Posted by William Mehi on 02.21.19
Cabinet and furniture manufacturers can and should maximize R&D tax credits offered by the Federal government. In the past decade, building and design trends are beginning to not only move towards multi function, but also minimalizing materials as well as space. For example “Tiny Houses” are trending all over the United States right now. Americans are embracing the concept of reducing their global impact as well as trying to live on smaller scales with multifunctional storage and furniture. Most furniture and cabinetry companies don’t realize the R&D tax credit applies to them, but with these growing movements in building, manufactures now have to start changing their processes and products to compete with the thriving market. There are many qualified activities cabinet and furniture businesses may not be aware of and eligibility isn’t limited to just the manufacturing area. If you implement a new system, build a new product line or develop a new formula or software, your company can take advantage of the tax credits, too.
The cabinetry and furniture industry is ripe with opportunities to claim Research and Development (R&D) tax credits. Qualifying expenses can include anything a company does to make its products better, faster or cheaper. For manufacturers, this could be everything from labor and travel, to supplies and materials that go into trial-and-error processes, new solutions, parts or products. Employees or contractors that are hired to help in this process based on their use of hard sciences, such as engineering or computer sciences, may have salaries that can also qualify for the tax credits.
Read our blog regarding how the R&D tax credits can be used to offset payroll:
The R&D tax credit was instituted by the federal government to stimulate the United States’ economy through innovation. The idea being that; by providing companies that were ready and willing to invest in improving their processes and developing new products with tax incentives, technology would progress and the nation would advance economically. In 2015, after many extensions on the temporary bills that would become the R&D credit, it was made permanent by the U.S. Congress and is now a dollar-for-dollar benefit against tax.
Many activities in the furniture and cabinetry industry will qualify for the R&D tax credits, including:
The activities and associated expenditures (derived mostly from employee time, consultant expenses and related R&D supplies) of a company can qualify for the R&D tax credit if the activities meet the requirements of the four part test established by the IRS:
Opportunities to claim the Research and Development (R&D) tax credits for the cabinetry and furniture industry are abundant. Developing and implementing new or improved safety enhancements and creating more efficient, cost-effective manufacturing techniques are just a few activities performed that can qualify for the R&D credit. Get the R&D tax credits your business deserves for your invested time, effort and resources.
Tax Point Advisors, a firm with expertise in working with small and midsize companies, works with businesses that may qualify for R&D tax benefits. For more information, read our e-book: The Business Owner's Guide to R&D Tax Credits.You may also contact us at (800) 260-4138, or please leave us a message below.