Several companies across the U.S. that work in the life sciences industry, including those that work in the field of pharmaceuticals, biotechnology and medical devices, are strong candidates for government sponsored incentive programs such as the R&D tax credit. Most of these companies have activities, processes and costs that would make them immediately eligible for federal and state R&D tax benefits, which were created to promote growth and innovation within the industry.
However only a few actually claim these benefits.
Misconceptions about qualifying processes and the consequent complexities of claiming R&D tax benefits can cost millions of dollars worth of savings to businesses. A wide range of activities qualify life science companies for the lucrative R&D tax credit incentive — designing new drugs, compounds or medical devices, developing new applications for existing drugs and new methods for drug delivery, conducting tests to satisfy government regulatory requirements prior to commercialization, developing new or improved techniques or formulae, to name just a few. What’s more is that these tax credits can also be carried forward for up to 20 years!
If your company operates in the life sciences, pharmaceutical, biotechnology, or medical devices space, there is a high probability that you could save valuable tax dollars from claiming R&D tax credits.
What if we are a start-up with no income taxes to offset?
Start-Up Companies Can now use the credits to offset payroll taxes!
Prior to tax year 2016, young businesses that had no income and therefore no taxes to pay were not incented to claim the R&D Tax Credit, even though they could carry them forward for up to 20 years.
But new changes as of tax year 2016 allow Qualified Small Businesses to offset a portion of their payroll taxes using R&D Tax Credits. Specifically,
- Qualified Small Businesses may offset the Employer portion of the FICA portion of their payroll taxes using R&D Tax Credits claimed on their 2016 and future Federal returns.
- R&D Tax Credits are applied against quarterly payroll tax payments.
- In any given year, the taxpayer can use up to $250,000, carrying forward what they don’t use.
- This is a significant positive change to the code that can give your “start-up” company an immediate cash benefit.
BRS’ team of highly qualified engineers, scientists and accountants, is well-positioned to help your company analyze and evaluate qualifying activities and follow through with the required documentation to capture valuable tax credits that you can reinvest in further innovation.
Fill out the form on this page to learn more about the benefits of R&D tax credits, and a member of our team will be in touch with you. You may also call us at 781-640-6610.