Latest / Bennett Thrasher Presents: Beyond The Ledger / Unlocking Hidden Opportunities: R&D Tax Credits for Manufacturers

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Unlocking Hidden Opportunities: R&D Tax Credits for Manufacturers · Bennett Thrasher Presents: Beyond The Ledger

• 0:08
  SPEAKER_02: Welcome back to Beyond the Ledger, the podcast where we go beyond the numbers to explore the strategies, opportunities, and insights shaping today's business landscape.
• 0:17
  SPEAKER_02: I'm your host, Shard A Lakefield.
• 0:20
  SPEAKER_02: When manufacturers hear the phrase RD tax credit, many immediately think of scientists in lab coats or cutting-edge technology companies.
• 0:28
  SPEAKER_02: But the reality is some of the most valuable innovation is happening every day on the shop floor.
• 0:34
  SPEAKER_02: Through process improvements, automation, tooling, product development, and solving complex engineering challenges.
• 0:41
  SPEAKER_02: The challenge is that many manufacturers don't realize those efforts could translate into significant tax savings.
• 0:50
  SPEAKER_02: Joining me today are two experts who help manufacturers uncover hidden opportunities, Nina Desai and Julie Hagen.
• 0:58
  SPEAKER_02: Nina is a partner in Bennett Thrasher's Credits and Incentives Practice where she helps companies identify and maximize RD tax credits by navigating the technical requirements behind qualifying activities.
• 1:10
  SPEAKER_02: Joining her is Julie Hagen, and together they work closely with manufacturers to uncover qualifying innovation, evaluate complex engineering and production activities, and help businesses maximize available tax incentives.
• 1:22
  SPEAKER_02: Thank you both for being here today.
• 1:24
  SPEAKER_02: Thank you for having us.
• 1:25
  SPEAKER_02: We're excited to be here.
• 1:26
  SPEAKER_02: I know I'm excited to learn more about what's going on in the industry.
• 1:30
  SPEAKER_02: So you guys ready?
• 1:31
  SPEAKER_02: We are ready whenever you are.
• 1:33
  SPEAKER_02: All right.
• 1:33
  SPEAKER_02: So innovation doesn't always happen in a research lab.
• 1:37
  SPEAKER_02: It often happens on the manufacturing floor where teams are solving problems every day.
• 1:43
  SPEAKER_02: When manufacturers hear RD tax credit, many immediately assume it doesn't apply to them.
• 1:48
  SPEAKER_02: Why is that one of the biggest misconceptions you both encounter?
• 1:53
  SPEAKER_01: Yeah, I'll start, Julian.
• 1:54
  SPEAKER_01: Feel free to jump in if there's something else you want to add or think of.
• 1:57
  SPEAKER_01: But I oftentimes think that people assume that you have to be wearing a white lab coat or in a lab blowing things up.
• 2:02
  SPEAKER_01: Maybe they think more about like life sciences when they're thinking about the RD tax credit, or they're thinking you have to be developing something groundbreaking or completely new to this world or new to this country.
• 2:13
  SPEAKER_01: And while yes, I could very likely qualify for the RD tax credit, it's oftentimes the day-to-day things that could potentially qualify.
• 2:20
  SPEAKER_01: So if you're developing a product, a process, a technique, or a formula, um, and there is really any uncertainty, there's a as part of that development, there's a high chance that it could qualify for the RD tax credit.
• 2:34
  SPEAKER_01: Um, there's actually what we call the four-part test for RD credit qualifications.
• 2:38
  SPEAKER_01: So part of that also, I can go through that in detail if you want, but I if you like a little bit.
• 2:44
  SPEAKER_01: Oh, if you can sprinkle a little bit in.
• 2:46
  SPEAKER_01: Okay, yeah, sure.
• 2:47
  SPEAKER_01: So in order to be eligible, I already talked about developing the product or process.
• 2:51
  SPEAKER_01: The second part requires your activity has to be based in a hard science.
• 2:54
  SPEAKER_01: So for our manufacturing clients, that could be engineering, but it could also be on like the software side, it could be computer science, computer engineering, physics, really anything along those lines.
• 3:05
  SPEAKER_01: The third and fourth part of the test are really where the heart of the RD study is.
• 3:09
  SPEAKER_01: So that third part requires that there has to be some sort of technical uncertainty at the outset of your project.
• 3:15
  SPEAKER_01: So whether you can develop this brand new product, how to develop this brand new product.
• 3:20
  SPEAKER_01: And a great way to tell if you're meeting that level of uncertainty is if you're going through the fourth part of the test, which is that you're going through a process of experimentation to eliminate that uncertainty.
• 3:29
  SPEAKER_01: So that's oftentimes trial and error, their iterative process of development.
• 3:33
  SPEAKER_01: For our manufacturing clients, it can be prototype development, trial runs.
• 3:37
  SPEAKER_01: Um, I can go into various examples, but there's so much there that people don't realize that they're doing and that would oftentimes qualify, especially in the manufacturing area.
• 3:47
  SPEAKER_01: Um, of course, the work has to be done in the US, you know, have to maintain the IP rights and it can't be funded.
• 3:53
  SPEAKER_01: But um, high level, there's a lot of a lot of work that our manufacturing clients are doing on a day-to-day basis.
• 3:59
  SPEAKER_01: They they don't even realize qualifies for the credit.
• 4:01
  SPEAKER_00: Yeah, and to add to that, um, you mentioned product development, but also process improvements is a big thing for manufacturing companies.
• 4:08
  SPEAKER_00: And I like how you said the day-to-day because a lot of our subject matter experts they say, Oh, but I just do this every day.
• 4:15
  SPEAKER_00: Like this isn't technical.
• 4:16
  SPEAKER_00: And we're like, Well, it sounds technical to me, and I don't normally run a million trial runs.
• 4:23
  SPEAKER_01: So exactly.
• 4:24
  SPEAKER_01: Yeah, that's oftentimes, and I think recently Julie and I both were actually at a client's office or their manufacturing facility.
• 4:31
  SPEAKER_01: They walked us through the floor, and it was through walking that manufacturing plant that we were like, RD, RD, RD.
• 4:38
  SPEAKER_01: And in this case, obviously, we're not going to share what the client was doing, but they were creating new processes, they were developing new product lines, they were creating or enhancing existing product lines.
• 4:48
  SPEAKER_01: So it's amazing what they're doing on a day-to-day basis and how many people are touching that development effort.
• 4:54
  SPEAKER_01: And we could probably qualify a portion of those employees' expenses, the supply expenses.
• 4:59
  SPEAKER_01: So it can be the credit can be very valuable and lucrative.
• 5:04
  SPEAKER_01: And we always say this is that if you are engaging in development work, these credits were enacted to help companies like like our manufacturing companies recoup some of that investment.
• 5:16
  SPEAKER_01: So why not claim the credit?
• 5:18
  SPEAKER_02: Why not?
• 5:19
  SPEAKER_02: Okay.
• 5:20
  SPEAKER_02: So once companies realize the credit may apply, the next question is usually what actually counts.
• 5:26
  SPEAKER_02: So what types of manufacturing activities or projects most commonly qualify for the RD tax credit that business owners typically overlook?
• 5:35
  SPEAKER_02: I I may have gotten ahead of myself with the last question and gone through that, but let's see.
• 5:39
  SPEAKER_01: Obviously, we talked about product development and Julie talked about process improvement.
• 5:44
  SPEAKER_01: So if you're developing anything better, faster, or cheaper, there's a very high chance that those process improvements could potentially qualify for the credit.
• 5:53
  SPEAKER_01: So an example would be you're trying to, I always use widgets.
• 5:56
  SPEAKER_01: I know it's kind of an old school example, but it's helpful.
• 5:58
  SPEAKER_01: It's helpful sometimes.
• 5:59
  SPEAKER_01: So let's say you're trying to go from developing five widgets in an hour to ten widgets in an hour.
• 6:04
  SPEAKER_01: That would be an example of a process improvement.
• 6:06
  SPEAKER_02: Okay.
• 6:07
  SPEAKER_01: Maybe you're trying to um change the material of this product that you've developed to make it um more durable, or you're trying to develop it where it still maintains all of its features, but you can develop it at scale or maybe in a um more cost-efficient manner.
• 6:24
  SPEAKER_01: Those are examples of things that would qualify for the credit.
• 6:27
  SPEAKER_01: Um, I always like to say this, right?
• 6:29
  SPEAKER_01: A lot of clients, they don't, they they always say, Oh, I developed this years ago.
• 6:33
  SPEAKER_01: But most people aren't aren't doing the exact same thing day-to-day.
• 6:37
  SPEAKER_01: They are constantly innovating, they're having to change their business model or their business product line or their product line in general, just a bit in order to stay up, I guess stay current or keep up with demand.
• 6:49
  SPEAKER_01: So the fact that you're constantly making those changes, a lot of times those changes could potentially qualify for the RD tax credit.
• 6:56
  SPEAKER_00: I guess one thing that is important to know is that doesn't necessarily have to be successful.
• 7:00
  SPEAKER_00: Like maybe you're trying to increase your your um how many widgets you can produce in an hour.
• 7:06
  SPEAKER_00: But if if you try all these things and it doesn't work, you can still claim a credit on that so you can recoup some of the costs that were lost.
• 7:12
  SPEAKER_02: Oh, that was a good tip.
• 7:13
  SPEAKER_02: Thank you.
• 7:14
  SPEAKER_01: That's a really good point.
• 7:15
  SPEAKER_01: Because sometimes people don't want to talk about what didn't work, but those are the best examples for the RD credit, is the things that you tried that ultimately did not work.
• 7:23
  SPEAKER_01: Because that really shows that you've gone through the process of RD for credit qualification.
• 7:29
  SPEAKER_00: It really shows the technical uncertainty.
• 7:31
  SPEAKER_00: Like it you weren't sure if it was gonna work and it actually didn't.
• 7:34
  SPEAKER_01: And I guess maybe one thing we can also cover too is the type of expenses that could qualify for the credit.
• 7:39
  SPEAKER_01: I know I briefly touched on it in the last question, but we could qualify employee time.
• 7:43
  SPEAKER_01: So anyone that's directly involved in the RD effort, anyone that's directly supervising the RD effort, or anyone directly supporting it.
• 7:50
  SPEAKER_01: So there's lots of layers of individuals that could potentially qualify there.
• 7:54
  SPEAKER_01: We talked about supplies, but any supplies that are used and consumed in development or that are used for developing a prototype could potentially be eligible for the credit.
• 8:03
  SPEAKER_01: And the third category of expenses that I think about when I think of my manufacturing clients would be uh contract research.
• 8:10
  SPEAKER_01: So if you are hiring another company or you're using a vendor to test out something that you're developing, or maybe they're engaged in testing, or maybe they're helping you develop a specific component of your product, that's a potential area that we could qualify as well.
• 8:24
  SPEAKER_00: Yeah, they could even have a contractor developing a specific part of the manufacturing line itself.
• 8:29
  SPEAKER_00: Like maybe you need a specific machine or equipment for that product development.
• 8:33
  SPEAKER_00: And depending on how who owns the IP right to that piece of equipment, like you could very much claim credits on that too.
• 8:40
  SPEAKER_02: I love this collaboration.
• 8:42
  SPEAKER_02: Right, right.
• 8:43
  SPEAKER_02: I mean, like the discovery is awesome.
• 8:45
  SPEAKER_02: Yes.
• 8:46
  SPEAKER_02: Okay, so many manufacturers focus on the products they make, but some of the biggest opportunities happen behind the scenes.
• 8:53
  SPEAKER_02: How can improving a manufacturing process, whether it's reducing scrap, increasing thought put, or improving precision qualify for the credit?
• 9:02
  SPEAKER_00: Yeah, um, so pro especially with manufacturing, sometimes the product isn't even what we're claiming the credit for at all.
• 9:08
  SPEAKER_00: It's just the actual process itself.
• 9:11
  SPEAKER_00: Um so you think about it, you if you want to make, I don't know, uh like this a cup, you want to make a cup.
• 9:17
  SPEAKER_00: So someone designed the cup and that's done.
• 9:19
  SPEAKER_00: Like the design of the cup is done.
• 9:20
  SPEAKER_00: So then the question is how do you produce this cup?
• 9:23
  SPEAKER_00: Um, so then they have to they have to build the entire manufacturing line.
• 9:28
  SPEAKER_00: On top of that, they have to make sure that manufacturing works with the material that you designed the cup for.
• 9:33
  SPEAKER_00: Like can can it melt this plastic?
• 9:35
  SPEAKER_00: Can it keep this plastic from um breaking when it cools?
• 9:39
  SPEAKER_00: Like you can't cool it too fast, you want to cool it slowly.
• 9:42
  SPEAKER_00: You um there's just so many little pieces to it.
• 9:45
  SPEAKER_00: Um so it definitely is not just the product itself, but is that product manufacturable and how do you manufacture it and how do you manufacture it quickly while maintaining quality?
• 9:55
  SPEAKER_00: There's just so much, so many questions there.
• 9:58
  SPEAKER_00: Um, you know, and again, reducing scrap rates, increasing yield, um, improving throughput, um, precision, all of those things um are just critical for for manufacturing.
• 10:10
  SPEAKER_01: You covered it.
• 10:11
  SPEAKER_01: I honestly don't know.
• 10:12
  SPEAKER_01: I'm just like, I got it.
• 10:12
  SPEAKER_01: I'm like, I have nothing else to cover.
• 10:14
  SPEAKER_01: No, we didn't.
• 10:14
  SPEAKER_01: That was a nice little deep dive.
• 10:16
  SPEAKER_00: Thank you, Julia.
• 10:17
  SPEAKER_00: If you want deep dives, just hey, we can keep going.
• 10:21
  SPEAKER_02: Okay, so today's manufacturing environment looks very different than it did, of course, a decade ago.
• 10:27
  SPEAKER_02: How are investments in automation, robotics, AI, machine vision, and other advanced manufacturing technologies create new RD opportunities for manufacturers?
• 10:38
  SPEAKER_00: Yeah, the automations especially have been something that we've seen.
• 10:41
  SPEAKER_00: So they're um, you know, getting AI involved, they're enhancing their the computer, even the computer systems within, you know, the machines are changing, and that has a lot of RD as well, and it kind of gets into the you know software development component too.
• 10:56
  SPEAKER_00: Um so all of that has I mean, there's so much RD there.
• 11:00
  SPEAKER_00: Anytime there's new technology in the world, it usually impacts all of our clients and they're all trying to keep up with the next the newest thing.
• 11:08
  SPEAKER_00: So there's a lot of opportunities for RD credits there.
• 11:12
  unknown: Okay.
• 11:12
  SPEAKER_01: And then when you obviously you mentioned software development too, sometimes that can be a portion of effort that's also involved in our manufacturing client.
• 11:19
  SPEAKER_01: So if they are engaged in software development or they are developing something internally, there's a chance that we could qualify some of that time.
• 11:26
  SPEAKER_01: We just have to be mindful that we're not picking up time for like um routine configuration, or they're buying, let's say they're purchasing off-the-shelf software and they're trying to configure it with their um manufacturing line.
• 11:37
  SPEAKER_01: That would just be something we need to get a little bit more detail in.
• 11:40
  SPEAKER_01: But we do have clients that seems to be all the, I don't want to say all the rage, but it seems to be where companies are trending towards is trying to figure out how they can integrate AI.
• 11:49
  SPEAKER_01: Or oftentimes their um manufacturing process is so unique that they can't just purchase software from another company or they can't license existing software.
• 11:58
  SPEAKER_01: They oftentimes have to develop something in-house for themselves.
• 12:01
  SPEAKER_01: So there's additional criteria to keep in mind for qualification there, but it's always worth having the conversation to see if there's eligibility for that effort.
• 12:09
  SPEAKER_00: Yeah, and robotics has been a big thing recently.
• 12:12
  SPEAKER_00: Really?
• 12:12
  SPEAKER_00: Okay, why?
• 12:13
  SPEAKER_00: Well, just automating um the manufacturing line so they don't need people, especially parts that maybe are dangerous, like putting a sheet metal inside of a scary-looking machine.
• 12:23
  SPEAKER_00: Clamps down.
• 12:24
  SPEAKER_00: Right.
• 12:25
  SPEAKER_01: And oftentimes it can be hard to find individuals to help in that part of the assembly.
• 12:30
  SPEAKER_01: So that's where robotics really come into place, too, right?
• 12:32
  SPEAKER_01: If it's not just a safety issue, but they just can't find labor.
• 12:36
  SPEAKER_01: So now they don't have to worry about that.
• 12:38
  unknown: Okay.
• 12:39
  SPEAKER_02: So not every improvement qualifies, but that's where many businesses become uncertain.
• 12:45
  SPEAKER_02: How do you distinguish between routine manufacturing activities and true technological experimentation that meets the IRS requirements?
• 12:53
  SPEAKER_01: Yeah, so I know we talked about the four-part test for credit eligibility.
• 12:57
  SPEAKER_01: Obviously, we would walk through that with any client as we're trying to look at the various projects that they're engaged in.
• 13:02
  SPEAKER_01: But I think Julie and I can always say the one area that we spend a lot of our time honing in on is technical uncertainty.
• 13:08
  SPEAKER_01: We really try to figure out what is a technical uncertainty.
• 13:11
  SPEAKER_01: Is there one at the outset of your project?
• 13:13
  SPEAKER_01: And then are they going through that process of experimentation to eliminate that uncertainty?
• 13:17
  SPEAKER_01: Oftentimes we will have clients say, like, no, we knew exactly what to do.
• 13:20
  SPEAKER_01: It was a simple fix, in which case, if it's simple, there's not really much experimentation.
• 13:25
  SPEAKER_01: We wouldn't want to qualify that time or effort.
• 13:27
  SPEAKER_01: Okay.
• 13:27
  SPEAKER_01: But for some of the time that they spend, it maybe I guess I would I also want to add, it might be that you can't qualify the whole project, but maybe there's a portion of the project that we need to dig into where there is some uncertainty related to the best material to use for developing a product or um again the process, how to develop like manufacture the whole product line.
• 13:48
  SPEAKER_01: That's oftentimes the questions that we get.
• 13:50
  SPEAKER_01: Um, so a lot of our job too is investigating and digging in and making sure that we're asking the right questions because we work with some very, very smart people.
• 13:59
  SPEAKER_01: So sometimes they'll even say, Well, of course I knew how to develop it, or of course I knew how to do this, or I wouldn't have signed this contract, or I wouldn't have, you know, started this project.
• 14:08
  SPEAKER_01: So a lot of times it's like, okay, so you knew how to do exactly what to do.
• 14:11
  SPEAKER_01: There was no trials, there was no iteration.
• 14:14
  SPEAKER_01: You literally just did everything in a sequence.
• 14:17
  SPEAKER_01: And then once you dig in and you ask those questions, you oftentimes realize, okay, maybe it wasn't as simple or as straightforward.
• 14:22
  SPEAKER_01: So a lot of time it's digging into the details.
• 14:24
  SPEAKER_02: So many manufacturers produce custom parts or build products to consumers' specifications, which often raises questions about eligibility.
• 14:33
  SPEAKER_02: When manufacturers are developing solutions for a customer's unique needs, how do you determine whether that work still qualifies for the RD credit?
• 14:42
  SPEAKER_00: Yeah, I think that goes a little back to my example about the cup.
• 14:44
  SPEAKER_00: Like, say a manufacturer orders like a certain t-shirt or something, or a customer orders a certain t-shirt, and then it's up to the manufacturer to figure out how do I produce it?
• 14:54
  SPEAKER_00: How do I produce enough at that quantity with this color, with this quality?
• 14:58
  SPEAKER_00: And so there's a lot of RD there.
• 15:00
  SPEAKER_00: The material they have to consider the material that the the customer wants and and all of that.
• 15:05
  SPEAKER_00: And every time there's a change, every time they maybe have new um requirements, like, oh, actually, we don't like this part of the we need to enhance this, or we need to change this material because this material is cheaper to produce, but we want to keep the same quality.
• 15:19
  SPEAKER_00: Yeah, so please do it with this cheaper material, but I want it to be perfect.
• 15:24
  SPEAKER_02: I want it to perform this way with the most expensive things, but the cheapest route.
• 15:28
  SPEAKER_00: Yeah.
• 15:29
  SPEAKER_00: So then the manufacturing company has to figure out how to do that.
• 15:32
  SPEAKER_00: Yeah.
• 15:33
  SPEAKER_01: So that's a great example.
• 15:35
  SPEAKER_01: A few other things to keep in mind too is we always want to make sure that um you have the IP rights, right?
• 15:40
  SPEAKER_01: So sometimes if you're doing work under contract, we have to dig into the contract to make sure that you have even the IP rights of the process, which doesn't come up too often, but it does come honestly, it comes up pretty 50-50, I would say.
• 15:51
  SPEAKER_01: So that's always something to evaluate.
• 15:53
  SPEAKER_01: And then we have to also look at how the payment is structured between the manufacturer and whoever their client is, too.
• 15:59
  SPEAKER_01: So that will oftentimes dictate eligibility, but usually we ask those questions up front so that there's no surprises later.
• 16:05
  SPEAKER_02: Okay.
• 16:06
  SPEAKER_02: Even when companies are performing qualifying work, documentation can make or break a successful claim.
• 16:11
  SPEAKER_02: What documentation and internal processes should manufacturers have in place to confidently support an RD tax credit?
• 16:18
  SPEAKER_00: Well, the good news is most of our clients already have the documentation in place.
• 16:23
  SPEAKER_00: They usually gather information on you know their trial runs.
• 16:26
  SPEAKER_00: They're like, okay, we manufactured this many items in this trial run, and this next time we manufactured this many in that amount of time.
• 16:34
  SPEAKER_00: And a lot they have a lot of that on hand.
• 16:36
  SPEAKER_00: They have ERP systems that are tracking information.
• 16:39
  SPEAKER_00: Um, they have different prototype design documents.
• 16:43
  SPEAKER_00: They'll have like this is the first prototype, and then we made these changes, and we have this one.
• 16:47
  SPEAKER_00: And usually they have all of that on hand, and then if they ever need to go back and get it, um, I guess our main goal is just to make sure that it's available for them to retrieve it if they ever need it.
• 16:59
  SPEAKER_00: Um knock on wood.
• 17:01
  SPEAKER_01: Well, and to that point, right, we just want to make sure that it's easily accessible.
• 17:03
  SPEAKER_01: Right.
• 17:04
  SPEAKER_01: We're hoping that they never have to reference this in the future, but should they have to, at least they can easily retrieve it and have a system in place.
• 17:11
  SPEAKER_01: So we always recommend our clients retain their documentation for at least seven years, should they ever need it.
• 17:16
  SPEAKER_01: And a lot of our clients, they've retained it indefinitely, and a lot of that goes to they also want to see how their product development cycle has been or the various iterations that they've gone through that way.
• 17:26
  SPEAKER_01: Should they ever come across a project that's similar or come across a different development need, they also already have that documentation to reference and research.
• 17:33
  SPEAKER_00: And thanks to technological advancements, it's all on the computer.
• 17:36
  SPEAKER_00: They don't have files.
• 17:39
  SPEAKER_02: If you have a good program, I guess a good process is in place.
• 17:42
  SPEAKER_01: Yes.
• 17:43
  SPEAKER_01: I would say the one area where it gets a little hairy is sometimes when they have transactions, right?
• 17:47
  SPEAKER_01: Or for client is acquired or um or maybe the company is shut down.
• 17:52
  SPEAKER_01: Obviously, those are instances where it might come up where okay, now you don't have the documentation, but we don't fortunately we don't see that as often.
• 17:59
  unknown: Oh good.
• 18:00
  unknown: Okay.
• 18:01
  SPEAKER_02: Yeah, I know.
• 18:03
  SPEAKER_02: So the value of these credits extends far beyond reducing a tax bill.
• 18:07
  SPEAKER_02: How have you seen manufacturers use the savings from RD tax credits to reinvest in growth, innovation, and future competitiveness?
• 18:17
  SPEAKER_00: I think the the RD credit is a great benefit for companies.
• 18:21
  SPEAKER_00: Um so they spent all this money trying to enhance their product and maybe it didn't even work, but they can get some money back for that.
• 18:28
  SPEAKER_00: Or uh if it did work, they're able to hire more employees or able to get a dollar for dollar off it on their taxes.
• 18:35
  SPEAKER_00: That's very good um just opportunities for them to reinvest in their companies, reinvest in development.
• 18:41
  SPEAKER_00: The whole purpose of the RD credit is to spur development in the United States.
• 18:45
  SPEAKER_00: And so I think it really does that for our clients.
• 18:48
  SPEAKER_00: It frees up cash flow and helps them to continue to grow and innovate.
• 18:53
  SPEAKER_01: That was very well said.
• 18:56
  SPEAKER_01: I was like perfection.
• 18:58
  SPEAKER_01: Well, and if you also think about it too, the federal credit usually ends up being about anywhere from four to seven percent of your qualified spend, and that's just federal.
• 19:05
  SPEAKER_01: And then if you couple that with state credits, about 40 of the 50 states have some sort of state level incentive.
• 19:10
  SPEAKER_01: So their credit can really be very lucrative, depending, especially depending on where your spend is, like which state the company's located and where their employees are.
• 19:18
  SPEAKER_01: Um and then another thing I wanted to add is obviously it's a dollar for dollar offset off of your income tax liability, but if you're a startup, which we don't see many manufacturing startups, but if you let's say you are a you're starting a brand new manufacturing company, um, you could potentially utilize the credit to offset payroll withholding taxes.
• 19:36
  SPEAKER_01: So let's say you can't, you don't necessarily have taxable income, you can't utilize the credit, the federal credit can be carried forward for up to 20 years, or you could potentially use it to offset payroll withholding taxes.
• 19:46
  SPEAKER_01: So it can be very beneficial.
• 19:48
  SPEAKER_02: Yeah, it can.
• 19:49
  SPEAKER_02: Thank you.
• 19:50
  SPEAKER_02: For manufacturers listening who may have dismissed the RD tax credit in the past, today's conversation may have changed their perspective, hopefully.
• 19:58
  SPEAKER_02: If there's one message you'd both like every manufacturer to walk away with and one first step they should take, what would it be?
• 20:06
  SPEAKER_01: Mine would be go reach out to your tax advisor.
• 20:08
  SPEAKER_01: Absolutely or come talk to Julie and I.
• 20:10
  SPEAKER_01: We'd be happy to have a conversation.
• 20:12
  SPEAKER_01: A lot of what you probably do on a day-to-day basis could potentially be qualified for the RD tax credit.
• 20:17
  SPEAKER_01: So if you haven't already evaluated, have a conversation.
• 20:20
  SPEAKER_01: Usually it can be like an initial 30-minute to one hour call where we you can we can really quickly vet out whether a company would be eligible for the credit or not.
• 20:28
  SPEAKER_01: So I think it's worth exploring.
• 20:30
  SPEAKER_01: If you're spending that money, put it back in the company.
• 20:32
  SPEAKER_01: Yeah.
• 20:33
  SPEAKER_00: Yeah, don't miss out.
• 20:34
  SPEAKER_00: It's it's there for you to take.
• 20:36
  SPEAKER_00: So you should should at least check it out.
• 20:38
  SPEAKER_02: Utilize every possible way.
• 20:41
  SPEAKER_02: Don't leave money on the table.
• 20:42
  SPEAKER_02: Right.
• 20:43
  SPEAKER_02: But also have a great advisor that helps you lead through that process as well.
• 20:47
  SPEAKER_02: So thank you, Nina.
• 20:48
  SPEAKER_02: Thank you, Julie, for being on and providing insights into this conversation.
• 20:52
  SPEAKER_02: And I hope to see you back.
• 20:53
  SPEAKER_02: Thank you, Sheridan.
• 20:54
  SPEAKER_02: You're welcome.
• 20:56
  SPEAKER_02: That wraps up today's conversation with Nina Desai and Julie Haken.
• 21:00
  SPEAKER_02: Today's conversation highlights that innovation in manufacturing isn't limited to breakthrough inventions.
• 21:06
  SPEAKER_02: It's happening every day through smarter processes, better products, automation, and continuous improvement.
• 21:13
  SPEAKER_02: And when companies recognize those efforts, they may also unlock valuable opportunities to reinvest in future growth.
• 21:20
  SPEAKER_02: Thanks for tuning in to Beyond the Ledger.
• 21:22
  SPEAKER_02: For more insights and expert perspectives, visit btcpa.net and explore our latest resources.
• 21:28
  SPEAKER_02: And don't forget to like, follow, share, and subscribe.
• 21:32
  SPEAKER_02: Until next time, I'm Sarday Lake Hill, and we'll see you for the next conversation.