Tune in to our latest episode featuring Powers Kane, Co-Founder and Chief Revenue Officer at RecoupeTax. We discuss how companies can increase their working capital by taking advantage of commonly overlooked R&D tax credits. This video series focuses on how companies innovate, strategically plan for the future, and create a strong employee culture.
Here are five things we learned from this week’s episode:
1. R&D tax credits are one of the most lucrative incentives for businesses.
These tax credits are rewards from the government for innovative activities. As a business, you can qualify for credit, not deduction, to use for innovation within your company. It’s an incentive that has been around for almost 40 years, yet few businesses take advantage of this benefit.
2. 90 percent of eligible businesses miss out on using R&D credits.
Unfortunately, most businesses miss out on the opportunity to use R&D tax credits, although they are likely eligible for them. Powers believes this is due to an education gap around how credit works. Common misconceptions around revenue criteria or not being a large enough company cause many businesses to leave money on the table.
3. When people think of R&D, they often think of lab coats and scientists
Many companies think they need to be developing new products or inventions in order to qualify for the R&D tax credit. However, the government defines R&D more broadly than that. Powers says it’s best to think of R&D as “innovation.” This means businesses that are improving internal systems and developing new ways of doing things are eligible for the credit.
4. Both large companies and pre-revenue startups are eligible.
Some business owners think their company needs to meet a certain revenue threshold to qualify for the benefit. However, new startups are also eligible for the credit. The credit was initially created by the government to help the U.S. become more competitive in the global business space. This way, they can help businesses improve their processes and develop new streams of revenue that are better for the economy. A credit like this in the early stage of a business can be a game changer.
5. It’s not something your CPA can just add.
While the R&D credit is accessible to most businesses, it requires organizing a narrative that ties back all your company’s activity back to the qualifying standards the IRS needs to validate the benefit. Powers describes it as a mixture of technology, business, strategy, and accounting, which is why his company, RecoupeTax, specializes in getting businesses set up to receive R&D credits.
Coffee with Ben is a series that focuses on how companies innovate, strategically plan for the future, and create a strong company culture. These topics are always crucial for companies to address, but now they’re absolutely critical. To learn how to increase your capacity for innovation or to guest star on the show, subscribe to our channel and schedule virtual coffee with RIDG Director of Development, Ben Blackman.