Critical Tax Deadline For Local Startups Approaching

FOR IMMEDIATE RELEASEContact: Powers Kanepowers@recoupetax.com(727) 300-6577
Critical Tax Deadline For Local Startups Approaching
Startup companies can offset up to $250,000 in payroll taxes for 2021 but must file their 2020 income tax before the March 15 deadline.
St. Petersburg, Fla. – February 10, 2020 – The window for Tampa Bay area startups to claim 2020 R&D tax credits is rapidly closing. Companies that fail to apply for tax credits by the March 15 corporate tax filing deadline risk missing out on an entire year of tax credit benefits and will have to wait until March 15, 2022 to apply again. In existence for 40 years, the R&D tax credit is the most valuable incentive offered by the federal government to businesses that develop new or improve upon existing products, processes, software, or services.
Worth up to $250,000 against annual payroll tax costs, startups can apply for R&D tax credits even if they only have one person on staff and don’t make a profit. In 2015, the federal government expanded how companies can apply their tax credits, looking to boost innovation at entrepreneurial startups. Potentially, qualifying companies can use their tax credits against payroll for 5 years or until they are profitable, whichever comes first.
Startups can leverage the R&D tax credit to drastically reduce their taxes and increase cash flow that is vital in a business’ early years. However, despite substantial financial benefits, an estimated 90% of eligible startups fail to leverage the R&D tax credit.
“Most startups either don’t know about the R&D tax credit or they simply assume they aren’t eligible,” said Powers Kane, Co-Founder of St. Petersburg-based RecoupeTax (www.recoupetax.com). “A lot of people think this is only available to big tech, pharma, or manufacturing companies. The fact is that startups in any industry, and of any size-even pre-revenue – can take advantage of the credit.”
According to Kane, who is leading an effort to educate startups on their eligibility and guide them through the process of leveraging the R&D tax credit, the impact of the R&D tax credit to a startup can be substantial. “We speak to startup founders everyday and cash flow is their most critical concern,” he said. “Startups always need more cash to continue to hire, market, or buy equipment. Since COVID hit, every extra dollar on hand is even more critical. There is no easier way to dramatically boost your cash flow without making a single sale or with zero loss of equity than the R&D tax credit. They (startups) just need to go get it.”
In order for startups to take advantage of the R&D tax credit, they must file for the credit on a timely filed return; which this year is March 15. If the credit isn’t claimed at that time, then the business is required to wait until next year in order to take advantage. That means potentially missing out on up to $250,000 in additional cash for the business.
Despite the limited time frame, Kane says there is still plenty of time to claim the credit; but startups shouldn’t delay too long. “Confirming eligibility can be done in a few minutes. Producing the substantiating documentation will take a few weeks. There’s time left, but action needs to be taken very soon.”
For more information about RecoupeTax and the R&D tax credit, visit www.recoueptax.com