Applying for a research and development tax credit helps many companies grow and improve their businesses. Valuable tax solutions like this, reimburse you for time and money you spend in developing new and improved products and services. As such, you receive valuable tax savings while your customers’ needs are met.

Businesses that implement an R&D strategy are usually more successful than businesses that do not invest in research and development. An R&D strategy gives you an advantage over competitors, while boosting productivity and making room for innovation. Learn more about research and development and why you should claim the R&D tax credit.

Many businesses are already working towards making their products stronger, less expensive, more reliable or more versatile. Additionally, businesses frequently seek to improve their processes so they become more efficient.

If you view these improvements as simply part of your business strategy, it’s time to look closer at gaining tax savings through research and development tax credits. You may already be performing activities that qualify you for these R&D credits.

2. You Receive Savings on Expenses You’re Already Paying for

If you are already performing R&D activities, it is wise to pursue reimbursements for your current expenses. The R&D tax credit is not a deduction, so you receive a dollar-for-dollar credit against taxes you owe or have paid. You are also able to file for R&D expenses in the year expenses were incurred, meaning your wait time is minimal.

3. An Investment in Research Drives Your Business Forward

Businesses gain an advantage over their competitors when they are more efficient or have products that are not easily replicated. For example, R&D efforts may lead to improved business processes that cut marginal costs or increase marginal productivity. Competitors that are not invested in research and development often fall behind.

4. Innovation Leads to New Products and Services

When you are continually testing products and processes, improving upon existing models and developing new ideas, the end result is often a better product or service.  Some of the most common industries that conduct research in order to produce new products and services are as follows:

• Industrial machinery
• Trucks and tractors
• Computing technology
• Manufacturing

5. R&D Tax Credits Make Mergers and Acquisitions More Attractive

Many companies claim R&D benefits because the credits not only create better internal processes for organizing and tracking expenses related to development activities, but they also legitimize their technology. Businesses that claim R&D credits are thus more attractive to larger corporations seeking an acquisition because they are providing more value to the potential buyer. However, it is key that the company collects and maintains all needed documentation to help support future claims for these credits.

If your business already conducts R&D activities or is working to develop a research and development strategy to drive your company forward, you should not miss out on tax savings you are entitled to claim.

It is often helpful to speak with a tax expert who is available to answer your questions on whether your company qualifies for R&D credits, how to claim credits or when to submit for credits. Partnering with an outsourced tax consultant is the best way to maximize tax savings when you pursue R&D credits and other tax solutions.

For more information regarding what tax incentives your company qualifies for, check out your state here and contact a tax consultant at Corporate Tax Incentives.