R&D tax credits are probably one of the most rewarding tax incentives companies receive for creating new products and enhancing production methods. For qualifying privately-owned businesses and startups, they can free up capital. For larger companies, they can help in tax planning and savings. Unfortunately, they remain to be the most overlooked credits.
R&D tax credits are there for a reason: they offer high-paying research and development-related opportunities in the United States, thereby promoting economic growth. In fact, tens of thousands of companies in the US could qualify for this tax credit. Sadly, they remain ignorant and miss out on the opportunities before them.
Because of this, tax experts and accounting firms work hard to inform the world about this opportunity. They reach out to qualifying organizations, publish write-ups, and teach CPE-accredited courses for CPAs in the country.
Choosing the right R&D tax credits specialist
Without understanding how the manufacturing life cycle works, how can one have a plausible conversation with these tax experts and accounting firms? Therefore, you need to find a partner who fully understands what R&D tax credit laws are and which industry they apply to. Here, we will discuss nine signs of a good tax credit specialist that you should look for when choosing one.
Signs of a good R&D tax credits specialist
- Alignment of values. Having the same values with your specialist is a sure way to avoid conflicts down the road. Do not hesitate to compare your mission, vision, and core values with your prospective specialist. Only pursue the one that presents the strongest alignment and stay away from those that do not share your sensibilities.
- Clean search results. The simplest way to verify if a company is an excellent choice for your organization is to check for any red flags. Do your research and verify if they have ongoing lawsuits or allegations of unacceptable behavior.
- Enjoyable working experience. Working with an R&D tax credit specialist should not be a headache, but instead, it should be a positive experience. While profitability exceeds all other considerations, it is nice to maintain a good personal relationship with your specialist. You may have to work with them for some time, so you might as well enjoy it.
- Years of expertise. Experience does not have a substitute – a tax specialist that has been in the business for more than two years is often more reliable than a newbie. Choose an R&D tax credits specialist with hands-on expertise. You might also want to ask them for references, as this is your way of confirming if they can offer effective tax credit solutions.
- Focus on improving your business. Your R&D tax credit specialist should go beyond just maximizing your credits. Ask them how they can improve your business and what they would recommend in spurring growth. Ultimately, the improvement of your business matters, so you must find a specialist with the same vision as yours.
- Industry association membership. A company’s reputation in the industry should affect your decision-making process. Their membership in industry associations could be a positive sign of their quality. It acts as a check against unethical behaviors and practices.
- No extra fees. A quality R&D tax credits specialist should offer a tax credit estimate with no additional fees. Tax return preparers must not charge fees tied to the number of write-offs they find or the tax return size. If a company mentions that there will be extra costs depending on the tax credit percentage, you should look for other options.
- Representation if audited. You do not need a tax specialist who will hang you out to dry when things do not go well. Ask them about their policy of representation when a tax audit occurs. Verify if the contracts explicitly mention any of those terms before signing them.
- Harmonious relationship with your CPA firm. Strong relationships are always valuable, more than anything else. Try to obtain recommendations from your CPA regarding R&D tax credits specialists. Do some research until you have confirmed if the specialist is a good fit for your company.
Choosing an R&D tax credits specialist: What questions do you ask?
With the growing interest in R&D tax credit and the number of CPA firms available, it can be challenging to discern the differences in the services each specialist provides. To further help you, we have come up with questions you should ask to choose the best professionals to help you.
- Ask about the client’s profile. This is the most basic question you should ask when choosing the right R&D tax credit specialist. Are they experts in your field of expertise? Identifying and gathering R&D tax credits will vary depending on whether the client is in the software development, aerospace, and science industry.
- Ask them how their process works. Knowing how the specialists identify and claim R&D tax credits is a huge factor in choosing an R&D specialist. Avoid working with someone who cannot explain their methodology from a qualitative and quantitative point of view. You must consider crucial factors like how they document their work, if they aid in collecting documentation, if they will help if an audit occurs, and more.
- Ask how they price their services. Federal level tax services are not allowed to charge contingent fees. Look for an expert that will charge a fixed fee or base the cost on the time and expenses of performing their services.
- Ask them more about their services. The best R&D companies rely on punctual filings, regular communication, and hard work. Choose a company with a client-centric culture. After all, having a good relationship with your tax expert is in your best interest.
You must also pay attention to their customer service and how they offer assistance. Do they do everything to achieve a successful outcome? Or do they offer support for you to contribute to the process?
You often hear the term due diligence in the context of an acquisition, but it is equally important when choosing an R&D tax credits specialist. With the significant number of specialists available, it is tempting to go with the first one that sounds good. But you must be careful and confident when choosing one.