Replicon Inc. beat the odds in a challenging business environment by capitalizing on the Federal SR&ED tax program. Replicon reinvested capital gains of almost $900,000, funding technological breakthroughs that have made the company a leader in web based software and resulted in 400% growth over three years. "Last year we implemented Web Based Timesheet software to automatically track R&D work. This has dramatically reduced workload, added $900,000 to our bottom line and made the company a real winner!" asserts John Eddy, CEO of Replicon Inc.

The Program
http://www.ccra-adrc.gc.ca/sred/
The Scientific Research and Experimental Development (SR&ED) Program provides tax incentives to Canadian businesses that conduct SR&ED in Canada. This program is intended to encourage businesses -- particularly small and start-up firms -- to conduct SR&ED that will lead to new, improved, or technologically advanced products or processes.

"This program is an economic driver for small and medium companies, with some very direct bottom-line benefits," says Eddy. The SR&ED Program returns $57 on every $100 spent on applicable research and development (R&D). Industry claims about 1.4 billion dollars of support annually from the SR&ED program. Canadian software developers are a major beneficiary of these credits, receiving approximately one third of the total amount.

Challenge

• To qualify for the SR&ED tax credit, companies must be doing research that advances technology with uncertain success. The companies must provide documentation of the activities and time spent on resolving these uncertainties through a scientific process.
• Application for the tax credit typically involves extensive review of the year's R&D activities long after the fact, and often by people uninvolved with the research activities. This creates a huge job under time pressure, many unanswerable questions about the year's activities, and often a loss of SR&ED benefits.
• Many companies don't think they qualify for the program, or find the process of qualification to be too much hassle to complete amid countless other deadlines. These perceptions leave many potentially qualified companies scrambling to find funding for further R&D.

• Replicon's Web TimeSheet allows daily or weekly commentary alongside a familiar time-entry interface. This delegates the documentation to the scientists and developers and makes it an easy part of the research process.
• Management is hands-off, with a customized e-mail system generating reminders and tracking late submissions for attention. Cursory review of timesheets allows for quality control.
• Work activities, uncertainties, developer logs and status are all captured alongside hours entered to provide a complete evidence package of the scientific research process. "What Web TimeSheet brings to the SR&ED process is simplified, distributed documentation," says Eddy. "The process has changed from an over-complicated administrative hassle to a painless, automatic activity that's part of weekly research work." The effort to claim SR&ED is greatly reduced and the probability of qualifying for a sizeable tax credit is greatly increased.

• Growth and reinvestment: "Replicon has had a 400% increase in revenue since 2000, with the SR&ED program adding $900,000 to the bottom line. With growth on track in 2002, Replicon is planning on doubling its workforce in 2003."
• Mitigating risk: With groundbreaking research, results are not always certain. The SR&ED program provides a safety net for companies to improve and grow. "The program reduces our expense, adds directly to our profit, and allows us quick capital to invest," says Eddy.
• Ease of qualification with Web TimeSheet : The complex documentation process becomes simple when using Web TimeSheet's time-tracking and journaling functionality on a weekly basis.

• No administrative hassle: By distributing the documentation to the individuals performing the research, managers can avoid guesswork in a review of the complete year of work activity. Easy-to-use reporting tools provide snapshots of progress through the year.
• Hands-off management: "This is an inclusive process where all the researchers doing the work take care of their own documentation as they go," states Eddy. "Over the year you get a really accurate record of challenges, uncertainties, successes, status and accomplishments." Customized, personal e-mail reminders keep everybody up to date.
• Employee involvement: Researchers tracking their work activities become educated about the SR&ED process, creating clear and concise evidence on R&D work performed each week. "We used to go through real suffering at year end to recall and gather all the SR&ED claim information, but now we just enter the work activities, uncertainties and status each week," states Dan Selinger, senior developer at Replicon. "This is great, especially for people who hate documentation."
• Ease of use : Integrating seamlessly with a familiar timesheet product, Web TimeSheet improves the time-tracking process to include additional documentary comment features. Web TimeSheet can be implemented in 2-3 days, making its benefits almost immediate.

The bottom line: invest $2000 in software to automate your R&D tracking and regain $400,000 in capital!

Company Name: Replicon, Inc.
Type of Business: Timesheet and expense software
Website http://www.replicon.com
Company Profile: Replicon, founded in 1996, is the world leader in timesheet and expense management with over 550,000 users worldwide. With its Web TimeSheet and ProMax products, organizations now can automate timesheet and expense processes and have visibility into project and staff productivity.