R&D Tax Credit – How Timewatch Can Help Your Application
An R&D Tax Credit incentive is available in the US, the UK and many other countries. The US federal tax incentive provides US companies with a dollar-for-dollar reduction in their tax liability for qualified research and development expense. A similar scheme is available in the UK.
The credit is available to businesses of all sizes in all industries, and it can be used to offset both federal and state taxes. There are hoops to jump through, but Timewatch can help you corroborate your application and increase the chances of success.
Qualifying R&D Tax Credit expenditures
Qualifying expenditures generally include activities such as the design, development or improvement of products, processes, techniques, formulas or software. Details on the US R&D tax credit are outlined under Section 41 of the Internal Revenue Code (we’ll be doing a follow up story on UK R&D tax credits shortly). Without getting too deep into the weeds, the term “qualified research expenses” is defined as the sum of in-house research expenses and contract research expenses which are paid or incurred by the taxpayer during the taxable year in carrying on any trade or business of the taxpayer.
R&D Tax Credit Benefits for US Companies
There are many benefits to claiming the R&D Tax Credit:
- Increased cash flow: The credit can provide businesses with a significant amount of additional cash flow, which can be used to invest in new research and development projects, hire new employees, or expand company operations.
- Reduced tax liability: The credit can help businesses reduce their overall tax liability, which can save them money on their annual tax bill.
- Increased competitiveness: The credit can help businesses stay competitive in the global marketplace by giving them a financial advantage over their foreign competitors.
- Stimulated innovation: The credit can encourage businesses to invest in new research and development projects, which can lead to new products, services, and technologies.
- Job creation: Tax credits can help create new jobs by encouraging businesses to expand their operations and hire new employees.
The R&D Tax Credit is a valuable tax incentive that can provide businesses with a number of benefits. If your business is eligible for the credit you should definitely claim it.
How to get help with your application to claim the US R&D Tax Credit
There is inevitable paperwork needed to apply for an R&D Tax Credit, but once you have worked through the process of how to apply, it is a repeat process every year. The main issue and complexity is in justifying the value of your claim as most of the value is of employee time. This is where Timewatch comes in as Timewatch helps companies justify the R&D credit they are applying for with time tracking systems designed for applying for Research Tax Credits.
Time tracked on R&D activities helps R&D Tax Credit applications
For most people, time tracking is a pain – just like doing taxes! But just like taxes, done well, there can be a big return. Many individuals and businesses procrastinate on tasks like this because it takes time. Timewatch can help here as our systems are save time by leveraging the tools your researchers, designers and developers are probably already using to help automate time tracking. Our systems can utilize data from systems such as Outlook and Google calendars, Teams and Zoom meetings and calls, bug tracking and support systems, and any other systems staff uses on a day to day basis to automate time tracking. Timewatch makes your R&D Tax Credit application easier, more likely to succeed, and saves your employees time into the bargain.
How to save time in time tracking
When people think of ‘time tracking’, most think of manual entry into a grid. Certainly it was like that many years ago on paper and spreadsheet timesheets, and literally every modern timesheet system uses the same byzantine approach. Why? It’s 2023. Surely with AI and bit of inventive thinking there is a better, more automated way? There is.
Timewatch takes a different, more modern, cleverer approach by linking with the other systems your company uses to save employees time and automate time tracking wherever possible. Firstly, although we provide a traditional grid view (to help new users migrate) our timesheet has many views including a calendar view, which is more intuitive. Next, we let users choose systems that feed into their timesheet. Time from Outlook and Google appointments, Teams or Zoom calls and meetings, time working on bugs, support tickets or working in dev tools, all of this can be used to prepopulate timesheets. This not only saves time, but as automated time tracking entries are based on actual data, they also increase timesheet accuracy and provide a data trail for corroborating Tax Credit applications.
If your business uses Outlook, we can prefill timesheets with the project time spent in appointments or on tasks. We can even track time spent with email and seamlessly add that data to timesheets.
Google calendars can also be used to automatically prefill timesheets.
If your business uses Microsoft Teams, we can save your employees time and make their timesheets more accurate by prefilling their timesheets with the calls and meetings your staff are involved in. Users also help other users – by specifying the project a call or meeting was related to, this information is available to everyone in that call or meeting, saving everyone more time.
What is the cost of R&D Tax Credit Time Tracking?
Time tracking takes time, but as the Tax Credit covers the cost of time spent on R&D, the credit is worth the effort. But what is the cost of this time? If you look at the cost of employee time, even at minimum wage plus a notional value of employee time of say $50 an hour, one minute is worth at least $1. Manual timesheet entry typically takes 1-3 hours a week, which Timewatch reduces to around 5-10 minutes. Over one month, a Timewatch system represents a saving of between $240-$740 over traditional timesheet systems, which again, is well worth the effort.
Automate Time Tracking from Any System
Timewatch often help companies automate time tracking by utilizing the very systems employees use in their everyday work. We have data connectors that can be linked to virtually any system, and in doing so their employees’ timesheets literally write themselves.
The benefits of automatic time tracking are considerable. The accuracy of timesheet data is dramatically improved as the timesheet is based on data that is derived or already exists in another system. In addition to improved timesheet accuracy, automated time tracking saves employees time – time that can be used on productive / chargeable tasks, which adds incremental revenue, increases productivity, billability, and profitability. Examples include: using time data from support systems, bug tracking systems, development tools – any system where time / access data is available and can be used to automate timesheet entry.
Automated time tracking systems help R&D Tax Credit applications by providing instant access to accurate time usage data that can be used as a source document to corroborate your research tax credit application. Our systems save time not just for employees tracking time, but also for the people involved in making your development tax credit application – time can be reinvested in R&D – which you get even more tax credits for doing!
If you would like more information on how Timewatch can help companies save time and streamline this process, please use the form to contact us.
So Who is Timewatch?
Timewatch are specialists in helping businesses manage, plan, schedule and track time better with resource scheduling, time tracking and professional services automation software. We work closely with our customers to save their employee’s time, time which can be better spent on productive tasks. By implementing a Timewatch system businesses make life better for their employees, which quickly provides a return to the business.
Want to Learn More About Our Solutions?
Contact us, we provide free consultancy sessions with product specialists to help companies interested in using time tracking to help Research Tax Credit applications.
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