Startup Business Tax Credits
Startup Companies & The R&D Tax Credit.
The PATH Act of 2015
On Friday, December 18th 2015, the "Protecting Americans from Tax Hikes"
(PATH) Act was signed into law by President Obama. This law makes
billions of dollars in incentives and cost reduction programs available to
Startup Companies. The PATH Act instituted the most sweeping tax code
changes in 33 years.
Startup Companies Now Qualify
The definition of a Startup under the PATH Act is simply, any company
formed after 2010 with gross receipts less than $5M in 2016. Qualifying
businesses may capture up to $250,000 of incentives and tax credits
annually and be able to claim credits against payroll taxes. Companies that
don't meet this criteria still qualify for Federal Tax Credits under the PATH
Act with the expanded R&D Tax Credit.
Startup and Tech companies due to their nature should take advantage of
Specialized Tax Incentives that are available to offset tax liability. GMG's
expertise lie in programs such as the R&D Tax Credit, Cost Segregation,
Hiring Incentives and Property Tax Mitigation. Programs that prior to the
PATH Act were out of reach for small to mid sized companies are now
attainable for Startups.
Prior to The PATH Act companies without income tax liability or companies
who fell under Alternative Minimum Tax (AMT) either did not qualify for or
had to carry forward R&D tax credits. Now, small businesses qualifying
under The PATH Act can capture the R&D tax credit within the immediate
tax year against payroll taxes, AMT, or Federal Income Taxes.
A Small Business qualifying under The PATH Act with a payroll of $250,000
would normally have to pay $15,500 in FICA. The available (estimated)
R&D Tax Credit of $16,000 would offset their tax liability 100%.