CASE STUDY


AUGMENTED REALITY

HIGHLIGHTS

  • VIRTUAL REALITY INDUSTRY
  • START-UP COMPANY
  • R&D CREDIT OFFSETS
    PAYROLL TAX
  • REFERRED BY CPA
  • $80,000 ANNUAL R&D
    CREDIT

Founded by three friends and backed with capital from some of the biggest names in their industry, this start-up company is a pioneer in their sub-industry of Virtual Reality. In addition to unique software and hardware design, this young company also creates mobile and web apps. The words ‘cutting edge’ are an understatement.

R&D QUALIFICATION

With only a handful of employees on payroll and roughly the same amount of contractors, this company develops brand new technology. Because of the unique nature of their product, both hardware and software needs to be developed from scratch. The design and engineering require significant iterations and testing through trial and error. With all of this research, yet no taxable income, the company assumed that R&D credits would not apply to them.

WHY Source Advisors

Source Advisors was referred by the firm’s CPA specifically because they stay current on R&D tax law and regulatory changes. Source Advisors invested the time and resources required to understand the company’s R&D investment to ensure they were maximizing R&D credits. Source Advisors had a strategy in place to increase cash flow for start-up companies (less than 5 years old and less than $5M in revenue) by using R&D credits to offset payroll tax.

THE RESULTS SPEAK FOR THEMSELVES

Being a start-up company that develops brand new technology, a majority of the capital is spent on research and development. With Source Advisors’ expertise, this virtual reality company realized a combined federal and state credit of $80,000 over a single year. New tax laws allowed them to apply their federal credit amount to payroll taxes. The state credit will be used to offset future state taxes as revenue is generated. The successful outcome was well received and the process with Source Advisors was a “breeze” according to their CEO.

HIGHLIGHTS

  • VIRTUAL REALITY INDUSTRY
  • START-UP COMPANY
  • R&D CREDIT OFFSETS
    PAYROLL TAX
  • REFERRED BY CPA
  • $80,000 ANNUAL R&D
    CREDIT