Industry Spotlight: Software

Given the broad definition of R&D, research and development, by the IRS, many companies in nearly all industries can qualify for the R&D tax credit. Software companies, in particular, are constantly conducting R&D by using their creativity and innovation to build or improve upon their product offerings. The R&D tax credit is a Federal tax incentive designed to reward companies innovating in America.

Below are just a few examples of R&D activities for software companies:

  • Daily stand up meetings to discuss software sprints
  • Writing code to build new or improve upon software and algorithms
  • Quality assurance testing prior to commercial release
  • Mobile app (iOS, Android) development
  • Back end development of web apps
  • Building an API to integrate with other platforms
  • Evaluating functional requirements and technical specifications
  • Designing and improving upon the platforms structural architecture

Chances are, if your company develops software for sale, lease, or license, your company is conducting research and development. As long as the R&D occurred in the US, you should consider looking into claiming the R&D tax credit. While R&D tax credits are primarily used to offset income taxes, qualified small businesses can now apply their R&D tax credit to offset future payroll taxes!