Claiming R&D Tax Credits as a One-Person Business

small business

R&D Tax Credit

Riz Malik
July 2, 2024

Whether you're a freelancer, contractor, or small business owner working solo, you might be surprised to learn that you can still claim valuable R&D tax credits.

The Employee Myth Debunked

There's a misconception that R&D credits are only for companies with large research teams. Employee salaries are just one piece of the R&D credit puzzle, the key is identifying qualified expenses directly related to your research and development activities.

Other expenses that qualify for the R&D Tax Credit include:

  • Supplies and Materials: Did you purchase prototypes, specialized software, or other tools crucial for your R&D process?
  • Outside Contractors: Did you hire freelancers or consultants to assist with specific R&D tasks?
  • Cloud Computing Costs: Are you leveraging cloud-based platforms to power your R&D efforts?

The core principle is that your expenses are directly tied to overcoming technological uncertainty for the development of a new or improved product, process, formula, software, technique, or invention. The size of your team doesn't matter.

Unlocking R&D Tax Credits as a One-Person Business

By understanding what qualifies and keeping good records, you can ensure you're not missing out on valuable tax breaks as an independent innovator. Don't let the lack of a large team hold you back from claiming the R&D tax credits you deserve.

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Common Challenges When Claiming R&D Tax Credits

Although claiming this credit can offer considerable benefits for companies engaged in R&D efforts, the process can be challenging.

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No Profits, No Problem: R&D Tax Credits Can Help Your Startup

Running a startup is all about innovation and making the most of your resources. But what if you're not yet turning a profit?

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What Happens to Unused R&D Tax Credits?

What happens if you don’t use all your credits in a single year? Don’t worry! The US tax code has you covered.

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