February 23, 2017 - Are you leaving money behind?
Did you know that the IRS offers generous research and development (“R&D”) Tax Credits? Most companies think “We aren’t PhDs or scientists so R&D credits probably do not apply to me.” You might be surprised how many companies and industries qualify for the R&D Tax Credit. For purposes of the R&D Tax Credit, qualifying R&D activities may be taking place in the everyday course of your business. To qualify:
- Research and development activity must involve new or improved products, processes or software, be technical in nature, and involve an element of trial and error.
- The process of experimentation must be designed to evaluate alternatives to achieve a result where the potential to achieve that result is initially uncertain.
The craft brewing industry is an often overlooked industry where the R&D Tax Credit can apply and saves breweries real money. The credit is non-refundable which means that you must be profitable to have tax to offset. However, any unused credits can be carried forward for up to 20 years to offset future income tax and can even be used to reduce payroll taxes for certain small, start-ups. Look at your operations:
- Are you developing new recipes?
- Are you developing and testing new methods and processes?
- Are you working with new ingredients or equipment?
These “new” things you are working on just have to be new to you, not the industry. To support qualified research costs, brewers and distillers must maintain detailed documentation including time logs, meeting minutes, testing/technical reports, ingredient costs and patent applications to warrant the R&D credit. You may qualify for these valuable credits and we would welcome the opportunity to discuss how you might qualify!
Steve Wenzlick, CPA
614-859-BEER or steve@draftfinancial.com
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