Businesses don’t become unicorns by waiting on the sidelines or simply following market trends.
According to McKinsey, companies that foster an innovative culture—where experimentation is rewarded and new ideas are celebrated—are twice as likely to succeed with digital initiatives like software transformations.
In fact, businesses that adopt new technologies—especially AI-powered tools—were 4.5 times more likely to describe their products and services as industry-leading.
Perhaps most telling of all? These innovative companies were also investing twice as much in research and development (R&D).
And all signs point to these R&D investments delivering real results.
Billions in tax credits available
Across North America, more than $20 billion in R&D tax credits are available to help innovative companies recover a portion of their research and development investments and stretch their innovation budgets even further.
The beauty of R&D tax credits is that they let you recover a portion of the investments you’re already making to drive innovation.
This gives finance teams a way to optimize EBITDA while unlocking a “virtuous cycle” of R&D—meaning your investments can keep compounding over time.
An underused program in the U.S.
In the United States, for example, businesses can claim up to $500,000 per year to offset tax liabilities (like payroll and income taxes) as part of the IRC Section 41 tax credit. That means up to $500,000 in cash can actually stay in your business’s bank account each year, letting you fund more innovation and reduce your total taxable income at the same time.
What’s frustrating is that billions of dollars in R&D tax credits go unclaimed every year because businesses either aren’t aware of them or get stuck navigating the IRS’s complex claim process.
A strong tradition of innovation in Canada
Canadian founders benefit from a long-standing tradition of innovation tax credits to support R&D. The flagship Scientific Research & Experimental Development (SR&ED) program, for example, serves R&D-focused businesses of all sizes and industries, and provided nearly $4 billion in support to more than 22,000 innovative Canadian businesses in 2021 alone.
But even the Canadian government recognizes that accessing SR&ED funding isn’t always easy or straightforward.
That’s because much of the approval criteria for both SR&ED and Section 41 tax credits are relatively subjective: Even though both governments provide a list of qualifying criteria for eligible activities, communicating your “unique innovation” to the IRS or CRA requires expertise that most in-house R&D teams—and even finance leaders—don’t have at their fingertips.
That’s because preparing these claims requires the combined expertise of experienced technologists AND tax policy specialists.
How to maximize your R&D tax credit eligibility
To make sure your company’s research and development efforts are set up to maximize your access to innovation capital, here are some practical steps you can take right now—without overburdening your finance or technical teams.
Step 1: Improve business and technical visibility
The top priority for finance leaders looking to understand tax credit eligibility is to create better alignment between the technical and financial sides of the business.
That said, this doesn’t mean you need to overhaul your current workflows.
In fact, teams should avoid disrupting R&D progress by pulling researchers and engineers away from their projects just to focus on tax credits.
Instead, finance teams should look for solutions like Boast that integrate with the project tracking, payroll, and financial reporting systems your teams already use. By combining AI and human expertise, Boast actively and passively links actions to financial outcomes, providing a continuous intelligence system for optimizing R&D strategies and flagging credit-worthy activities.
Step 2: Explore all funding opportunities
While tax credits help you recover investments you’re already making in product development, there are also plenty of grant programs that offer non-dilutive innovation capital for promising projects. However, keep in mind that using some of these programs to fund your R&D may disqualify you from certain R&D tax credits. Finance teams should still pursue a diverse mix of capital sources to drive innovation—instead of putting all their eggs in one [investment] basket, so to speak.
Step 3: Keep thorough records:
While finance teams don’t need to manage the workflow systems of their product development counterparts (and vice versa), both sides should be diligent about keeping thorough records of their progress throughout the year.
Both the IRS and CRA recommend tracking workflows—like timesheets and project plans—as a baseline. Following these best practices shows government agencies that your organization is doing its due diligence (which can boost their confidence in your business—or even help during audits).
Down the road? Keeping good records (and having successful tax credit claims as proof) will also make your business more attractive to investors.
Step 4: File on time
This should go without saying, but the more disciplined you are about meeting R&D tax credit deadlines, the better positioned you’ll be to unlock that “virtuous cycle” of investment—both for current and future claims.
Simply put, stick to the deadlines for filing R&D tax credit claims and, depending on your country, you may even be able to claim credits retroactively for up to three years after expenses were incurred.
Maximize your R&D tax claim with minimal effort
With Boast AI, you’re not just filing a claim—you’re making sure you get the biggest possible return with the least amount of effort.
With decades of experience navigating tax codes—and as a team of founders and technologists ourselves—plus a platform that syncs your key financial, project workflow, and payroll data into a single system of proof, Boast leaves no stone unturned in uncovering all your credit-worthy activities.
In fact, businesses that work with Boast to file their R&D tax credit claims typically see 20 percent higher returns than those who work with competitors or try to claim on their own.
Boast helps you easily capture more of your eligible R&D tax credits with our scalable, AI-driven software, which is flexible enough to accept technical data from virtually any system. This ensures every qualifying activity is captured and every hour is accounted for—down to the last detail.
From there, our technology helps us identify eligible work and guarantees that we find every single hour and cost that went into those initiatives. Our team of industry experts then steps in, thoroughly analyzing your projects and identifying every qualifying project throughout the year.
Our unique Boast method, built on more than a decade of claim experience, is designed to create the most effective R&D tax strategy tailored to your specific needs.
Talk to an expert Connect with our team today to see how we can help you maximize your access to essential innovation capital.
