Startups & The R&D Credit
What you need to know
Startups spend 6.2% on every W-2 salaried employee each year in employer FICA taxes (Social Security Portion)...that's $6200 for every $100k spent.
New legislation allows for Startups engaging in R&D with less than 5 years of gross receipts and under $5 million in gross receipts to apply R&D credits against those taxes...up to $250,000 a year.
That same $100k salary could yield $6-$10k in credits!
Eligible expenses come from the Startups' U.S. based:
1. W-2 employees (i.e. engineers and the individuals who support and/or supervise them)
2. Outside Contractors and/or Services
3. Supplies (i.e. prototypes, hardware, patents)
The two biggest reasons why eligible Startups do not claim eligible credits are Time & Cost for an R&D study.
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