Time tracking for biotech R&D tax credits and grant compliance

To claim the federal R&D tax credit under IRC §41, biotech companies must document qualified research expenses (QREs)—including wages for employees performing qualified research activities. The IRS requires contemporaneous records showing who performed the work, how many hours were spent, and which activities involved a process of experimentation to resolve technical uncertainty. ClickTime captures this data at the point of time entry, creating audit-ready R&D labor records that support credit claims without retroactive reconstruction.

Federal grants from NIH, NSF, and SBIR programs require precise documentation of how funded labor hours were spent. When researchers work across multiple grants and internal projects, tracking time at the project level ensures each funding source is charged accurately. ClickTime's approval workflows and audit trails provide the defensible records grant auditors expect—replacing the spreadsheets and estimates that put funding at risk.

Qualified research activities under §41 must meet a four-part test: the work must be technological in nature, intended to develop a new or improved business component, involve a process of experimentation, and address technical uncertainty. For biotech companies, this commonly includes drug discovery, clinical trial design, assay development, process optimization, and formulation work. The key challenge is documenting which hours were spent on qualifying vs. non-qualifying activities—something project-level time tracking solves at the point of entry.

The biggest barrier to maximizing R&D credits isn't eligibility—it's documentation. Nearly 25% of organizations have lost R&D tax credits due to inadequate records. Biotech companies can recover more by capturing labor hours against specific research activities in real time, rather than relying on end-of-year estimates from department heads. ClickTime ties each hour to pre-defined cost categories so finance teams can identify every eligible wage dollar and defend claims with verified data.