditure. If your business is using 3D printing, you are likely eligible for the R&D Tax Credit. The R&D Tax Credit allows a credit of up to 13% on eligible spending on new and improved products and processes. Get in touch with the experts at Swanson Reed to find out more.

Photo credit: westonhighschoollibrary via Foter.com / CC BY-SA

Top States for Doing Business 2016

team 1317270 1280

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.

R&D creates a new form of boating docks…

leaves and v dock 2 750xx882 496 0 32

Forest Lake-based R&D Manufacturing Inc. has made a name for itself in Minnesota and Wisconsin for its easy-to-install, lightweight V-Dock boating docks and accessories. R&D manufacturing sells an average of three miles of decking per year, the equivalent of 15,840 feet. Docks made by the company, which employs only six people, range from 32 to 300 feet.

The company’s Roll-in and Roll-n-Float portable docks allow consumers to roll docks into the water ‘as is,’ with no further assembly other than connecting the self-locking pieces together using a steel pins. If water levels rise or fall, the dock can be raised or lowered by using a cordless drill or a handle provided by R&D Manufacturing.

Most docks on the market require owners to remove decking tiles before rolling it into or out of the water. Simplifying the installation process has led to R&D Manufacturing’s growing popularity.

Three years ago, the company ramped up its online marketing and expanded its consumer base by shipping its portable docks to other destinations in the U.S. Some of their most recent shipments went to Texas and Alaska. The move has resulted in two consecutive record years for the company.

In 2016, the company saw sales growth of 35 percent, marking the company’s most profitable year, said co-owner Rick Johnson. All docks are sold and shipped directly to customers.

The company was founded in 1982 by Johnson’s father, Dick Johnson, who wanted to create a more sturdy and easy-to-install boating dock for Minnesotans. A trained welder, Johnson created his own brand of docks using V-shaped beams located under the dock for better support and to better absorb impact and movement. Johnson designed his own tools and machinery to make the docks and in 1982 started R&D Manufacturing. The company has since produced five patented designs.

“The customers we get are not first-time home buyers,” Johnson said. “The kids are out of the house. They need a simple way of installing the dock. They don’t want to go in the water to put posts in. They want to put it in and out.”

To find out more about R&D or to determine whether you may be eligible for an R&D Tax Credit  Contact a Swanson Reed specialist to see if you qualify.

ND company invests $240m into soybean production facility

soybeans 1543071 960 720

Minnesota soybean processors are in the early stages of doubling in production with a new $240 million soybean facility starting up in North Dakota. The new facility will crush approximately 125,000 bushels of soybean a day, which is 10,000 more than the Minnesota facility.

With the high market demand for soybean, a second facility with higher crush capacities was necessary in order for the co-op to remain competitive with other soybean processors. As there has not been much recent growth of soybean processing in recent years, investing into such a facility, which will research alternative, innovative and effective methods to soybean processing was highly necessary.

General Manager, Scott Austin, says there is a large market for soybeans and the current facility in Minnesota has already been expanded and is reaching its limits, which lead to the rationale of purchasing additional land and researching into more effective methods to process soybeans and increase crush capacity.

As soybeans are the number one crop in North Dakota from an acreage perspective, it was seen as an appropriate location to open the new facility.

The new North Dakota site will consists of 150 acres and is located in the center of regions growing soybeans. When completed, the facility will create 55-60 full time jobs and will produce 900,000 tons of soybean meal for livestock feed, along with 490 million pounds of soy oil, both from bio-diesel and food-grade oil.  Currently the feasibility and engineering stages of the projects are being completed.

If your company is incorporating innovative production methods into its business practices, it may be eligible for the R&D Tax credit, contact Swanson Reed R&D Tax Advisers to find out more.

Boeing Research and Development Center in Charleston, SC

plane 50893 960 720

A Boeing Research and Development center has opened in Charleston, South Carolina. The new 100,000 square-foot facility has created 300-400 jobs and focuses primarily on advancing manufacturing technology and composite fuselage development.

Greg Hyslop, vice president and general manager of Boeing Research and Technology, says the project is reorganizing and realigning the research and technology operations to better meet the needs of commercial airplanes and defense, space and security business units, as well as government R&D customers.

The South Carolina facility is the 11th Boeing R&D facility established. Boeing currently already employ over 8,000 people in South Carolina and over 80,000 in Washington state.

The North Charleston factory is capable of producing all three variants of Boeing’s newest and biggest Dreamliner widebody aircraft.

In addition to South Carolina, Boeing has also opened new R&D centers in Seattle, Alabama, Missouri and California.

If your business is undertaking R&D, you may be able to benefit from the R&D Tax Credit. To find out whether you qualify, have a chat with one of our R&D Specialists today.

Innovative Chocolate Shop Makes Zombie Bunnies

easter bunny 707754 1280

Tired of traditional Easter bunnies? An innovative chocolate shop in Medford, Oregon, is selling Voodoo Bunnies – blood-splattered, zombie bunnies with exposed brains and eyeballs hanging out!

Voodoo Bunnies take up to five hours to make and are made only twice a year at Easter and Halloween. The idea originated from regular Easter bunny chocolates that ended up with defects. The chocolatier added marzipan and colored cocoa butter and the Voodoo Bunny was born.  They became so popular that they had to be removed from the website after going viral on Twitter.

Lillie Belle Farms Artisan Chocolates was started in 2002 by Jeff Shepherd, a chef who began selling truffles at a farmer’s market. Always experimenting, he has tried thousands of combinations, “from Thai chili and lemongrass to crystallised flower petals.”

Jeff’s R&D has certainly paid off. Now his shop is renowned across the country. Dessert Professional magazine named him as one of the 10 best chocolatiers in the US in 2009, and his salted lavender truffle won a silver medal at the International Chocolate Awards in 2013. One year, his chocolates ended up as Martha Stewart’s corporate gifts.

Other creative products from the shop include chocolate covered pears and the ‘Do Not Eat This Chocolate,’ made with a generous ratio of ghost chillies. They have even partnered with a local cheese shop, Rogue Creamery, to create an amazing cheese truffle. It took many failed attempts and they nearly gave up on the idea, but it was worth the perseverance in the end. As Jeff recalls, “One day we decided on using their Smokey Blue, organic milk chocolate and toasted almonds in an exact ratio and voila! The ultimate blue cheese truffle was born… We have been making them for 10 years now and while we are quite aware of how weird they sound, we also know just how incredibly good they are. We put about a year into the R&D. Now it’s perfect.”

As Lillie Belle has proven, investing in the creation of new product lines in order to differentiate a company can create a strong competitive advantage. Companies undertaking certain R&D activities can claim the state and federal R&D tax credit, which can then be reinvested into the business. To find out whether your business qualifies, contact Swanson Reed R&D Tax Advisors.

$100 Million R&D facility opening at Rowan University NJ

laboratory 385349 960 720

Rowan University, together with the senate president, Steve Sweeney, and lieutenant governor, Kim Guadagno, have announced that the Spanish multinational veterinary pharmaceutical company, HIPRA, will establish its North American headquarters in South Jersey Technology Park at Rowan University, New Jersey.

HIPRA will purchase 25 acres of the technology park’s 180 acres on Rowan’s west campus and invest $100 million into building the 375,000 square ft research and development facility, which will create over 200 new high-technology jobs.

“The United States is a critical market for our firm and its continued growth, the South Jersey Technology Park will provide the company with an ideal location to expand its operation in the United States and distribute its products worldwide. ” said Arnau Nogareda, HIPRA’s managing director.

According to Nogareda, the technology park was selected after evaluating numerous first-class host sites and consideration of research that had already been carried out, which showed to be impressive, particularly in the areas of science and engineering.

It is anticipated that by establishing the North American research headquarters in New Jersey, HIPRA will create short and long-term employment opportunities in diverse fields, such as construction and biomedical engineering. In addition, the facility also plans to open the door to spin off companies, benefit local businesses that will serve its employees, and will be especially valuable for the faculty and students working in the sciences, engineering and business.

HIPRA’s r&d technology park will be an excellent fit for the University’s overall goals, as it will attract new partnerships that provide opportunities for the faculty, and will allow students to conduct and produce real life research that will help to further develop the regional economy.

The HIPRA and Rowan University board are excited about the future outcomes resulting from the collaboration and are thrilled to be able to grow the concept of R&D projects in New Jersey, in hope it will spark encouragement for other companies to do the same.

To find out whether your company’s activities may qualify for the R&D Tax credit, contact Swanson Reed R&D Tax Advisers.

Alaskan Oil Field Discovery Comes Just In Time

alaska-810433_1280

New Oil Field To Help Boost Alaskan Economy

A vast oil field has been discovered in the northern section of Alaska and could play a big role in increasing Alaska’s energy production industry.

Caelus Energy made the discovery about 300 miles north of the Arctic Circle and believes it could extract somewhere between 6 to 10 billion barrels of oil from the area.

“The discovery could be really exciting for the State of Alaska. It has the size and scale to play a meaningful role in sustaining the Alaskan oil business over the next three or four decades. Fiscal stability going forward is critical for a project of this magnitude,” said Jim Musselman, Caelus CEO.

The plan is to build an $800 millon 125-mile pipeline to connect with existing pipelines in other parts of Alaska.

The discovery has come just in time for the Alaskan oil industry. Without it, Alaska could be nearing a total collapse of its oil industry and economy if it doesn’t come up with a solution to prevent the continuing decline of its production efforts.

Contact Us

If you are a U.S. company conducting R&D and are interested in claiming the R&D tax credit, please contact a Swanson Reed specialist.

BeeHex Move R&D Operations to Ohio

pizza 1344720 1280

BeeHex is a 3D food production company, best known for their 3D printed pizzas. The company started as a NASA project to produce the first 3D printer to create food for astronauts (3D printing material can be stored for much longer periods than perishable and processed foods.)

Now the company is adapting to sell their printer technology commercially. BeeHex will develop production models of the 3D printers in its new Gahanna lab, which should be available to certain pilot customers by the end of 2017. Co-founder Jordan French believes that “a lot of industries are looking for solutions like this, giving employees tools to do things more efficiently.” Potential targets could include sports arenas, theme parks, restaurants or even the military.

BeeHex uses fresh ingredients to make fresh and freezable, oven-ready pizzas, which is an ideal food for 3D printing as it is constructed in layers.

The company aims to create printers that can take the customer’s preferences into account and make food on-the-spot. They have built an app that allows the customer to choose their preferred pizza size and type of dough, topping and cheese.  A conveyor belt that allows robots to then add toppings is also being developed. The technology could make it faster and easier to produce food for consumers with special requirements, without a chef having to learn specialized skills.

Like normal 3D printers, the pizza printer receives instructions from a computer and creates the pizza using layers. However, BeeHex printers use pneumatic systems instead of additive technology to move ingredients around. Initially taking six minutes to print, it now takes only a minute for a 12” pizza. A small sized pizza can then take just two minutes to cook.

Worried about the taste? BeeHex has partnered with Pasquale Cozzolino, a renowned pizza chef, who uses only the best Italian ingredients at his pizzeria, Ribalta. He stated, “I am looking forward to using my experience in the culinary industry to create a pizza that can be 3D printed without sacrificing quality ingredients and taste.”

If your company is using 3D printing, you may be eligible for the federal and Ohio R&D Tax Credit.  Contact a Swanson Reed specialist to see if you qualify.