R&D Tax Credit for Small Businesses

/ Best Practices, Human Resources, Time & Labor

Black Friday. Cyber Monday. Giving Tuesday.  And, let’s not forget – Small Business Saturday that just passed. That glorious time when the incentive to shop mom and pop was increased on a single day, as to not get shut out by big box stores during the holidays.

Whether or not your business thrived this weekend with sales and inquiries, small businesses may have an upper hand in the upcoming tax season. We’ve all heard the myths of the so-called R&D tax credit, however, this is no legend. Its fact. And it’s poised to give even bigger tax breaks to small businesses versus large companies.

How Does it Work?
Prove that you’ve done the legwork. If you can show just cause for improving or evolving your product/service/business, you may be able to deduct expenses related to this including quantifying time and expenditures. This may be in the form of new technology, tools, or resources, third party studies, legal consultation, partner or testing services, additional staff, or the like.

In order to apply for the R&D tax credit, you must be able to exemplify some advancement or augmentation that forwards your mission. What’s more, small businesses may be eligible for this credit even if you do not owe any tax monies at the end of the year. An advantage larger corporations are unable to benefit from.

Save Those Receipts!
Recordkeeping is essential in order to capitalize on the R&D tax credit.  Small businesses are required to show documentation or receipts for the last five years that relate to research and development. From email and hard-copy communication to out-of-pocket expenses including payroll monies allocated for R&D, the IRS will need you to prove to them this was a worthy endeavor.

Payroll Data Services (PDS) compliance services and technology helps you archive and retrieve the information you need to garner tax credits. Our innovative payroll processing and integrated HCM solutions, makes it easier for you to report on time and labor tracking, expenses, and analytics for workforce performance to quantify efforts.

For over 20 years we’ve partnered with companies to provide pioneering technology that has become industry standard. Backed by a team of some of the most intelligent minds in every aspect of HR management, we combine old school client-centric values, with innovative design and forward-thinking features to simplify the business of HR.

Learn how you can partner with PDS for payroll, tax, compliance, benefits, timekeeping, and the HR business intelligence to streamline processes and focus on mission critical tasks. Get in touch at 800-805-3282, to demo our complete suite of customizable HCM services to meet your toughest business challenges.