While often overlooked, manufacturing companies perform a multitude of activities that can qualify for the Research and Development (“R&D”) tax credit.
Manufacturers that are improving their processes or designing and developing new or improved products are precisely the companies that can be eligible for this incentive. A segment of the manufacturing industry that may also qualify for the R&D tax credit is food manufacturing — specifically, those companies that process food for consumption. Food manufacturers are not only developing improved processes, but they are also working to ensure that their processes are as safe and efficient as possible. It is these development activities that make food manufacturers candidates to claim the R&D tax credit.
Food manufacturers regularly improve and update machinery and equipment to ensure not only the safety of the food during processing, but to maximize the safety of food delivered to the consumer. The integration of new equipment into the manufacturing process can be qualified toward the tax credit. In addition, food manufacturers improve processing techniques that increase product consistency and maintain compliance with ever-changing federal and state regulations.
alliantgroup recently worked with a food manufacturer to identify activities that qualify toward the R&D tax credit. This company focuses on the manufacturing of meat products for sale to restaurants throughout the country. The company expended resources, including employee time, every year to ensure that their manufacturing process complied with all regulations while maximizing manufacturing efficiency. Recently, a new process was implemented at the company that improved the quality of the meat, both during and after the freezing process. This ensured that the product delivered to the restaurant was as fresh as possible. This company’s qualified activities for the R&D tax credit focused on the consistent development of improved manufacturing process.