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2016 Tax Savings Opportunities to Explore for Manufacturers

According to Blue & Co. and LEA’s 2017 National Manufacturing Outlook and Insights survey, 44% of small manufacturers (those with fewer than 100 employees) and 19% of large manufacturers expect revenue growth of more than 10% in 2017. Another 50% of small manufacturers and 30% of large manufacturers expect revenue growth in the 3% – 9% range.

This is a very good sign for the industry.

One of the challenges in fueling this growth is developing additional cash flow strategies to support investment in R&D, Capital Expenditures, Increasing Labor Costs, and Acquisitions – which were all identified as top priorities in the survey.

That is why it is important to revisit tax saving opportunities with the changes to the R&D tax credit that were incorporated into the 2015 PATH Act. Beginning in 2016, qualifying taxpayers (S-Corporations, partnerships, sole proprietors, etc. with average annual gross receipts of $50 million over the previous three years) can now claim the credit against their alternative minimum tax (AMT). Previously, the AMT had greatly limited the benefit of the credit for many of these taxpayers. Additionally, the R&D tax credit can be used to offset payroll taxes up to $250,000 for certain qualifying startup entities.

It’s not too late to claim the credit against your 2016 income tax liability and generate cash savings that can be reinvested for future growth. To discuss how this credit can help fuel your growth, contact Mike Wade at mwade@blueandco.com or 502-992-2597.

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