Innovation and Disruption starts with the correct concept and market timing. However, it cannot happen without many things falling into place – one of them is having sufficient capital to support its success. Capital can come from internal cash flow, outside investment, commercial banks, or unique avenues such as tax credits when applicable. Dave Fleischer, of Business Resource Services (BRS), details how BRS helps companies that are investing in innovation.
BRS helps quantify and attain a Federal R&D tax credit that companies may be eligible for. Introduced in 1981, the tax credit is intended to incentivize companies to develop new and improved products and processes. Companies ranging from $3M-$100M in sales that have invested in new products or improvement of old products or internal processes will qualify. Traditionally, this is an underserved market, as many companies are unaware of the extent to which they are involved with R&D activities as defined under IRS regulations, and most CPA firms don’t focus on it. Thus, BRS is able to save companies hundreds of thousands of dollars through this process. It is a way to infuse capital into qualified companies without a significant drain on internal resources, and it is money they are eligible for but don’t know about.
Typical customers hail from verticals such as biotech, pharma, manufacturing, engineering, food and beverage processing, and medical devices. Important items to note around the credit include:
- Federal and State credits can amount to as much as 20% of the costs incurred in developing new products and/or manufacturing processes.
- Example: For every $1 million in payroll that qualifies for the Research credit each year, clients would be eligible for approximately $100,000 in Federal Tax Credits. Additionally, you can also take advantage of state credits in approximately 40 states. In Massachusetts, for example, you can add to the federal credit by 50%.
You can go back 3 years to claim past credits if they haven't been claimed already.
You can carry forward credits for up to 20 years.
Typical return on investment is a cash benefit of 3-10 times the cost of the BRS study.
Dave got into this business after having founded his own energy efficiency company and growing it to $15M in sales. He understands first-hand the day-to-day challenges of a business owner around cash flow and finances. Some of the best advice he received in his career is “to keep your financial house in order,” meaning having the best people running your finance and accounting department. This will lead to development of proper processes and controls, and accurate, timely information for management decision making—all things that BRS can help with.
For inquiries, please contact firstname.lastname@example.org.
Written by Cheryl Silveri