Recent interview about my work with clients about tax savings; especially the R&D tax credit and more!
Interviewer: Terry, when you talk with business owners, you
start with a simple premise. Every
dollar you miss shrinks your margin. What do you mean by that?
Terry Scott: It really is that plain. Profit margins do not
grow by accident. They grow when you find what is already leaking out of the
business. At All Solutions Known, we focus on cash flow first. We unlock hidden
savings, because profit margins don’t grow themselves. That is also why I often
point people to [www.KnowCashFlow.com](http://www.KnowCashFlow.com). It gives
them a quick starting point to see where money may be slipping through the
cracks.
Interviewer: Most owners assume “tax savings” means waiting
until tax time. You disagree.
Terry Scott: Completely. Many owners treat tax strategy like a yearly event, but the best
opportunities show up when deadlines are close and decisions are being made
right now. When owners act earlier, they keep more cash in their account during
the year, not after the fact. That cash becomes payroll, equipment, marketing,
debt payoff, or breathing room. When people ask where to begin, I tell them to
visit [www.KnowCashFlow.com](http://www.KnowCashFlow.com) because the fastest
win is often simply identifying what you qualify for and what you have been
missing.
Interviewer: Let’s talk about one of the most misunderstood
opportunities. The R and D tax credit.
A lot of owners hear that name and tune out.
Terry Scott: That name has probably cost business owners
billions. People hear “R and D” and they picture lab coats, test tubes, and a
giant research budget. In reality, the credit has evolved and the door is much
wider than most people realize. If a company is developing or improving
products, processes, software, techniques, or even how they manufacture and
deliver, they may have qualifying activity.
Interviewer: What types of businesses tend to qualify?
Terry Scott: Manufacturers are the obvious ones, but it goes
well beyond that. Fabrication, engineering, software development, architecture,
food and beverage, farming and agriculture. The common thread is that employees
are doing technical work, improvement work, testing, quality assurance,
automation, streamlining, or building better ways to produce results. Those
efforts often translate into qualified research expenditures. It is a term that
sounds intimidating, but the actual activities are common inside real businesses.
Interviewer: What makes your approach different than what
many owners experience with a CPA?
Terry Scott: Many firms take a narrow pass. They might
choose two or three employees, call part of their payroll “R and D,” and move
on. Sometimes the business gets a small credit and assumes that is the ceiling.
But the opportunity is usually in the details, across the whole organization.
Our approach looks at the business more granularly. Instead
of assuming only the engineering team counts, we analyze roles and activities
across departments. An administrative role may still support qualifying work
depending on what they actually do. The goal is to capture every legitimate
dollar that the rules allow, not leave value on the table because it is
inconvenient.
Interviewer: Give me a real world example of why that
matters.
Terry Scott: I have seen companies think they were “already
taking it” and the number was tiny. Then, with a deeper review, the benefit was
dramatically larger because we examined the full picture. That is why I tell
owners not to stop at “yes, we take that.” The right question is “are we
capturing it correctly and completely?”
Interviewer: What does this do for cash flow?
Terry Scott: It can be significant. A credit is dollar for
dollar. That is why it matters. If a business nets a real six figure benefit,
that can be the equivalent of having to generate several million dollars in new
revenue to produce the same after tax outcome. Owners feel that difference
immediately.
If someone wants to understand whether their business
activities fit, they should start at
[www.KnowCashFlow.com](http://www.KnowCashFlow.com). That is where we help you
see what you might qualify for, and it frames the conversation around cash
flow, not just tax paperwork.
Interviewer: You also work with commercial property owners
on cost segregation. What is it, in plain language?
Terry Scott: Cost
segregation is one of the cleanest ways to improve cash flow for property
owners who purchased, built, or renovated commercial property. It is a tax
planning strategy that accelerates depreciation in a proper, rules based way.
The impact can feel immediate because it can reduce taxes due, and that changes
what the owner has to send to the IRS.
Interviewer: Why do so many owners miss it?
Terry Scott: Because the default method is slow and simple.
The IRS allows commercial buildings to be depreciated over a long timeline.
That approach ignores a basic business truth. Cash today is better than cash
tomorrow. Also, most owners are not keeping the carpet, signage, wiring,
parking lot improvements, and interior components for decades. Yet the default
method treats much of the building as if it lasts forever.
Cost segregation breaks the building into components and
places each component into the proper category based on IRS guidelines. That
shifts a portion of the cost into shorter life categories, which increases
depreciation earlier. Earlier depreciation often means less tax paid now, which
means more cash retained now.
Interviewer: How does that translate into “instantaneous”
cash flow, as you put it?
Terry Scott: Many businesses prepay taxes during the year.
They set aside money, make quarterly payments, and hold funds expecting a
certain tax bill. When we identify a significant depreciation benefit, the
owner may not need to send as much. The money they were about to pay can stay
in the business. Even before the paperwork is finalized, owners understand the
math and the relief is real, because it impacts decisions they are making right
now.
Interviewer: What kinds of properties tend to be the best
fit?
Terry Scott: Apartment complexes, assisted living
facilities, auto dealerships, hotels, manufacturers, medical offices, and
property management portfolios. Also any business that does major renovations
or leasehold improvements. The more meaningful the property costs and
improvements, the more meaningful the potential benefit.
Interviewer: You keep bringing this back to a broader theme.
Hidden savings and margin protection.
Terry Scott: Exactly. Owners are under pressure from
payroll, insurance costs, interest rates, supply chain realities, and
competition. They cannot “wish” a margin into existence. We unlock hidden
savings, because profit margins don’t grow themselves. Whether it is R and D
credits, cost segregation, or other incentives and audits, the objective is the
same. Put cash flow back where it belongs, inside the business.
Interviewer: If someone reading this is busy and wants a
simple action plan, what do you tell them?
Terry Scott: Start with clarity, then take fast, practical
steps.
First, identify whether your business has qualifying
activities or qualifying property. If you are improving products, processes,
software, manufacturing performance, quality, or reliability, or if you own or
have renovated commercial property, you are worth a closer look.
Second, do not assume you do not qualify. Most of the people
who qualify think they do not. That is not a slogan, it is a pattern.
Third, take action while deadlines still allow you to
capture the most value. Timing matters.
And the easiest place to begin is
[www.KnowCashFlow.com](http://www.KnowCashFlow.com). It is designed to help you
take the first step without turning it into a project that drags on for months.
Final note from Terry
Scott: If you have been thinking, “I will deal with this later,” later is
exactly how money stays unclaimed. Every dollar you miss shrinks your margin,
and the window to capture certain benefits can close faster than people
realize. Visit [www.KnowCashFlow.com](http://www.KnowCashFlow.com) now. We
unlock hidden savings, because profit margins don’t grow themselves. Do it
today, not when the opportunity has already passed.
