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Education

the first year. Forbes also notes that 90 percent of startups permanent fixture in the American tax code system.
don't make it. Business analytics firm CB Insights placed a
lack of capital as the number one reason for new business Software companies currently dominate the R&D indus-
failure. try. Some of the biggest tech companies like Alphabet,
Amazon and Microsoft spend 7 to 21 percent of their total
As old businesses pivot into their next new business itera- budget on R&D, all eligible expenses for reimbursement.
tion or new businesses form to meet changing consumer But here's the surprising news—many retail businesses
demands, investing in new tech, processes or software be- can also apply. So can ecommerce businesses, engineering
comes essential. Businesses that started during the pan- firms, manufacturers, and fintech companies. The recent
demic, or that flexed to meet new consumer demands, ruling from United States vs McFerrin broadened the defini-
need capital to sustain their business operations and meet tion of R&D. Now the idea of only getting credit for pat-
the demands of a post-pandemic economy. ented or brand new ideas is outdated. Instead, companies
can get credit for processes or packaging that is just new
Economic Innovation Group cautioned that "Maintaining to them.
this high level of new business formation will be crucial
in placing the economy on a strong and durable path to Before the passage of the PATH Act, companies viewed
its recovery and helping eliminate the startup deficit that claiming tax credits as a risky bet since there was no guar-
had built up in recent years." Startups and new businesses antee that legislation would support the credits through
are perfectly positioned to be the engine for the economy's the next year. Now that their status has been solidified,
recovery. They just need a little fuel. the R&D sector has over $18 billion in funds for anyone
who's a mover-and-shaker in their industry. And that's
Rewarding risk and American job creators good news for the American economy.
From its debut in 1981, the R&D tax credit's purpose has
been clear—to keep high-paying jobs in the United States Tyler Kem is co-founder and president of Strike Tax Advisory, which
by rewarding companies that invest in risk and innova- helps businesses discover and claim government-provided tax credits
tion. After its creation, the tax credit underwent several and incentives available to them. Strike Tax helps SMBs compete more
amendments, all with the intention of making it easier to efficiently while keeping jobs in the United States. For more information,
claim. In 2015, the PATH Act made the R&D tax credit a visit www.striketax.com.