The Benefits Advisory (TBA) is a consulting firm specializing in operational cost reduction, new technology and the niche areas of incentives and credit services and profit recovery.
With our business partners we have helped businesses across a range of industries realize millions of dollars in savings from available business incentive programs. Cutting costs and increasing profits are critical to every business, especially during difficult economic times. However, even when times are good, your company cannot afford to overlook opportunities to improve the bottom line with incentives, grants, and other economic development programs offered through federal, state, and local programs.
Businesses in many different industries routinely do work that qualifies for significant business development credits, rebates, and rewards as they attempt to create products that are lighter, faster, less expensive… or more durable, reliable, or precise. As the pace of your business accelerates and competition increases, you may be more likely to overlook this source of cash because you lack the time, resources or expertise needed to identify and manage tax credit claims.
This is found money; these are not a stimulus, grant or loan to the business. These are dollar for dollar credits based on business behaviors. Truth be told, sadly less than 5% of the companies ever apply for the credits, benefits and rewards they are entitled to claim. Of those who do apply, nearly 90% of those companies are billion-dollar revenue companies.These credits and incentives can be applied for every year, and the company is also afforded the opportunity to recover unclaimed credits for 3 tax years retrospectively. For many companies these retrospective reviews have amounted to millions of dollars to the bottom line.
With our business partners we have helped businesses across a range of industries realize millions of dollars in savings from available business incentive programs. Cutting costs and increasing profits are critical to every business, especially during difficult economic times. However, even when times are good, your company cannot afford to overlook opportunities to improve the bottom line with incentives, grants, and other economic development programs offered through federal, state, and local programs.
Businesses in many different industries routinely do work that qualifies for significant business development credits, rebates, and rewards as they attempt to create products that are lighter, faster, less expensive… or more durable, reliable, or precise. As the pace of your business accelerates and competition increases, you may be more likely to overlook this source of cash because you lack the time, resources or expertise needed to identify and manage tax credit claims.
This is found money; these are not a stimulus, grant or loan to the business. These are dollar for dollar credits based on business behaviors. Truth be told, sadly less than 5% of the companies ever apply for the credits, benefits and rewards they are entitled to claim. Of those who do apply, nearly 90% of those companies are billion-dollar revenue companies.These credits and incentives can be applied for every year, and the company is also afforded the opportunity to recover unclaimed credits for 3 tax years retrospectively. For many companies these retrospective reviews have amounted to millions of dollars to the bottom line.
MANUFACTURING
"Research and development" go far beyond test tubes and petri dishes. It's a lesson all businesses should take to heart, but particularly manufacturers.
Many manufacturers fail to apply for the credit as they deem their internal testing as unworthy of reward. This is absolutely false, especially considering how contract manufacturers routinely receive federal and state credits for developing prototypes for production design parts.
While scientific experimentation is nice, it's not for putting a man on the moon—applied sciences definitely count, and the trial-and-error testing completed on the factory floor is just as valid as that occurring in a lab. If a company is improving a product or improving how to make a product, it is all eligible. The R&D credit was designed by Congress to keep well-paying jobs in the United States, not to lead to a massive increase in patent applications. Small and medium-sized business owners frequently think that only Nobel Prize winners and rocket scientists should bother applying for the R&D credit.
While this incentive can be of extreme benefit to manufacturers, it is also complex, and fully identifying the proper substantiation for capturing the various credits requires a deep understanding of the tax code. Our practical experience in the disciplines of manufacturing engineering, industrial engineering, mechanical contracting, tool and die and ..... to work alongside our clients ensuring optimal results.
"Instead of tax loopholes that incentivize investment in overseas jobs, I'm proposing a more generous, permanent extension of the tax credit that goes to companies for all the research and innovation they do... right here in the United States of America."
- President Barack Obama
CONSTRUCTION
For more than a century, the construction industry has been considered the “backbone of America.” And yet, most construction companies are simply unaware that there are state and federal government programs that offer lucrative research and development (R&D) incentive programs. Other companies are aware of the R&D Tax Credit but fail to take full advantage due to misunderstanding the types of business behaviors which qualify.
The reality is that a broad range of common construction industry practices will qualify for the credit under the Internal Revenue Code’s definition of R&D. Research and development is not limited to the work of scientists wearing lab coats. Construction industry specialists, engineers, designers, and machinists often spend a substantial portion of their time developing superior designs and manufacturing practices to remain competitive. These continuous activities provide substantial opportunities for companies to take advantage of available credit and incentive programs.
If your company is in the construction industry and is involved in any of the following activities, you may be able to claim the R&D tax credit:
- Exploring means and methods and construction techniques
- Preparing structure and facility design for constructability
- Developing and improving construction equipment development
- Designing LEED/green initiatives; Designing HVAC systems
- Analyzing the functions of a design directed at improving performance, reliability, quality, and safety
- Performing Request for Information Process (RFI’s)
- Improving mechanical equipment sizing
ENGINEERING
The R&D credit is one of the most overlooked opportunities afforded to U.S. engineering companies, with the vast majority of eligible companies (and, in many instances, their CPA's) self-censoring away from the credit.
While many associate the research and development (R&D) tax credit with the technology, aerospace/defense and pharmaceutical industries, the engineering industry is often overlooked as an area for potential R&D credits. While identifying and documenting qualified research activities and expenditures taking place in these industries is generally more difficult than in traditional R&D-intensive industries, it can be well worth the effort for companies that perform certain types of projects. Because not all projects qualify, it is important to understand the R&D credit qualification criteria sufficiently to determine whether your company has enough potential R&D activity to warrant further investigation.
Many engineering firms employ professionals, including architects, engineers, general contractors and sub-contractors, to perform qualified research as part of their project activities. Qualified research is most often found in projects that present one or more technical challenges that must be overcome. The firms that provide the best credit opportunity are the ones that perform engineering and design work in-house.
If you think you have to be operating in a laboratory to qualify for R&D tax credits as defined by the Internal Revenue Code, think again. If your firm is in the engineering industry, there is a strong chance that you could benefit from an R&D Tax Credit study.
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SOFTWARE and TECHNOLOGY
As incentive tax credits are dollar-for-dollar, common sense would dictate software and technology companies with skilled, highly paid employees would be the greatest beneficiaries. With higher wages and employee work hours which can be tied directly to eligibility, incentives such as the R&D credit are tailor-made to reward the daily innovation of software developers — and the numbers are there to prove it.
For example, a client who is a software developer received over $1 million in federal credits for creating applications allowing companies to more effectively administer user accounts. The application provided improved functionality, allowing users to generate requests for multiple systems using one request form. Technology and software development go hand-in-hand with R&D and other government-sponsored credits, and now is the time for software developers take advantage of the benefits.
Examples of software applications for any industry that may be eligible for R&D tax incentives include:
- Accounting and Financial Software
- Digital Asset Management Systems
- Logistics Management Software
- Document Management Systems
- Educational Software
- CRM Software
- Database Management Systems
- Analytical Software
- Video Games and Game Creation Software
- Food Marketing Software
….
INNOVATION
The competitiveness of the U.S. economy depends on technological progress and every company needs to innovate to survive. This means constantly enhancing existing products and services and developing new ones – all to drive revenue and profits, to illustrate a market leadership position, and to stay ahead of the competition.
The U.S. offers some of the world's richest business development tax incentives, but chances are you're not taking advantage of them and getting the cash you deserve. BIS has found many of our clients regard their own efforts to make new, lighter, stronger, cheaper, more reliable products as “just doing my job,” when in fact they have been performing business activities all along that would qualify them for lucrative incentives and credits.
“Innovation is key to long-term survival and it goes beyond new product development. It means radically re-evaluating areas of your business, such as strategy, business processes, operations and management models."
- Julian Birkinshaw, Professor of Strategy of Entrepreneurship at London Business School.
Companies in many different industries who are constantly innovating can qualify for the incentive tax credits, including:
- Aerospace and defense
- Software
- Telecommunications
- Chemicals and plastics
- Oil and gas
- Food processing
- Entertainment and media
- Construction and engineering
.Joel Terry
www.IncentiveCredits.com/Terry Visit the site
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