Payroll Credits
The R&D payroll tax credit lets a qualifying startup apply up to $500,000 a year of its research credit against payroll taxes instead of income tax. It fits companies under $5 million in gross receipts with five or fewer years of revenue. You elect it on your original, on-time return, and the offset starts the quarter after you file. Fee: a share of the credit. No credit, no fee.
FeeA share of the verified credit, invoiced after it is filed. Nothing if you do not qualify.
See your result before you talk to anyone. No contact info needed.
Tax services are provided by licensed tax professionals under a separate engagement agreement. BEG does not provide tax advice.
What It Costs to Wait
None of them pause while you decide.
The election goes on the income tax return you file on time, extensions included. The IRS does not accept it on an amended return.
The offset starts the first quarter after that return is filed. Until then, every payroll tax deposit is paid in full.
Only companies with five or fewer years of revenue qualify, and the election can be made for five tax years in total.
How It Works
From a 90-second check to a verified credit on your 941.
Answer five questions on this page. Your result shows on screen, with no contact info required.
A 15-minute call reviews your answers and your payroll setup. If it fits, BEG brings in its licensed tax partner.
Licensed tax professionals document the qualifying work and wages, then file the election. Your team gives a few hours of interviews, not weeks. The offset runs through each quarterly 941.
Who Qualifies
Three tests. Pass all three and the payroll election is open to you.
Older or larger companies keep the credit. It applies against income tax instead, and open prior years can often be recovered.
See Tax Planning →Counted across related companies together, not one entity at a time.
Counting the credit year. Pre-revenue years do not count against you.
Software, engineering, product development, process improvement, formulation. Not sure? That is what the check is for.
Complete Scope
Everything handled, from the first question to the last 941 of the year.
Why This Is Different
“We don’t do R&D. We just build software.”
Building or improving software, products, or processes is what the research credit covers when the work meets the IRS tests. No lab required. A licensed tax professional checks it before anything is claimed.
“We paid for a study up front and got nothing back.”
The fee is a share of the credit, invoiced after the credit is verified and filed. If you do not qualify, the check and the call cost nothing. If the credit is small, the fee is small.
“Research credits get audited.”
Every credit is verified by licensed tax professionals and documented to examination standards before it goes out. If a position does not hold up on review, it does not get filed.
Compare
| Factor | BEG Payroll Credits | Standalone credit firm | Doing nothing |
|---|---|---|---|
| First step | 90-second eligibility check, no call | A sales call | None |
| Cost if you do not qualify | Nothing | Often a study fee | Nothing, and nothing gained |
| When you pay | After the credit is verified and filed | Often when the study is delivered | Full payroll tax, every quarter |
| Your team’s time | A few hours of interviews | Often weeks of data pulls | None |
| Payroll coordination | Handled with your payroll platform | You relay it to your provider | Not applicable |
| Review before filing | Licensed tax professionals, every credit | Varies by firm | Not applicable |
| Outcome | Credit applied against payroll taxes | Credit claimed | Credit left unclaimed |
No. The Employee Retention Credit was a temporary pandemic program. This is the federal research credit, in the tax code since 1981, with a payroll election for small businesses since the 2016 tax year.
Often, yes. The test is whether your people work through technical uncertainty to build or improve a product, software, or process. Software teams, engineers, manufacturers refining a process, and formulators often qualify.
Companies with under $5 million in gross receipts for the year, no gross receipts before the five-year period ending with that year, and qualified research expenses.
Up to $500,000 a year for tax years beginning after 2022. It applies to the employer share of Social Security tax first, then the employer share of Medicare tax.
Yes. That is who the payroll election is for. It reduces payroll taxes you already pay, whether or not you owe income tax.
The first calendar quarter that begins after you file the income tax return that makes the election.
No. It has to be on the original return, filed on time with extensions. The IRS does not allow it on an amended return.
Only the payroll offset is limited to the first five years. The credit itself still applies against income tax, and open prior years can often be recovered. See Tax Planning.
Yes, if you have qualified research expenses. A company with no gross receipts meets the receipts test.
Form 6765 makes the election on your income tax return. Form 8974 claims the credit with each quarterly Form 941.
No. The credit works with any payroll provider, and you keep yours. BEG coordinates Form 8974 with whoever files your 941. When BEG already runs your payroll, that side is handled in-house.
The unused amount carries forward to the next quarter.
Up to five tax years, and only while the company still passes the gross receipts tests.
A share of the verified credit, invoiced after it is filed. Exact terms are set in the engagement agreement before any work begins. The eligibility check and the first call cost nothing.
Licensed tax professionals at BEG’s tax partner verify, document and file the credit under their own engagement agreement. BEG does not give tax advice. Your BEG contact coordinates payroll and stays your single point of contact.
If you appear to qualify, you book a 15-minute call with BEG. If it fits, BEG brings in its licensed tax partner for the study.
Ready?
See your eligibility before you talk to anyone.
Tax services are provided by licensed tax professionals under a separate engagement agreement. BEG does not provide tax advice.
