The Qualified Small Business R&D Payroll Tax Credit Provides up to $500,000 in Annual Savings for Startup Companies

The Qualified Small Business (QSB) R&D Payroll Tax Credit is a tax incentive geared specifically for early-stage companies. The credit can be used to offset payroll tax, either instead of or in addition to federal income tax.

The QSB R&D Payroll Tax Credit reduces early-stage companies’ U.S. labor costs up to 7.65% (capped at $500,000). Eligible companies can apply all or part of their research tax credit against their payroll tax liability, instead of their income tax liability. Qualified companies may claim credits on originally filed federal income tax returns (including extensions) and apply these credits against employer paid payroll taxes.

A “Qualified Small Business” is defined as any company with no more than 5 years of revenues and less than $5 million in the current year of revenues with qualifying research activities and expenditures.

Any early-stage company with employee wages that engage in research or technology development is a good candidate. The incentive can be a key benefit to startups who often operate at a loss by providing additional cash flow.

Why should you use A&M’s R&D State Tax Credits service?

The A&M Research Credit Incentive Services (RCIS) team brings a multidisciplinary approach and decades long experience.

Clients look to us for:

Expertise: Most professionals on the team have decades of experience in this area of tax, and as CPAs, attorneys, and tax professionals, the group maintains the credentials to address all areas of R&D tax incentive legislation.

Deeper benefit discovery: Our expertise and detailed approach helps maximize credit claims, ensuring that we provide the full amount of available benefits.

Client confidence: Clients can be confident in knowing they will have the necessary support in the event of an IRS audit.