2. Systematic Approach
The cornerstone of any good consulting firm, SR&ED or otherwise, is the ability to understand the client’s overall business and provide appropriate advice accordingly.
In the context of SR&ED and government funding, a good indication of whether a consultant can truly help you is measured by the questions they ask during your first few meetings. Beware of SR&ED consultants that tell you exactly how much money they can save you without performing a thorough examination of your business.
To properly validate eligible SR&ED projects, the consultant must consider your corporate structure, payroll, and the technical validity of your research and development – information that isn’t readily available in the first meeting.
For multinationals, international tax law must also be taken into consideration. Transfer pricing can play a crucial role in determining a company’s optimal credit rates. A SR&ED consultant needs to be well versed in international tax legislation to ensure the corporation is maximizing their overall credits.
There are many other government incentives that fund innovation. IRAP, for example, is Canada’s most competitive grant available to companies pursuing projects with high levels of technical uncertainty. Your SR&ED consultant should be up-to-date with relevant programs, stack as many programs together, and steer you in the direction that is most aligned with your overall business objectives.
Furthermore, while it may seem tempting to have an aggressive maximization strategy, this increases your odds of being audited in the long run. SR&ED consulting firms who do not assess funding opportunities on a long-term basis may set you up for an unwelcomed audit, or even worse, an outright refusal of your claim.
Audit or refusal of claims can have rippling effects on your team’s productivity in the short-run and increase your risk of being audited in subsequent years. That’s why a SR&ED consultant who can see the full lifecycle of government funding will help you streamline the claim process.
3. Organizational fit
SR&ED consultant search and selection is a lot like dating or marriage. Compatibility does not just include shared history and objectives but incorporates how well you click and your ability to speak each other’s language.
Personality clashes or a misalignment of business styles can all lead to poor performance and stressful communication between a SR&ED consulting firm and a client.
One way to safeguard against any mismatches is to open channels of communication before, during, and even after engaging a SR&ED consultant.
4. Reasonable fee structure and long-term thinking
One of the more difficult aspects of the consultative process is determining an agreed-upon fee structure that benefits both parties.
Within the context of SR&ED, the tax incentive can sometimes be the single source of cash flow for the company. If consulting fees are too stringent, the tax credit becomes less effective. This is especially true for pre-seed or seed tech startups. Love money, personal savings and an initial round of funding are often fully allocated to salaries, and it can be difficult to accommodate a SR&ED consultant if their fees are too high.
A good SR&ED consultant understands the reality of growing tech companies and seeks to build a long-term relationship with them. Oftentimes, during the first year of the engagement, there may not be any eligible work, but the SR&ED consultant will train and support the client with best practices, so that an defensible claim can be submitted later on.
How R&D Partners Can Help
If you have questions or comments about our SR&ED services, please do not hesitate to contact Sahar Ansary at 1-800-500-7733 for more information.