What Qualifies for the R&D Tax Credit? Ask MISCO Speaker Company [VIDEO]

Dec 11, 2018 8:42:42 AM

When Dan Digre’s CPA asked if his company, MISCO Speaker Company, had ever considered the R&D Tax Credit, his response was, “We don’t really do any R&D here, we’re a manufacturer.”

But Dan didn’t realize what types of activities qualify for the R&D Tax Credit and how many of those activities his company does every day.

Now, after receiving the credit, his business is more competitive, growing faster, and more profitable. More specifically, he acquired two companies and is putting the first speakers on Mars.

Here’s his story:

 

About MISCO Speaker Company

MISCO is a 70-year-old Minneapolis-based manufacturer of loudspeakers and audio equipment. They make everything from custom audio solutions for specific applications to off-the-shelf speaker variations. And the production of these products does require a lot of research and development.

MISCO’s Initial Meeting with Black Line Group

Dan’s CPA recommended he look into Black Line Group for assistance in receiving the R&D Tax Credit.

At the time, Dan still didn’t believe MISCO performed any research and development. But after a consultation with Black Line Group, he discovered that “Yes, in fact, what we did was considered R&D.”

The process was extremely simple for Dan. “We didn’t have to teach Black Line Group about what manufacturers do. They got all that,” he says. “They only needed to learn the vernacular of our company.”

How MISCO Used Their Credit

“Our first credit was actually a sizeable credit,” Dan says. With it, he was able to purchase a complementary company — one that measures and tests sound. According to Dan, it was a game-changer for their business because none of their competitors had the same capabilities.  In subsequent years, MISCO bought out one of their competitors with their R&D Tax Credit.

MISCO was also able to buy two 3D printers. These printers help build their customized speaker prototypes quicker and more efficiently at a fraction of the cost.

With all these new business upgrades, Dan confidently says, “The R&D Tax Credit helped us expand our sales by being able to offer more products and services. Therefore, they’ve also helped us increase our profitability.”

Finally, as a direct result of their 2017 R&D Tax Credit, MISCO was able to invest in software to support NASA in their program to enhance a Mars-destined spacecraft. So, thanks to the R&D Tax Credit, they’re putting MISCO speakers on Mars!

And NASA is only one of the many noteworthy customers that MISCO Speakers Company works with. “We wouldn’t have been able to move forward as quickly as we have in attracting more prominent customers (without the R&D Tax Credit),” Dan says.

There was no “Catch”

“I kept thinking, ‘When is the truth going to be revealed?’” Dan says. “Well, there was never a catch!” Not only has it provided Dan with the means to grow his business, but it has required very little effort from MISCO staff. “It’s a minimal investment in time and cost, and the returns are enormous,” he says.

John Madsen, VP and manufacturing practice leader at Black Line Group, was thrilled to see the type of return MISCO received. “To watch them invest the credit, grow their business, and be more competitive and profitable is some of the greatest satisfaction we have,” he says.

Dan now includes the R&D Tax Credit in his regular annual budget planning, and he partners with Black Line Group to make sure he maximizes MISCO’s return. Dan says, “In the case of Black Line Group and the R&D Tax Credit, it’s really a no-brainer. I feel like Black Line Group is a part of the team now.”

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