Research and development (R&D) is the part of a company’s operations that seeks knowledge to develop, design, and enhance its products, services, technologies, or processes. Along with creating new products and adding features to old ones, investing in research and development connects various parts of a company’s strategy and business plan.
According to the latest Business Enterprise Research and Development survey by the National Center for Science and Engineering and the U.S. Census Bureau, businesses spent $32.5 billion to support their R&D activities in 2020.
Here are some reasons your business should invest in research and development.
- Research and development (R&D) is an essential driver of economic growth as it spurs innovation, invention, and progress.
- R&D spending can lead to breakthroughs that can drive profits and well-being for consumers.
- Today, R&D is present in nearly every business sector as companies jockey for position in their respective markets.
- Smaller firms engaged in R&D can offset some of these costs and attract investors thanks to a federal tax break.
Investing in Research and Development (R&D)
The Internal Revenue Service’s definition of research and development is investigative activities that a person or business chooses to do with the desired result of a discovery that will create an entirely new product, product line, or service.
However, the activities don’t only need to be for disovering new products or services—this is only for tax purposes.
R&D isn’t just about creating new products; it can be used to strengthen an existing product or service with additional features.
Research refers to any new science or thinking that will result in a new product or new features for an existing product. Research can be broken down into either basic research or applied research. Basic research seeks to delve into scientific principles from an academic standpoint, while