Did your South Carolina business spend time and resources on developing new processes, products, or improving upon current ones? Did you hire scientists, engineers, or designers? If you answered yes to either of these questions, you are very likely eligible for the South Carolina R&D tax credit.
Large corporations take advantage of research and development tax incentives each and every year – and have since these credits and rebates were initially offered. However, many small and medium-sized businesses are missing out on these very same tax incentives. Why is that?
It’s typically because they aren’t aware these incentives exist, or they don’t believe they qualify. We also see so many businesses make the assumption that the dollar amount they can recapture is not worth the time or energy it would take to do so. We’re here to tell you that this couldn’t be further from the truth. With an average recapture rate of $104K, this is certainly a worthy endeavor.
But, how does it work in South Carolina in particular? Each state has differing research and development tax credits. The activities and expenses that qualify may differ, and the amount you’re entitled to will differ too.
Don’t worry – we’re going to clear up much of the confusion surrounding South Carolina research and development tax credit. We’ll help you understand whether or not you qualify, and explain how you can get started.
What Exactly Is The South Carolina R&D Tax Credit?
First things first: what exactly is the South Carolina R&D tax credit? It’s exactly what it sounds like. As a business, you are eligible for a tax rebate for expenses incurred for research and development purposes. You can file for federal R&D tax credits, too.
Just about any business can file for these credits: S-Corps, C-Corps, LLCs, individuals, partnerships, and sole proprietors. It’s important to note that there are two types of tax credits in South Carolina:
- Refundable tax credits: these can help reduce your tax liability to zero. If you don’t use the entirety of your credit in the first year of claiming it, it will be refunded to the taxpayer. The forms you use to claim these credits start with I-.
- Nonrefundable tax credits: these will not help you reduce your tax liability all the way to zero. However, they can be rolled forward in future years until you’ve claimed the full amount you’re owed. You’ll use forms that start with TC- to claim these.
These tax credits cannot be sold, exchanged, or transferred. That’s one of the great things about the South Carolina research and development tax incentives. You can continue to reap these benefits for up to 10 years until you’ve exhausted your credit. But, similar to the California R&D tax credit, you cannot carry this credit back to previous years. And, the tax credit you claim cannot exceed 50% of your company’s tax liability in a given year – after other credits have been applied.
Now, you’re probably wondering – how much can I get back on my expenses related to research and development in South Carolina? While it depends on a few different factors, most businesses earn 5% of the qualified expenditures attributed to research and development. So, if your firm invested $1,000,000 into qualifying research and development activities, you could earn a rebate of up to $50,000. And that’s just for the State of Carolina – you also get incentives through the Federal Government.
How To Determine If You Qualify For A South Carolina R&D Tax Credit
After learning you could earn back 5% of research and development expenses, you’re probably ready to find out whether or not you qualify. This is the tricky part – and why we recommend you let the folks here at the Tier Group take care of you. More on that later. First, let’s talk about a few examples of research and development.
We see so many businesses pass up the opportunity to claim these rebates because they’re under the impression the activities they invested time and resources into don’t qualify. They think you have to invent something new and revolutionary. But the reality is, you just need to make improvements to existing products/processes. Here are a few different examples of what qualifies as research and development in South Carolina:
- Testing new raw materials for your products
- Developing software to optimize internal processes or sell as a product
- Making quality enhancements to existing products
- Rolling out new products
- Introducing more efficient manufacturing processes.
These are just a few of the many types of research and development activities that qualify. These types of activities can be summarized pretty easily: did you hire engineers, scientists, designers, or researchers? Did you dedicate time and money to improve, innovate, or enhance workflows/your product? If so, we should talk about how you can start receiving your credit: keep reading.
Receiving Your South Carolina Research and Development Tax Credit Is Easy – Here’s How:
At the Tier Group, we make it easy for small and medium businesses like yours to get the research and development tax rebates they’ve earned. We serve a variety of industries, and boast an average recapture rate of $104K – so you can trust that you’re in good hands. We’ll pair you up with one of our licensed professionals. They will help you determine whether or not you qualify for tax credits in South Carolina, and the dollar figure you could earn. Here are the industries we can help with:
- Construction R&D tax credits
- Food and Beverage R&D tax credits
- Manufacturing R&D tax credits
- Dental R&D tax credits
- Engineering R&D tax credits
- Software Development R&D tax credits
Don’t delay any longer – book a call today. You’re just a few clicks away from receiving the rebates you deserve!