Case Study #6 | Research & Development Tax Credit | Startup IT Company
Research & Development Tax Credit
Startup IT Company
Overview
A start-up software company with innovative technology in the education space was growing rapidly. Engineers, researchers, and other professionals are joining the company monthly to grow the
Challenge
There is a tremendous investment being made in developing and advancing the technology. There are constant enhancements, customization, research, and new product development occurring weekly. The investments being made in salaries, software, and hardware are constant. The
Solution
Economic Incentives Advisory Group (EIAG) was able to introduce a newly revised version of the Research and Development (R&D) Tax Credit to the client. The client, commencing in 2017, is now able to claim the qualified R&D expenses and apply them towards the payroll taxes. Even companies that do not have a tax liability can benefit from this program by reducing payroll by up to 6.2%, which is the employer’s portion of payroll taxes.
Results
Starting in 2017, the company will be able to reduce its payroll by up to $250,000 per year – for a period of up to 5 years. This will significantly reduce the client’s operations expenses and allow them to continue to invest in their company. Additionally, the client will be able to continue to dedicate personnel to core job functions and allow EIAG to administer this program.