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Best Practices for Exploring R&D Tax Credit Eligibility


Be Prepared, and You Can Save Time, Effort, and Money.

New call-to-actionf your company relies on the hard sciences or uses technology to create or improve products or processes, you might be able to reduce your federal taxes by a portion of the costs incurred using the Research & Development (R&D) Tax Credit. The credit can be significant and many types of companies potentially qualify. Smart preparation early in the process can also save you time, effort and, potentially, tax dollars.

Best Practices When Exploring the R&D Tax Credit

Reach out to qualified professionals to discuss the credit.

Find out if this professional has experience with the R&D Credit. Have they worked with companies similar to yours? They should ask about your new product(s) or innovation(s), your employees’ time associated with those developments, and if you retain rights to what you developed. Being mindful that your time is valuable, an experienced professional can often make a preliminary assessment in the first meeting as to the likelihood your company is eligible for the R&D credit or provide the preliminary questions needed in order to make that assessment.

Set up a meeting at your facility.

A walk-through helps immensely to educate your chosen consultant. That time walking through your plant or watching your prototype in action tells them a lot about your operations and, in turn, your potential to qualify for the R&D credit. Plan to set aside an hour to three hours, approximately (includes meeting time after the walk-through).

Have your subject matter experts easily accessible to discuss potential R&D activities.

These persons can be your employees or even outside contractors most connected to the development. Not having the right people involved as soon as possible in the exploratory process can negatively impact the amount of credit that you ultimately claim.

Understand that you’re trying to qualify for the tax definition of R&D.

We recently visited a manufacturing company where the chief technology officer claimed the company was doing no R&D. Of course the firm was constantly researching and developing as they were coming out with new products each year and making significant functional improvements to their existing products.

We helped him to understand that the definition of R&D for tax purposes might not match his scientific definition. This a pro-taxpayer credit: The tax definition of R&D can be more liberal and more encompassing than some traditional engineering minds might think.

That same company also experienced a year where technical challenges and other factors kept many of their developments from getting to market. They thought they had no activities to potentially quality for the R&D credit—but failure can be a positive when claiming a credit. It doesn’t mean you have no qualified R&D expenses—it can actually help show that R&D did occur.

Have your documentation ready.

Any contemporaneous documentation that monitors the activities qualifying as research activities will help to support your claim for the credit: blueprints or marketing materials, project write ups, financial information, status reports, modifications’ specs, and so on. (See our recent blog regarding proper documentation when exploring qualification for the R&D Tax Credit.)

Lack of documentation or no documentation makes the process of exploring your qualification for the R&D credit more involved; however, it is often possible to reconstruct information needed to claim the credit.

Talk to our experts today about your business’s potential to claim the R&D credit.

For more insight, observations and guidance on the R&D Tax Credit, visit our Freed Maxick Guide to the Federal Research and Development Tax Credit webpage.

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2013 NYS Bones Annual Conference - Speaking Engagement

October 17-18, 2013 The Desmond Hotel, Albany New York
2013 NYS Bones Annual Conference

The 6th Annual NYS Bones Conference will be held Thursday and Friday, October 17-18, 2013 in Albany, New York.

This year organizers are expecting a much larger attendance with earlier promotion and a growing member base. The program is being finalized with presentations suggested by membership, including Worker's Comp and legislative updates and a open panel discussion with recognized experts in accounting, legal, HR and finance.

The conference is open to all orthopedic practice managers and key staff, both members and non-members of NYS Bones, from New York and New Jersey. The organization is working closely with NYSSOS to encourage physicians to be sure their office staff take advantage of the educational opportunities offered.

The conference designed to provide focused topics on key issues facing practices and three separate open sessions for discussion of the myriad questions we all face as practice managers. This format is based on the feedback from previous conferences which indicated that most want the opportunity to raise common problems and learn from each other’s ideas, and solutions. This is also an opportunity to develop ongoing working relationships with others. In addition there are over 30 exhibitors who provide products and services to New York orthopedic practices.

Make sure to check out the 10:30 AM – 1:00 PM, FRIDAY, OCTOBER 18, 2013 “Panel Discussion with Legal, Financial, and HR Experts” featuring Shawn M. Frier, CPA, CPE, CMPE, Director, Freed Maxick, Buffalo, NY
A unique opportunity to ask experts about those burning questions we face in our day-to-day practice lives. The session will begin with panel introductions and their perspectives in the challenges facing healthcare and orthopaedic practices. This will follow with an extended time for Q&A with the audience. Bring your questions for a broad perspective of opinion from the experts. Moderator: Megan O’Connor, President, NYS Bones, Practice Manager, Robert Moriatry, M.D., PC, Huntington, NY

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