How To Choose The Best R&D Tax Credit Provider

The research and development tax credit offers money-saving benefits for businesses, but claiming this general business credit can be tricky. To take the guesswork out of claiming this credit, many business owners turn to R&D tax services.

In this post, we’re going to help you pick the best R&D tax provider for your situation. With the right tools at your disposal, you’ll be able to identify expenses, determine if you qualify for the credit, prepare and file forms and documentation, and get the most out of this tax credit.

What Is The R&D Credit?

The research and development (R&D) tax credit is a general business tax credit available to businesses that have created or improved a product or process. Businesses of all sizes, including startups, are eligible to receive the credit provided they engage in qualified research and development activities that meet the requirements set by the IRS.

The R&D credit is used to lower federal annual income tax liability. In some cases, the credit can also be used to offset the Alternative Minimum Tax or the employer’s share of payroll taxes.

When You Should Use R&D Tax Credit Services

IRS tax codes can be difficult to decipher, and this is especially true in terms of the requirements for the R&D tax credit. The process can get even more complex if you’re retroactively claiming the R&D credit, applying your credit toward Alternative Minimum Tax or payroll taxes, or are just generally unsure of whether you qualify and how to claim the credit. Unless you’re an accountant, tax pro, or well-versed in tax laws, your best option may be to hire a professional to guide you through the process.

R&D tax credit services help simplify the complex rules of claiming the R&D credit. Additionally, these services may provide audit protection or support, as well as other useful tips and tools to help you maximize R&D credits and other general business tax credits.

What To Look For In R&D Tax Credit Providers

If you want to hire a professional to calculate and file your R&D tax credit, here’s what to look for in a good provider.

R&D Specialists With Experience

Instead of simply choosing a tax service that typically handles regular tax returns, make sure that your provider has experience calculating and filing the R&D tax credit.

Not only will this help ensure that you maximize your credit, but it will also help prevent errors that could cost you further down the road.

Make sure to read reviews and testimonials before choosing a provider. If you can’t find these online, ask the provider specifically about its experience and whether it has testimonials, reviews, or case studies that can be shared with you before you get started.

Free Feasibility Analysis

Many reputable R&D providers offer a free feasibility analysis. This no-cost assessment helps you determine if you’re qualified to claim the credit and also provides you with an estimate of tax benefits.

This is especially important if you’re unsure if your research and development expenses meet IRS requirements for receiving the tax credit.

Competitive Fees

The cost of your R&D tax services isn’t the most important factor to consider, but it’s still something to keep in mind.

The cheapest service isn’t necessarily the best, as you may not receive personalized support or audit protection (more on that later). On the other hand, you want to make sure that you aren’t being overcharged.

Take advantage of free assessments and don’t be afraid to ask outright about a provider’s fees and what those fees include. You’ll also want to inquire about the fee structure. Find out if the provider charges:

• Fixed Fees: A set amount that is agreed upon regardless of the amount of your tax credit
• Contingency Fees: Fees that are based upon the amount of your tax credit (i.e., 10% of the recovered amount)

Fixed fees are easier to budget for but are typically required upfront, while contingency fees are more unpredictable but don’t require upfront payment, giving you more time to pay your provider.

Good Customer Support

Whether you need to submit more documentation, ask questions, or just want updates on the status of your tax credit, you’ll want to find a provider that offers good customer support.

Look for a knowledgeable team that can easily walk you through the process, break down the complexities of the R&D credit, and respond to you in a reasonable amount of time. Bonus points for providers that offer numerous easy ways to get in touch (such as live chat or a direct phone extension) and offer support beyond traditional business hours.

Audit Protection

If you’re audited by the IRS after claiming the R&D tax credit, you want a company that provides some form of audit protection. This could mean providing you with the documentation you need to submit to the IRS, walking you through the audit process, or even helping you obtain legal counsel.

Ask any potential providers whether audit protection is available and whether it is included in your fee.

Additional Services

As we’ve already mentioned, it’s important to choose a provider that has experience with R&D credits. However, there are many specialists who also offer additional services that may benefit your business, such as:

• Personal & business income tax filing
• Cost segregation studies
• Accounting & bookkeeping services
• Business intelligence
• Business analytics
• Human resources
• Payroll & benefits

Which R&D Credit Provider Is Right For Your Business?

Whether you choose to hire a CPA, opt to use an R&D tax credit service, or invest in tax software, these resources can streamline the extremely complex task of calculating and claiming your R&D tax credit.

No matter which route you opt to take, make sure that you do your research. At a minimum, you want to work with companies that offer good customer support, audit support, and tools to make completing tax forms and claiming the R&D credit easier for your business.

Before investing your hard-earned funds, make sure you understand what you’re signing up for. Start by scheduling a consultation. Inquire about pricing, contracts, and the benefits you’ll receive before signing up for new software or services, and learn how to calculate the R&D credit yourself to get an idea of what to expect from your credit.