Did you know that you can get tax credit for an ERP? The Federal Research and Development (R&D) tax credit is a tax incentive designed to encourage companies to invest in research and development activities. This credit is available to any business that engages in activities to develop new or improved products, processes, software, techniques, formulas or inventions. Yes, that includes implementing an ERP!
Implementing an ERP system can be eligible for the R&D tax credit, particularly if it involves customization or software development. These activities can significantly enhance operational efficiency and reduce costs, aligning with the goals of the R&D tax credit. By leveraging this credit, businesses can offset the financial burden of investing in advanced systems.
What Qualifies as Research & Development?
- Permitted Purpose: Business component(s) must enhance function, performance, reliability, quality, or reduce costs.
- Technological in Nature: Research must rely on a hard science, like engineering, physics and chemistry, or the life, biological or computer sciences.
- Technical Uncertainty: Must be undertaken to discover information to eliminate uncertainty regarding the development or improvement of a business component.
- Process of Experimentation: Evaluate alternative hypotheses/designs to achieve a result where the capability or method is uncertain at the outset.
Involving consulting experts early in your ERP project is crucial. Through optimizing your tax strategy, having a trusted advisor can ensure that your new system is set up to maximize tax efficiencies. The Attivo Group can guide you through every step of leveraging tax credits for equipment and software purchases. Benefit from the long-term savings and improved operational efficiency that comes with a well-integrated ERP system! Don’t wait around – contact our team today to assess your current system and invest in the future of your business.
