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As a concept, taxes have been for long known to confuse people and businesses. But all individuals, as well as businesses, need to pay taxes on time, as it helps the Government with money, and they, in turn, use this money to pay their employees, and other support staff like the police, army, firefighters, and also use the money to provide the required infrastructure and funds to places like constructing roads, libraries and amusement parks. 

Other than the fact that paying taxes helps the Government to faithfully perform its duties, it’s beneficial for businesses too to pay the tax on time and with efficiency. There are some corporations who try delaying tax filings, majorly due to a crunch of funds. Small organizations are a typical example of this. 

Also, filing taxes is quite a task that requires a lot of resources and the process is very tiring, especially for small organizations. Paying taxes on time can help businesses in the long run. Here are a few reasons why:

No Penalties

When a business fails to file its taxes, then it has to pay an unnecessary monetary penalty. Penalties are usually quite hefty and are often followed by an interest amount too. The worst part is that this amount keeps on accumulating until a particular organization files its taxes. 

Credit Ratings

Almost all businesses are established with the idea of expanding and no business has a hefty amount of funds ready all the time that is required for expansion. They would require taking loans from banks, and banks often are in the search of a good credit rating. When a particular organization pays its taxes right on time, it fetches a good credit rating for itself. 

A lot of times credit ratings are also dependent on the amount of tax that is being paid. Usually, it is said that the higher the tax, the better it showcases both profits and revenue. 

Being in The Good Books of Investors

At any given time, a business might need an investor, and when an investor is investing in a business, the first thing he or she is likely to check is the financial and tax statements. Going by the figures for the tax that is being paid, the investors will have an idea about a particular business. That is to say that they will then understand that you are doing your business by following the right procedure and that doing business with your company will be helpful and profitable to them. 

Conduct Business in a Peaceful Manner

No matter how many times you hear success stories of people getting away by not paying taxes, someday or the other the tax authorities are going to catch hold of everyone who has failed to file their taxes. 

So, it is always advised to pay taxes on time, so there are no unnecessary penalties attached that might lead a business to pay a much higher amount. For businesses, their image is everything, and not paying taxes on time can tarnish a company’s hard-earned reputation. 

Therefore, all businesses must make every effort to pay their taxes in the right amount on time, and thereby operate peacefully without any unnecessary hassles or tensions. Once the taxes are paid, then businesses can dedicate their time and energy to growing their company. 

R&D Taxes 

While mentioning taxes, it is perennial to talk about R&D tax credit too. This kind of credit is applicable for those companies and businesses that have already developed or are on the verge of developing varieties of business components. 

These can include products, processes, different kinds of formulas and techniques that can help in greater performance, efficiency and reliance. The R&D tax credit is available both at the federal and state level, and currently, 30 states in the United States offer credit to offset state tax liability. 

A company or a business can be eligible for the R&D tax credit if they dedicate the required time and resources that will help in the creation of innovative products and services. Secondly, they will also be eligible if they improve any existing products. Thirdly, they will also be eligible if they help in developing processes, patents, prototypes, or any kind of software. 

Lastly, they will also be eligible if they recruit scientists, engineers or designers who will help in designing their products and services. Most experts term R&D tax credit as one which helps in reducing a company’s tax liability greatly. This is due to the fact that there is absolutely no limitation on the number of expenses and credits which can be claimed every year. 

In case, the federal R&D credit could not be used at a given time or completely, then any credit which is unused can be carried back by one year, and even carried forward up to a period of around 20 years.