Alleyoop is a makeup company that specializes in creating multi-functional beauty products, with a particular emphasis on “efficiency.” “Efficiency” may seem like an unexpected descriptor for beauty products, but this term actually organizes the values of their entire production process, from the product itself serving multiple purposes to minimal sizing to sustainable packaging. By redefining efficiency as environmental sustainability, including reducing packaging waste, Alleyoop innovates within the beauty field not only in the versatility of their products but also in how they support the fast-paced, time-efficient lifestyle of the modern woman.
How do you substantiate R&D credits
for a company that sells cosmetics and skincare products?
Decades of R&D Tax Credit Experience
Discovering the credit
Business owners generally believe that the federal R&D tax credit applies only to technology companies or to businesses that are primarily engaged in research. However, in reality any company that uses research and testing in their production process could be eligible.
In the case of Alleyoop, Ardius was able to quickly identify their research activities, calculate the dollar amount of such activities, and produce supporting documentation to substantiate these calculations.
As R&D tax credit specialists, Ardius has two distinct advantages:
- Our staff has over 100 years of combined experience in identifying companies’ potential eligibility for R&D tax credits.
- As a result of our deep knowledge of the R&D tax credit applicability, we can help companies discover the potential tax credit they receive.
Using software to save time and money
Typical R&D credit firms discover tax credits through a series of interviews with the customer, primarily focusing on employee wages. Company expenses are often too costly to analyze, are skimmed over, or ignored entirely.
Ardius’ software scanned close to 30,000 Alleyoop expenses to identify potential credit items. We reduced to minutes what would have taken an expert hours or days to sift through (a costly task for smaller clients). Our R&D tax specialists were then able to focus on getting Alleyoop’s credits.
Ensuring audit readiness
An R&D credit is only as good as the supporting documentation accompanying it. Failure to properly support the claimed credit amount can lead to penalties and interest payments in the event of an audit. When choosing an R&D credit provider, it is crucial that the calculations can withstand IRS scrutiny.
Ardius worked with Alleyoop to find supporting documentation such as patents and test results as solid supporting evidence for the research activities claimed. The work was reviewed by a CPA with over 15 years of R&D tax credit experience for accuracy and audit-readiness.
A lasting partnership
Whether a business is structured as an LLC, S corporation, or C corporation impacts the credit calculation and tax filing requirements. Ardius’ tax expertise allowed Alleyoop to claim credits for prior years, even through a business structure change. As Alleyoop continues to grow year after year, Ardius stands ready to ensure that the right credits are discovered and claimed.
20+ years of CPA and VC experience
Former West Coast Executive CPA for Ernst & Young