In September 2004, President Bush signed the $146 billion tax cut bill restoring the recently expired business Research & Experimentation Tax Credit. The 18-month renewal of the research and experimentation tax credit, which expired June 30 2004, was the most expensive item with an expected $7.6 billion cost through 2014.
Process Improvement Qualifies
If you are spending money on ISO 9000, six-sigma, lean manufacturing, TQM, or any other initiative focused on improving your products or processes, then you could qualify. This includes software purchases, training courses, labor, and of course the purchase of any Policies, Procedures and Forms products or services.
An Immediate Source of Cash
This is an actual dollar-for-dollar tax credit against your tax liability and not a deduction. You can deduct all costs in the year incurred. And better yet, these regulations are retroactive, which means you can get a refund for previous years.
Requirements to qualify
If you fit these five basic requirements for research, then you might qualify under the latest regulations.
1. New or Improved Product, Process or Software. Research must derive ways to improve a product or process such as development or improvement of a formula, invention or technique.
2. Technological. Research objective must be to discover technological information, based upon principals including computer science or engineering.
3. Research Involves Uncertainty or Risk. It must involve uncertainty or risk associated with the design or method of design achievement, not including general business risk.
4. Experimentation Process. It must be well-documented and include failed and successful efforts.
5. Permitted Process. Activity for product or process improvement must relate to a function, performance, reliability or quality.
Your Tax Credits are Waiting for You
There is no better time to obtain ISO auditor training, well-defined process training, business process consulting, or to get the maximum value out of a helpful key like the Management Procedures Value Series. Tax credits may expire again later in 2005, so act before it is too late.
Chris Anderson has over 18 years of sales, marketing and business management experience working with business process design, software and systems engineering. He is also co-author of policies and procedures manual products, producing the layout, process design and implementation to increase performance. He is currently the Managing Director of Bizmanualz, Inc. Visit: http://www.bizmanualz.com
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