Whether it is to meet a new health trend or to meet food safety requirements, food developers undertake research and development processes that can qualify for the R&D Credit. Testing new food formulations and/or manufacturing processes require significant investment in time and capital and with the right information food developers can now recoup many of these costs through local, state, and federal incentives.
The R&D Tax Credit can allow food developers to increase cash flow, invest in expansion projects, and continue to grow their business. Examples of activities that could qualify for the R&D Credit include:
- Developing new or improved food formulations in order to lower trans-fat or carb-content.
- Developing new molds or manufacturing equipment to improve yield or yield quality.
- Developing new additives or preservatives to increase shelf-life.
- Developing new packaging or packaging techniques for food preservation.
- Manufacturing test-batches for food quality evaluations.
For example, Company ABC aims to design and develop new packaging techniques in order to extend the shelf-life of pre-packaged and cut vegetables. In order to do so, the Company researches, develops, and tests various packaging materials and packaging configurations. Furthermore, the Company evaluates and develops natural additives that can be added to the vegetables to prolong shelf-life. In this case, Company ABC may receive a credit for the development efforts related to the new packaging and additives.
Working directly with clients and their CPAs, TRCG has delivered R&D services to a wide spectrum of food development companies. Through industry expertise, TRCG can quickly understand your company processes, identify potential qualifying projects, and help you capture valuable tax credits.