As a business owner in South Carolina, have you ever heard of the research and development (R&D) tax credit? If you haven’t, then it’s time to learn about this valuable benefit that can help boost your company’s bottom line. In 2023, the R&D tax credit is expected to be a significant boost for qualifying businesses in the state. In this blog post, we’ll explain what the R&D tax credit is all about, how it works, and how your company can take advantage of it.
The R&D tax credit is a federal tax incentive for companies undertaking research and development activities. In South Carolina, the tax credit is also available at the state level. This tax credit is designed to spur innovation and help businesses grow by reducing their tax liability. The credit is not limited to any particular industry, so businesses in all sectors can benefit from it.
To qualify for the R&D tax credit, a company must meet certain criteria. The research activity must be related to the development of an innovative product or process, or the improvement of an existing one. The activity must also involve a process of experimentation using the scientific method. Expenses that qualify for the credit include wages, supplies, and contract research expenses associated with the eligible R&D activity.
The R&D tax credit is a significant benefit to qualifying businesses in South Carolina. In 2023, South Carolina residents can expect to receive a tax credit of 11% of their federal tax credit. This means that if a business receives a federal tax credit of $100,000, they can also claim an $11,000 state tax credit. This is a significant boost to a business’s bottom line and can help them invest more in research and development activities.
The R&D tax credit is not automatic, however. Businesses must apply for the credit and provide documentation to support their claims. This can be a complex process, but there are tax experts and consulting firms that specialize in helping businesses navigate the R&D tax credit process. These firms can help businesses identify qualifying research activities, gather the necessary documentation, and file the appropriate tax forms.
The research and development tax credit is a valuable benefit for corporations conducting R&D activities. In South Carolina, the R&D tax credit is expected to be a significant boost for qualifying businesses in 2023. Remember that companies must meet certain criteria to qualify for the credit, such as; expenses tied to the cost of development, wages, and supplies. In this way, a company can reduce its tax liability. While claiming the credit can be a complex process, tax experts are available to guide business owners through the steps. Remember, taking advantage of these credits means additional funds that can be used to further research and development, ultimately helping your business grow.
So, take advantage of this valuable tax credit and invest in your company’s innovations and future.
Author: Danielle Michel,
CPA, President and Founder of MTRS
Danielle Michel, CPA (she/her) is a Certified Public Accountant and founding president of MTRS, a specialized firm based out of Charleston and Long Island that focuses on the Employee Retention Tax Credit, the Research and Development Tax Credit, and Sales Tax Recovery. MTRS was founded to help American manufacturers and businesses across all industries maximize their bottom lines without compromising their pockets… Or innovative calendars. Our insights provide a look into topics facing American businesses, but are not financial advice. For digestible information and practical tools for understanding the tax landscape as a business owner visit our FAQ or contact MTRSNow.