Although many textile manufacturing processes are overseas, many companies are looking to improve product quality and fabric construction. For example, companies are looking for more environmentally safe materials and incorporating these changes in design and production of new textile products. These activities can take up significant resources and capital.
The R&D Tax Credit can allow companies in the textile industry 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 fabrications to meet quality requirements such as durability or flammability.
- Developing new or improved equipment or manufacturing techniques for textile/apparel production.
- Developing new dyes, fabrics, and materials that are environmentally friendly.
For example, Company ABC designs and manufactures fabrics that are low cost and meet environmental standards. The Company undertakes the design and development of a new fabrication that is made with organic cotton. In order to do so, the Company evaluates alternative cotton materials for quality standards and develops techniques to spin the organic cotton into a durable thread for fabrics. Company ABC can capture costs related to developing the new techniques for fabrication as well as developing the new fabrication itself.
Working directly with clients and their CPAs, TRCG has delivered R&D services to several textile companies. Through industry expertise, TRCG can quickly understand your company processes, identify potential qualifying projects, and help you capture valuable tax credits.