While many companies aren’t aware of it, there are actually no restrictions on what the SR&ED refund can be used for. The following allocation methods are ones that are most likely to put your business in a better position:
1. Reinvest in R&D
Plowing the proceeds from a SR&ED refund right back into R&D is the most popular way for a company to spend it. Putting additional capital into R&D, whether it’s through hiring additional personnel or investing in materials and technology, could increase your SR&ED refund in subsequent years.
2. Grow Your Sales & Marketing
Whether you are just starting out or an established player in your industry, sales and marketing are the key to growth. Effective marketing and sales campaigns can reinforce your positioning and brand, communicate your message, generate demand, and create new customers. After determining the amount to reinvest into the sales and marketing campaign budget, subtract the expenses from the gross profit to calculate the net profit and estimate ROI by subtracting the net profit from the marketing investment and dividing the result by your marketing investment.
With reinvestment into your sales and marketing, solid planning, a jolt of creativity, and focus on measurement, your company will be in a stronger position for success.
3. Scale up
Using the funds you receive from the SR&ED Program to scale up or expand your business is another way to invest in it. Whether expanding your business means adding more locations, adding salespeople, increasing the number or scope of the services and/or products you offer or some other idea, this free money from the Canadian government is a risk-free way of doing so.
Using your SR&ED refund to put your business on more solid footing ensures that it remains healthy and viable for years to come.