R&D Tax Credits for Any Industry: Find Out if Your Business Qualifies

Welcome to the latest episode of SMB Matters. I’m Essie Baird, Senior Partner Account Executive at TriNet Clarus R+D, where I help companies get rewarded for their innovative work. This podcast series takes a close look at the latest news and trends on a variety of topics related to running a successful small or medium-sized business.

What if your small business could save thousands of dollars annually in taxes—all thanks to work you’re already doing? The federal research and development (or R&D) tax credit makes this possible for companies of all shapes and sizes. Every year, the U.S. government provides billions of dollars to innovative businesses who are developing and improving technologies, products, and processes.

Despite this, many growing businesses continue to miss out. Some perceive it to be too complex or costly, while others often mistakenly believe they don’t qualify based on the industry that they’re in.

When thinking about the R&D tax credit, industries that usually come to mind include pharmaceuticals, manufacturing, and software development, just to name a few. While it’s true that the science and technology sectors often take advantage of the tax credit, in reality, as long as your work fits within the R&D criteria, there are no restrictions on eligible industries. Categories such as cosmetics, apparel, telecommunications, or even food and beverage may have qualifying work.

Let’s take a closer look at some examples and possible R&D activities. For instance, an architecture firm is developing site plans or schematics for environmentally friendly buildings utilizing CAD tools—this might all be considered qualifying work. Similarly, a dental office using an in-house lab to create and test 3D printed prototypes might also be considered qualifying activities. And what about a construction company? Developing energy-efficient HVAC systems or improving engineering to withstand seismic events or extreme weather may be considered qualifying work. Whether you’re an agricultural business experimenting with new fertilizers and irrigation systems, or a food and beverage company testing ingredient mixtures and preservative chemicals, you could be eligible for thousands of dollars in federal R&D tax credits!

The key is to recognize that qualifying activities extend beyond traditional research and development stereotypes. It's not just about scientists in labs or tech-savvy developers coding away; it's about any business that invests time and resources in the pursuit of improvement and innovation.

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Legal Disclaimer:

This podcast is for educational purposes only. With decades of experience supporting small and medium-size businesses, TriNet has unique insight into HR best practices for businesses. TriNet does not provide legal, tax or accounting advice. The materials in this podcast and the options and opinions expressed herein may not apply to your company or scenario, so you should consult with your own advisors on how best to proceed. Reproduction in part or in whole is not permitted without express written authorization from TriNet.