Gender shouldn’t determine an individual’s leadership abilities.
Does your company manufacture products, develop software, or create any kind of technology? Does your company have a Research and Development (R&D) department, or conduct any proprietary product design and development? Do you provide design, engineering, or testing services to your customers? Has your firm recently applied for and/or received patents? If your answer to any of these questions is “yes,” then your company may be eligible for R&D Tax Credits under Section 41 of the U.S. Internal Revenue Code.
The Section 41 R&D Tax Credit is a general business tax credit that is intended to encourage R&D spending in the United States. Introduced in 1981, the credit applies to businesses that invest expenditures on certain qualified research activities, such as:
- Developing new, improved or more reliable products, processes or formulas
- Customizing products to meet customer’s needs
- Developing prototypes including computer-generated models
- Experimenting and testing of new materials
- Developing software or hardware
- Testing of new concepts and technology
- Adding equipment to improve processes
It has been estimated that over 20,000 companies apply for R&D Tax Credits every year. Clearly, companies that are able to demonstrate expenditure eligibility for the R&D credit have great incentive to apply for and receive tax credits from the IRS.
How Automated Time Tracking Can Help
It’s often said that “time is money,” yet businesses of all sizes may be missing an opportunity to put their time to work by capitalizing on as many tax credits as they can. It’s important to note, however that since 2007 the IRS has designated the R&D Tax Credit as a Tier 1 issue, which makes it one of the most carefully scrutinized credits. Consequently, any company claiming credits under Sec. 41 should be well prepared to substantiate its claims by providing adequate documentation of their expenditures, both in terms of personnel hours and costs incurred.
The amount of data needed to comply with an IRS audit can be staggering, but if you start automating your time tracking with an effective cloud-based application, you’ll have all the data you need at your fingertips to be well prepared to meet any kind of documentation requirements. By capturing time spent on R&D activities and defining hourly cost rates for project resources, companies using a flexible and easily configurable time tracking application will be able to accurately track R&D associated time, and gain increased visibility into where that time is spent.
This visibility provides valuable data that can be used to streamline project management and better allocate workforce resources. Best of all, by investing in a cloud-based time and cost tracking application, companies can ensure that they’ll be able to meet the requirements of ― and reap the financial returns available from ― the R&D Tax Credit.