Effective distribution strategies that increase the bottom line is the goal for any value-added distributor. Doing so in a safe and timely manner all while delivering a quality product that meets client expectations is the true challenge.
Those who work in the realm of hose and accessory distribution know all too well that the process from assembly all the way to delivery involves unique science so that no fitting is left inadequate. This process normally takes iteration after iteration to perfect, particularly in the hose industry where there are often several components involved on the path to a final deliverable.
The value-added distributors that make this process a reality take part in an improvement of processes and product delivery that the U.S. government was seeking to reward when it created a government incentive that puts money back into the pockets of American businesses who are innovating.
The Research and Development Tax Credit (R&D Credit) was enacted in the 1980s to encourage U.S. businesses to innovate and help our country’s economy continue to not just thrive, but remain a worldwide powerhouse.
The credit has expanded over the years through judicial activity and legislative changes, including the most recent change, which got rid of the corporate Alternative Minimum Tax (AMT) and curbing the number of pass-throughs subject to individual AMT.
Value-added distributors are already taking advantage of the R&D Credit in a variety of industries, but those working in the field of hose and accessories distribution are uniquely positioned to take advantage of the incentive based on their work to create custom solutions for their clients.
Here are some common activities that have qualified both value-added distributors in the past:
- Optimizing and maintaining equipment through performance engineering and systems integration
- Providing products and services to clients that either increase production rates, reduce waste or improve quality
- Performing site evaluations and technology audits to determine client needs and scalability
- Consulting clients about new technology and educating staff with applied training
Make no mistake; these are just a few of many different examples of activities that value-added distributors do that might qualify for this powerful government incentive. Companies working in this space have repeatedly been able to claim the credit successfully—leaving open the ability to reinvest that newfound capital into their organization.
For those who might remain skeptical that this tax incentive applies to them, the concept of research and development is actually more prevalent within a niche industry than the average value-added distributor might realize. The reasons are simple: what all these companies have in common is a commitment to improving products and processes—the exact type of behavior the R&D credit was created to incentivize.
The R&D Credit rewards companies up and down the supply chain and is an opportunity that anyone within this industry can connect to.
