How to Qualify Businesses for R&D Tax Credits: A Sales Rep's Guide

1. "Do you have W-2 employees doing technical work?"

This is your first filter. R&D tax credits require W-2 employees (not 1099 contractors) engaged in qualified research activities. The credit is available under IRC Section 41 and is claimed on IRS Form 6765.

2. "What kind of technical work do your employees do?"

Qualified research activities include software development, product improvement, engineering, and experimentation. The work must involve technical uncertainty - meaning you didn't know if it would work when you started.

3. "Was there technical uncertainty when you started?"

Important distinction: Technical uncertainty is about HOW to do something, not WHETHER it will work. You can be confident the end result will work, but still qualify if you had to figure out the methodology, design, or implementation approach.

4. "How many W-2 employees do you have, and what's your annual revenue?"

More employees and higher revenue typically mean higher potential credit recovery. R&D credit is typically 6-8% of qualified research expenses (QREs), which include W-2 wages, supplies, and cloud computing costs.

Note: Actual amounts vary significantly based on percentage of time spent on R&D, qualified expenses, and years in business. These are rough estimates.

5. "Do you have documentation of your R&D activities?"

Documentation is crucial for defending the credit. Good documentation includes timesheets, commit logs, design documents, test results, meeting notes, and project plans. If they don't have documentation, they may still qualify, but it's harder to defend.

"We already have an accountant"

Response: "Many accountants stop doing R&D credits because they're complex and require detailed documentation. We specialize in this - we handle all the documentation, calculations, and IRS forms. Your accountant can focus on what they do best."

"We're too small"

Response: "R&D credit works for companies of all sizes. Even with 5-10 employees, you could recover $30,000-$70,000. The credit is based on your qualified expenses, not company size."

"We don't have documentation"

Response: "We can help you create documentation retroactively. Git commit logs, timesheets, and project notes can all be used. We'll guide you through what's needed."

"I'm just adding features/levels - I know they'll work"

Response: "That's fine! The question isn't whether the feature will work - it's whether you had to figure out HOW to implement it. Did you experiment with different approaches? Try different algorithms? Optimize performance? Balance mechanics? That's technical uncertainty, and it qualifies."

"I work on side projects that don't work out - can those count?"

Response: "Yes! If you're a W-2 employee working on business projects (even experimental ones), the time qualifies. The IRS specifically says 'even unsuccessful research qualifies.' If you were experimenting with different technical approaches for your business, that's R&D. The key is it needs to be for your business, not personal projects."

"It sounds too good to be true"

Response: "The R&D tax credit has been around since 1981. It's a legitimate IRS program. We're just helping you claim what you're already entitled to. No upfront fees - we only get paid if you get a credit."