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R&D payroll tax credit

Additional source of cash flow for small businesses!

What is the Payroll Tax Credit?

The Payroll Tax Credit is a subset of the R&D Tax Credit that allows qualifying small businesses and start-ups to reduce the company’s share of their FICA payroll tax liability. The Payroll Tax Credit can provide a source of cash flow at a critical time for startups and small businesses.

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    R&D Tax Credit for Qualifying Small Businesses

    The Payroll Tax Credit

    This version of the R&D Credit was created in December 2015 through the Protecting Americans from Tax Hikes (PATH) Act to benefit younger companies with no or a very small income tax liability. The Payroll Tax Credit can be claimed for a maximum of 5 years by a Qualified Small Business.

    How to Qualify for Payroll Tax Credits?

    • To be considered a Qualified Small Business, your company did not have gross receipts for any years preceding the 5 tax year period ending with the credit year
    • The gross receipts must be below $5M per year
    • Each year qualifying companies can claim a maximum of $250K, or a total of $1.25M across the 5 years

    What can this mean for your business?

    • Immediate reduction in your payroll tax liability
    • Credits banked for future payroll tax liability
    • Increased valuation
    • Freeing up cash to re-invest

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