The Importance of Research and Development for Businesses

Research and Development, or R&D defines the business process in which efforts are made to develop new products, services and technologies through the expansion of knowledge. For a lot of businesses, Research and Development is already happening within their organization, but they aren’t aware of the financial benefits that they are entitled to as a consequence. That’s why, in this article, we’ll be discussing why Research and Development is important for businesses, but also how R&D tax relief works. 

When Does Research and Development Occur?

Research and Development traditionally happens at the start of a product’s lifecycle, as companies work to explore the potential of a product. To make the most profit and keep competitiveness high, businesses rely on extensive R&D to ensure that they’re consistently bringing the best options to their target audience. A number of large businesses have dedicated R&D professionals who can support the development of a product or service, and their roles typically consist of experimental or innovate practices. 

If you’re a business owner examining the outcome of an R&D cycle, you should explore the potential of your product based on a number of different theories and decide how you’re going to incorporate changes into your design and development practices as a result. 

Why Is Research and Development Important?

For any business, R&D is important as it helps you to stay ahead of the curve. Not only do your customers make decisions based on how innovative and interesting a product is, but your external stakeholders such as investors will want to see what you’re doing to ensure the longevity of your business. 

Whether you hire R&D professionals or keep these operations within existing development teams, by prioritizing this work you can keep up with ongoing technological advancements and improve your existing processes. 

What Is Research and Development Tax Relief?

As we mentioned earlier, a lot of businesses already complete elements of R&D that they don’t realize fall under this specific umbrella terminology. Because of this, they often miss out on the financial benefits of realizing r&d tax credits that they’re entitled to. R&D tax relief credits:

• Improve business cash flow by reducing your effective tax rate and state income tax liability. 
• Can be carried forward for up to 20 years. 
• Are available to any businesses that perform qualified research, so regardless of the outcome of your research, you might still be eligible to claim.  

With this tax relief incentive having the potential to save you hundreds of thousands of dollars per year, revisiting your business taxes to take advantage of this opportunity is a no-brainer. 

Whether you manage your own taxes as a business owner, or you outsource your tax processing to a qualified accountant, realizing your R&D tax relief credits is one of the best ways to boost the overall success and secure the upward trajectory of your company. Rather than be worried about embarking on research into uncertain areas, you should do everything you can to drive positive change. As long as you go to experienced tax professionals for advice, you’ll be able to take full advantage of what R&D can do for your business.