United States

Start-ups and Small Businesses - Take Advantage of R&D Tax Credit

Mar 23, 2016
From the Global Enterprise Institute

If you are a start-up company with annual gross receipts of less than $5 million, you can apply up to $250,000 of your R&D credit against your payroll tax liability. 

The section 41 tax credit for research and development (R&D) is now permanent. Along with this change, there are benefits to start-ups and small businesses who could not otherwise take advantage of this credit.

How will the change benefit you? If you are a startup company with annual gross receipts of less than $5 million, you can apply up to $250,000 of your R&D credit against your payroll tax liability. Because this change was made to help new smaller companies receive credit for research and innovation, keep in mind that any taxpayer making this election for 2016 must not have had any gross receipts in a tax year preceding 2012.

Now that you have an idea of how you can take advantage of this tax credit, read Start-ups and Small Businesses: Take Advantage of R&D Tax Credit to learn why you should think about using the credit now. 

Learn More About the R&D Tax Credit

TaxWatch Webcast: The R&D Tax Credit -
A Catalyst for Growth for Start-ups and Midmarket Companies

Hear KPMG's Research Credit Services professionals provide an overview of the research tax credit and best practices that small businesses can implement. 

This webcast covers key topics related to the R&D tax credit including:

  • An overview of the tax credit, qualifying activities, QRE credit calculation election and methodologies
  • The AMT offset
  • The payroll tax liability offset

>> View the R&D Tax Credit webcast

Research Credit Made Permanent and New Potential Abilities to Use Credit to Offset AMT and Payroll Taxes

With the permanent reinstatement of the research credit, certain small businesses can get special tax benefits. This article, by KPMG's Washington National Tax professionals, introduces the permanent extension of the research credit and the ability to offset alternative minimum tax (“AMT”) and payroll taxes for eligible businesses.

>> Download the article and get more details about the research credit

Claim R&D Tax Credits

Private companies in almost any industry can benefit from federal and state tax credits for research and development (R&D) projects, which can help offset the cost of innovation activities and reserve cash to fund future innovation activities.

In this article, Venture Capital National Tax Leader, Francois Chadwick, reviews the requirements for privately-backed companies and the importance of early planning to take advantage of this tax credit.

>> Read the article, Claim R&D Tax Credits