The pet industry has experienced recent growth due to the increase in pet adoption rates during last year’s lockdown. With more time to invest in care for pets while working from home and staying indoors, many people have turned to the support of these four-legged companions. Shelters have reported massive decreases in available animals and occupancy levels which has brought about an influx in demand for quality and efficient care, products and resources for pets.
In fact, the American Pet Products Association reported that $99 billion dollars were spent on pets last year, and online pet food sales jumped 77% in the U.S. in March 2020 year-over-year. This large industry expansion has led many businesses in the pet industry to undergo research and development activities that could qualify them for essential tax credits to offset much of the cost needed to perform these activities.
What are R&D Tax Credits?
Research and development tax credits are dollar-for-dollar tax credits given to businesses who take risks and complete innovative work that helps advance their industry. These tax credits can be used to offset any cost it took to complete the research and development performed therefore promoting companies to continue to invest in future growth.
R&D tax credits are given to companies who:
- Improve the quality, function, or reliability of a process or product
- Resolve or remove uncertainty in a product or process
- Have a systematic process to research or development such as logical trial and error, assessing alternatives, and refining hypotheses
- Perform research that is technological in nature
If your company has been involved with any of the above, you could receive these tax benefits with the proper documentation and help from a professional tax team.
What Type of Activities Would Qualify Pet Companies For These Credits?
Here are a few examples:
- Researching and developing formulas and recipes for healthier pet food and treats
- Researching and developing formulas and recipes for medicines and supplements
- Applications and other forms of technology developed to help with general pet care and training
- New or improved toys and pet products such as grooming products, shampoos, toys that help with dental hygiene, physical health or other forms of health
- Creating virtual platforms for veterinary visits and consultations
- Developing new veterinary practices or methods that improve the quality of care or removes any uncertainty
If your business has performed any activities that you think qualify for these lucrative tax credits, our team of tax specialists at National Tax Group can help walk you through the entire process of gathering all the correct paperwork to make sure you receive the money you’re owed for your efforts.
Give our team a call at 561-257-3436 and set up your free consultation with us to get started.