R&D Tax Credit Services | Books on Time

Assistance for Startups to Claim the R&D Tax Credit

Advisors ready to help you navigate, file and receive the R&D tax credit.

What is the R&D Tax credit?

The R&D Tax credit is a tax savings directed towards start up companies that incur research and development costs in the United States. A credit of up to $250,000 per year can be taken on your payroll return for up to five taxable years. Some specific examples of projects that may qualify include:

Development of new software

Tests of new concepts and technologies

Prototype and model development

Development of new and/or improved products or formulas

Updating and streamlining to improve a process

What are the Benefits of the R&D Tax Credit?

The R&D tax credit benefits businesses by offsetting some of the payroll expenses involved in advancements and experimentation. Society benefits by freeing up companies, like yours, to take additional risks to improve systems and products we use everyday. Other benefits include:

$250,000 each year for up to five years

Unused credit can be carried forward up to 20 years

Increased cash flow

Increased return on Investment

Lower your effective tax rate

Use funds to offset Federal Income Tax

Some states have their own R&D programs for tax credit

Increased earnings per share

Reduction of federal and/or state tax liability

Who qualifies for the R&D tax credit?

To qualify for the R&D tax credit, there are four basic criteria (also called a “four-part test”). All research must be completed in the U.S. and receipts must be from within the past five years. Here are some of the ways we help our clients navigate the credit:

Credit calculation

Determining valid expenses

Financial advice for future R&D

Determining eligibility

Filing your company tax return

R & D Tax Credit FAQs

What is the four-part test?

In order to qualify, the R&D conducted must prove things like; an attempt to eliminate uncertainty, process of experimentation, that the project is technological in nature and there is a qualified purpose to improve things in the field you’re working on.

What is the R&D tax credit (financially speaking)?

This credit can be utilized to offset employer FICA tax, Federal Income Tax or AMT Tax.

What types of research expenses are qualified for the credit?

Qualified research expenditures include:
    A. Wages
    B. Contract labor (US Based)
    C. Supplies

Can a credit be claimed for a prior year?

Tax years that are open to amendment under relevant statutes of limitations may be amended to include credits. This period is generally three years from the unextended due date or the return filing date, whichever is later.

How do I claim the credit?

The credit is claimed on a timely-filed (including extensions) tax return for the year in which the qualified R&D expenses were incurred.

Can startups claim the R&D tax credit?

Yes, eligible startups can claim the R&D tax credit to offset up to $250,000 of their payroll tax liability annually for up to five years.

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