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The last few years have been challenging for many business owners, to put it mildly. Therefore, it is more important than ever to take full advantage of all available tax credits and deductions. The problem is that entrepreneurs often miss out on the opportunities they are entitled to due to being uninformed. 

Financial prowess is a must for any business leader. Knowing your financial destination and how to reach it is just a part of managing a business. You should be innovative, too. If you meet these criteria, chances are you can qualify for the Research and Development (R&D) Tax Credit.

Unfortunately, statistics works against you. Only three out of ten growth businesses who qualify for the R&D tax credit claim it in the end. Do not be an underdog and miss out on substantial cash savings R&D tax credit yields because you are in the dark. If you cannot find the light to navigate you towards your goal, ask for a helping hand. Tax professionals, such as those you can find in Clarus R&D, can help maximize your R&D tax credit enabling your business to continue growing and thriving.

What is the R&D Credit and How Can You Use It to Grow Your Business?

The R&D tax credit was enacted in 1981. The goal was to stimulate innovation and encourage investment in development throughout the USA. A wide variety of industries and companies of all sizes qualify for the R&D tax credit. If you are engaged in any research activities or attempting to develop innovative or improved products, processes, or software, you might qualify, too. 

The R&D tax credit provides dollar-for-dollar cash savings. The cash you generate from an R&D claim is yours to spend as you wish. You can re-invest in innovation as that is likely to ignite further growth by opening new markets and attracting new customers.

Having a unique asset or service gives you the competitive advantage needed to propel your business into a bright future. 

Numerous growing companies cannot afford new employees, which puts their production or delivery on stand-by and hinders further growth. The R&D tax credit can be used to bring new professionals on board. Two heads are better than one, especially when they both have an innovative state of mind.

If your company's growth is held back by a lack of equipment or machinery, you'll be forced to outsource, and that can drain your budget in a nick of time. An R&D claim can help acquire all the gear your business needs to become more efficient and profitable.

Indebtedness is quite common for growing and innovating businesses. In order to move from a starting point and set things in motion, emerging companies resort to different financial strategies that often include business loans and lines of credit. Some entrepreneurs even reach deep into their personal savings. The R&D tax credit can go towards paying off any outstanding debts.

Finally, why not use the cash generated from an R&D claim to reward yourself or your team? If you and your team selflessly spend energy growing the business, you deserve to recharge the batteries, too. A loyal team is instrumental to your company's growth, so always show your appreciation for their hard work.

Why Do So Many Companies Miss Out on Substantial Benefits of R&D Tax Credit?

Tax is not a top-of-mind concern for many business owners. Some have misconceptions that deter them from applying for the R&D tax credit, too. As a result, numerous companies are yet to rip the benefits this credit can generate.

Let us debunk some common myths!

First, no business is too small to pursue R&D tax credit. You do not have to be doing groundbreaking activities, either. Any attempt to create a new product, formula, process, or software; or improve the existing one can be eligible. The work need not be done by CEOs or VPs. Job titles do not influence this matter at all. 

Do not be discouraged by the required documentation. If you cannot acquire every document and record tax examiners request from you, get professional help. Tax professionals can help you claim the R&D tax credit and present you with additional saving opportunities. Companies such as Clarus R&D, have vast experience in helping start-ups and growth companies take advantage of this tax incentive - why not use their expertise to your advantage? 

After all, claiming a tax credit isn't a one-and-done activity. You'll need to review your eligibility each year so that you can claim R&D tax credit again or claim other tax credits that weren't available to you before. Keeping track of complex tax regulations and your business financial information while attempting to grow your company can be tiresome, to say the least. Therefore, the expense of a qualified tax professional is not a high price to pay!