Develop or Improve Products, Business Processes, or Techniques
The activity must aim to create a new product or process or enhance an existing one. This includes improvements in performance, reliability, or cost-efficiency.
Undertake a Process of Experimentation
The R&D effort must involve the evaluation of alternatives, trial and error, or other methods of experimentation to resolve the challenges faced.
Attempt to Solve a Technical Uncertainty
The activity should address an uncertainty concerning the capability, method, or design of a product or process, where the information available does not provide a clear path to resolution.
Fundamentally Rely on Hard Science Principles
The work must be grounded in the principles of physical or biological sciences, engineering, or computer science.
Example R&D Activities Across Key Industries
While nearly any company that develops new or improved products, processes, or techniques can potentially qualify for the R&D tax credit, the following industries commonly benefit—and each has a unique set of qualifying R&D activities:
Biotechnology & Pharmaceuticals
Developing new drugs or medical devices, conducting clinical trials, and improving manufacturing processes to increase yield or reduce waste.
Software & Technology
Designing new software platforms, enhancing existing systems for increased functionality or security, and developing innovative algorithms or data processing techniques.
Engineering
Creating new or improved engineering solutions, developing eco-friendly construction materials, and enhancing efficiency in manufacturing processes.
Agriculture
Innovating sustainable farming techniques, developing genetically modified crops for higher yield or resistance, and improving food processing and preservation methods.
Architecture
Designing buildings with advanced sustainability or energy-efficiency features, developing new construction methodologies, and utilizing innovative materials for enhanced durability.
Manufacturing
Automating production processes, refining product design for cost-effectiveness or performance, and implementing quality control methodologies.
Food & Beverage
Creating new food products or flavors, improving packaging for longer shelf life, and enhancing nutritional value without compromising taste.
Helping Your Clients Utilize the R&D Tax Credit
As a CPA, you play a pivotal role in guiding your clients through the complexities of tax incentives, particularly the R&D tax credit. But you don’t have to do it without help. Omega provides specialized expertise in identifying qualifying R&D activities, ensuring comprehensive compliance, and maximizing claims. Our experts work closely with your team to unlock the full potential of this valuable tax incentive for your clients with a clear 5-step process:
- Identification & Discovery: We begin with a thorough analysis of your client’s business and operations to pinpoint qualified research activities.
- Quantification: We collaborate with you to collect and review financial data, quantifying the eligible expenses for the credit.
- Qualification Review: We dive deep into each identified R&D project, conducting interviews and compiling documentation to ensure every expense meets the stringent qualification criteria.
- Substantiation & Support: With the credit amount determined, we assist you in preparing for a smooth tax filing process, providing comprehensive documentation and support for potential audits.
- Maximize Annually: We work continuously with you to identify ongoing R&D tax credit opportunities for your clients, recommending operational adjustments to maximize their benefits year after year.
Conclusion
The R&D tax credit is more than a tax incentive for your clients; it’s a catalyst for innovation, growth, and competitive advantage. Omega is equipped to guide you through the complexities of this unique credit, enriching your expertise and service offerings in the process. Most importantly, we’re committed to partnering with you, providing ongoing support, and helping you achieve significant outcomes for your clients.
Ready to get started? Contact Omega’s Director of Research & Development, Matt Davenport.
