When it comes to research and development, few people think about their skin and the treatments necessary to care for it. However, research and development for skincare products, treatments and cures have significantly increased over the years due to heightened awareness of skin cancer and other skin diseases.
A lot of dermatologists and companies may not know they can qualify for R&D tax credits and are missing out on a direct source of cash flow. If your company is involved with the development of skincare methods and medicines that are new, improved and more efficient – you may be in luck.
Medical Vs Cosmetic Dermatology
The main difference between medical and cosmetic dermatology, as it applies to R&D, is their goals.
Medical dermatology involves the treatment, diagnosis, and prevention of disease for the hair, skin and nails. Cosmetic dermatologists treat the skin, hair and nails using processes that improve a patient’s appearance and don’t focus as much on disease treatment. With this in mind, medical dermatologists will largely focus their research efforts on developing drugs and treatments for skin disorders and diseases while cosmetic dermatologists work on developing aesthetic or therapeutic skin care methods and products.
What Would Qualify as R&D?
The activities that qualify for R&D differ based on the type of research dermatologists perform. In general, anything that improves a product, process or software, is technological in nature, eliminates uncertainty, and has a process of experimentation will be considered for these credits.
Examples of Activities That May Qualify:
- Clinical and lab research for skin disorders, diseases or cancer
- Advances in technology such as smartphone applications that allow people to self-examine irregular moles or skin lesions
- Research to develop drugs or creams that help treat skin diseases or disorders or even cosmetic developments such as acne medicine or hyper pigmentation lightening cream
- Non-invasive cosmetic surgeries like Coolsculpting
- Therapeutic aspects of skin care to help eliminate discomfort or health risks
What The Next Steps to Claim These Tax Credits
If you think your company may qualify for R&D tax credits, the next step would be getting together paperwork to assess employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. This can be a long and highly detailed process. Having a team of tax professionals by your side to help complete these claims can help guarantee the maximum credit you can claim.
At National Tax Group, we have a team of skilled and experienced professionals who are here and ready to help you. Give us a call at 561-257-3436 and set up your free consultation with us to get started.