Research and development are crucial for companies to create new products and improve their existing lineup. In many cases, companies must onboard staff to fulfill their labor needs, and they can utilize their research and development (R&D) need to create new jobs. Here are ways businesses can stimulate the job market through R&D.
Create a long-term R&D strategy
The first step to creating research and development jobs is ensuring you have a long-term R&D strategy. Examples of aspects to include in your strategy include:
- Having a problem-solving approach: When creating an R&D strategy, it is crucial to identify the problem, brainstorm ideas, and determine the most effective solution.
- Balancing focus with experimentation: Companies must focus on achieving their goal during research and development. However, the team should be given opportunities to experiment, as experimentation may lead to additional discoveries that can benefit your organization.
- Clear goals and objectives: Ensuring that your team consistently has a clear goal to accomplish is essential for maintaining productivity. Moreover, it is vital for the department to clearly understand how their work contributes to the company’s success.
A long-term plan allows businesses to remain competitive by enabling them to focus on a goal and adjust their strategy as events unfold.
R&D-centric job titles
Examples of job positions within R&D include scientists, development engineers, and laboratory technicians. In today’s job market, you’ll likely find R&D professionals of varying experience levels, which can help you find employees who fit your company’s needs.
What companies can create R&D jobs?
A common misconception is that a company must be a large corporation with a laboratory to create research and development jobs. However, many small businesses and startups in non-science sectors can create R&D-related jobs as well, including software companies and web development firms.
Create an R&D department
As your organization grows, having a distinct R&D department can improve team cohesiveness, provide common goals, and increase efficiency. Building a team of R&D employees with various skills can benefit your organization and potentially result in more creative solutions.
Having all R&D employees working in a distinct department can improve team cohesiveness by providing them with a common goal. A cohesive team is likelier to be more efficient while using fewer resources.
Look beyond scientists and researchers
While scientists and researchers can be excellent candidates to include on your team, others in non-science or tech professions can also perform research and development. Businesses in non-tech sectors, such as food, apparel, and agriculture, can have employees performing R&D.
Some job titles with potential qualifying research activities include apparel designers, chefs, and food producers. Further, the range of activities that can count as research and development is vast, from improving food taste to streamlining manufacturing.
Receiving tax credits for qualifying activities
Once you have onboarded R&D employees, the next step is to document all qualifying research activities within your organization to clearly define them and claim R&D tax credits. R&D tax credits are dollar-for-dollar credits from the federal government available to companies that attempt to innovate their lineup. Congress created the R&D tax credit in 1981 to incentivize companies to invest in research and development. In 2015, the Protecting Americans from Tax Hikes Act (PATH Act) made the R&D tax credit permanent.
Tracking employees’ research activities is essential when filing an R&D tax credit claim. Further, it is crucial to note that qualifying research activities (QRAs) need not be successful or groundbreaking for the IRS to approve them; activities only need to pass each aspect of the four-part test and be new to the company. The four-part test includes the following:
- New or improved business components: QRAs must be done to create a new business component or improve an existing one.
- Technical activities: Activities must utilize the hard sciences such as computer science, mathematics, biology, etc.
- Eliminating uncertainty: Research and development teams must not know the outcome when beginning their activities. Qualifying research activities must attempt to resolve uncertainty, such as not knowing whether a new business component can speed up a manufacturing process.
- Utilizing an experimental process: Organizations must demonstrate that they are using alternative formulas, processes, discussions, or simulations for their research.
Research and development present businesses with prime opportunities to improve their offerings while providing R&D professionals the chance to grow their careers. If you need help claiming R&D tax credits for your organization, MainStreet helps startups and small businesses claim each credit they qualify for, saving business owners time and money. Get in touch with us to get started today.