Ever wanted to build a new software system for your company but didn’t have the funds to do so? Do you have a passion for understanding more about and overcoming industry-wide problems? Could your company actually be at the vanguard of changing your sector by overcoming uncertainty in technology?
The answer to at least one of these questions is undoubtedly “yes” – but finding the money to carry out these projects can be a challenge. Sure, you might see how an innovative new app could change how businesses in your sector operate, but if you don’t have the funds to build it in the first place, the project will likely never get off the ground.
At this point, many companies stop considering R&D, see it as “pie in the sky” thinking, and resume their regular operations, ignoring the opportunity altogether. Others spend more time thinking about it – and sometimes try it – only to find out that they don’t have the money that they need to see their plans through to fruition. It’s a tremendous waste of resources and energy.
How to make your R&D activities more financially viable?
The first, and perhaps, the most important, are tax credits. A tax credit is different from a tax deduction. Instead of receiving a reduction in your tax bill, you can actually claw back a proportion of the money that you owe on your regular tax bill.
R&D tax credits are a case in point. The government wants businesses to invest in new technologies, products and services, so it provides something called R&D tax credits. These credits incentivise firms to plough more money into their research and development activities while, at the same time, saving money on the rest of their tax bill.
The way it works is simple. R&D spending doesn’t work as a traditional expense. Thus, not only can you deduct R&D spending from your income (as you can any other expense), but you can also get additional money off your corporation tax bill by increasing your costs by a further percentage amount.
The great thing about these tax credits is that they help you pump up the overall profitability of your company. You can plough money into projects that will help you become a market leader in your industry and also benefit financially ahead of time. Tax credits are a great way to fund innovation in your business. You can use the money you save on corporation tax (or the cash payments you receive if you’re a loss-making business) to fund research efforts that will pay off in the future. The possibilities are remarkable.
There’s no limit on how much tax credits you can save
Finding grants or business funding isn’t always easy. But with this simple accounting trick, you can claw back an enormous amount of money from the taxman – money that you can then earmark for more innovation at your firm. What’s great about these tax credits is that there is no limit to how much you can save. The more you spend on research and development, the more you can slash your tax bill. Get in touch with our team to find out more.