Utilizing the Research & Development Credit
Monday, September 26, 2016
     As autumn comes underway, we wanted to inform you of a couple key items that might be of interest you and your company as you prepare for the end of the year. 

Research and Development Credit
       In December 2015, Congress passed the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), extending and making permanent a number of important tax credits-including the federal research and development (R&D) credit. And while popular belief is that the types of businesses that would qualify for the R&D credit involve laboratory coats and science experiments, a couple of recent changes have given small and mid-sized businesses opportunities to take advantage of this credit's benefits.

What is the Research & Development Credit?
     The R&D tax credit is a federal credit that was originally implemented under the Economic Recovery Act of 1981 as a means to encourage innovation through research and development in United States companies. Throughout the years, the credit has been updated to increase utilization by small and mid-size businesses throughout a variety of industries, and has continually been among the biggest and most significant tax incentives available.  This credit from taxes (not a deduction) can result in significant tax savings.

Who can claim the Research & Development Credit?
     As a whole, the credit is available to companies whose activities are intended to eliminate uncertainty about a product or process. Qualified research is determined through meeting the following qualities: 
  • Research is being performed in order to discover information that is technological in nature; and
  • Substantially all of the research activities must constitute elements of a process of experimentation; and
  • The experimentation must relate to a permitted purpose.
     This definition is very broad and encompasses many activities. If your company is involved in any of the following activities, you may be able to claim the R&D Tax Credit: 
  • Developing new or improved products, processes or formulas;
  • Developing prototypes or models;
  • Developing or applying for patents;
  • Certification testing;
  • Developing new technology;
  • Environmental testing;
  • Developing or improving software technologies;
  • Building or improving manufacturing facilities; and
  • Streamlining internal processes
Companies in industries that can qualify include:
  • Agriculture, forestry, fishing;
  • Architecture & engineering firms;
  • Automobile;
  • Communications & utilities;
  • Construction;
  • Film & music;
  • Food processing;
  • Government contractors;
  • Manufacturing & fabrication;
  • Mining;
  • Oil & gas;
  • Pharmaceutical; and
  • Technology/software development

The research and development credit is an excellent way for many companies to easily achieve some tax relief. If you think your business may be eligible for the R&D tax credit, please contact us. 

Soukup, Bush & Associates Client Portal
        We'd also like to remind you about the Soukup, Bush & Associates' Client Portal. Our Client Portal is an extremely useful tool we offer our clients to communicate and share sensitive data, from anywhere and on any device.
        The Portal utilizes state-of-the-art data centers operated by Amazon Web Services, which provides physical security and logical security controls at the infrastructure level. The encryption capabilities are so strong (the same strength as online banking!), that you can feel confident when uploading even the most private information. The Portal allows us to work together efficiently, while safely exchanging working documents, .pdf files, and even large files like QuickBooks and other tax documents that may exceed the capacity of your e-mail account. 
        As an added convenience to you, we will always upload an electronic copy of your tax return or other delivered documents that we have prepared for you or your company to your personal Client Portal, and these will remain in your Portal for a minimum of five years.

        Our Client Portal has been extremely useful in securely sending private information and sensitive documents, and the link can be found on our website, www.SoukupBush.com.  We highly encourage you to take a look and test it out!

      The Research and Development Tax Credit, as well as our Client Portal, have the potential to be tremendously useful to your business. If you have any questions regarding either of these, please contact us at (970) 223-2727 at your convenience.

Thank you,