Traditionally, companies in the software or information technology sector do not necessarily think they qualify for the R&D Tax Credit. However, undertaking the development of product-based software, software-as-a-service, social networking, telecommunications, or media/video game development can qualify for the R&D Credit.
With the assistance of a knowledgeable advisor to understand and evaluate processes and related expenses, software companies can recoup many of these costs through powerful local, state, and federal incentives. The R&D Tax Credit can allow software developers to increase cash flow, invest in new projects, and continue to grow their business. Examples of activities that could qualify for the R&D Credit include:
- Developing new or improved functionality for systems to meet customer business requirements.
- Developing digital applications for mobile software.
- Developing software to improve a customer’s data collection, storage, and analysis processes.
- Developing risk management techniques and analytics.
- Developing video gaming technology.
- Developing and testing new system hardware.
For example, Company ABC innovative digital applications for cellular phones such as the Android and iPhone. The software developers undergo a detailed development process to develop concepts of new applications that provide specific functionality to end-users and then create beta versions of the software for further testing and evaluation. In this case, Company ABC can capture costs related to the design, development, and testing phases of the process.
Working directly with clients and their CPAs, TRCG has delivered R&D services to a wide spectrum of software companies. Through industry expertise, TRCG can quickly understand your company processes, identify potential qualifying projects, and help you capture valuable tax credits.