A tax benefit that companies I’ve worked for or owned have been able to use effectively is the Scientific Research and Experimental Development credit (SR&ED), run by the Government of Canada. You can start here for more information. It is a really good program for receiving tax refunds for any new R&D work done by a Canadian company, and can act as an effective way to help finance the growth of your company. One of the keys to a successful SR&ED application is for everyone involved, no matter how peripheral they may seem to the work, to keep track of their time, and what they did. Using rough estimates based on typical workdays, etc., really isn’t sufficient. The people reviewing the applications want to see some kind of evidence.
The key, then is to record your time somewhere. It could be something as simple as a notebook where you record your activities and the time spent everyday, or a text file that you update. More sophisticated firms will use Excel spreadsheets. The best way I’ve found is to use actual time keeping and recording software. At a previous venture, we used Replicon’s TimeSheets package. I’m currently using their web-hosted TimeSheets service to keep track of my time. I’m having to split my time between multiple projects and ventures, and I need to record when I’m working on actual coding, research, business development or administrative tasks. What I like with TimeSheets is their spreadsheet layout for the week, and you can then build a hierarchy of customers, projects and tasks. For SR&ED, you will need some level of detail, since they know that a programmer doesn’t spend 100% of their time actually writing code. You will want to distinguish between activities like coding, research (reviewing literature, prototyping and experimentation, etc) and attending status meetings. It is best if you read through the rules for SR&ED, and if in doubt, contact the people at the Canada Revenue Agency for information and clarification.
It is useful to keep track of your time, even for your own purposes. It can help you determine how effectively you are using your time, if nothing else. It’s one thing to think that you are spending a lot of time doing maintenance on your computers, but if you have accurate records, you can see the impact relative to the time you spend on other activities. If your business is based on billable hours, a high-quality time recording system is essential.
So remember: keep track of your time. In some cases, it is worth more than you realize.