Tracking Time on Capex and Opex for Tax Credits

In this tutorial, you will learn how to use Tempo Accounts to track both capitalized (Capex) and operational (Opex) hours. There are many reasons to track capitalized work, and applying for tax credits for that work is a typical one.

You need Tempo Timesheets for Cloud to complete these tasks.

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The scenario: Beverly wants to track both Capex and Opex hours that her team has worked for her company so that she can create a report to send to the Accounting department. Then they will apply to get tax credits for capitalized expenses (Capex), which is mostly the research and development work for their software. The work done on things like training is considered an operational expense (Opex). Tracking the time spent on these activities helps support the tax credit application.

Get set up:

Step 1: Create categories for the accounts

Creating Account Categories - Select Settings Settings.png in the Tempo sidebar. Under Accounts, select Account Categories.

To start off, Beverly creates two new categories for the Capex and Opex accounts to which the employees will be logging their time. 

  • For the Capex account category, she enters Development as the Name, DEV as the Key (the Key is a unique identifier for this category), and sets the Type to Capitalized.

  • For the Opex account category, she enters Training as the Name, TRAIN as the Key, and sets the Type to Operational.

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Step 2: Create Capex and Opex accounts

Creating Accounts - Select Accounts Accounts.png in the Tempo sidebar, then click the + Create Account button in the top right and fill in the Create Account form.

Now Beverly is ready to create two new accounts for tracking work as either Capex and Opex. 

  • For the Capex account, she enters AppDevCAPEX as the Name, edits the automatically generated Key to be APPDEVCPX, adds herself as the Lead, and selects Development as the Category, which is a Capitalized type.

  • For the Opex account, she enters SupportTrainingOPEX as the Name, edits the automatically generated Key to be SUPTRNOPX, adds herself as the Lead, and selects Training as the Category, which is an Operational type.

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Step 3: Link each account to its related Jira projects

Linking Accounts to Jira Projects - On the main Accounts page, select the account to which you want to link Jira projects. Then on the account's information page, click +Add Project Link on the right and select a Jira project from the dropdown.

Beverly needs to link the accounts to Jira projects so that she and others can log work to the issues in those projects.

For each of her two accounts - AppDevCAPEX and  SupportTrainingOPEX - Beverly selects CLOUD from the Jira Projects dropdown to link it to that account.

Then she clicks +Add Project Link again and selects Tango OnDemand to link that project too.

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Step 4: Link Capex or Opex accounts to the Jira issues and log time

Now Beverly needs to link either the Capex or Opex account to the appropriate Jira issues, and then log some time to those issues.

She starts by opening a Jira issue related to the Development project (Capex work), then selecting AppDevCAPEX from the Account dropdown. This dropdown appears because a Jira administrator added it as a custom field to the Jira issue screens (Adding the Account Field to Jira Issue Screens.

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Now Beverly - or anyone else on her team - can log time to this issue and it will be correctly categorized as Capex work.

Similarly, she links the SupportTrainingOPEX account to the Jira issues for operational work, such as Training, and logs time to those issues.

Step 5: Create a report on Capex hours for tax credits

Creating Reports - Select Reports Reports_LessPadding_copy.png in the Tempo sidebar, then click the Logged Time tile. In the Create Logged Time Report form, select one or more options in the Filter by and Group by fields, then click Create.

All the work for Development and Training on the sofware project has been logged, and now Beverly can generate a report that shows the Capex versus Opex hours. This will be the spreadsheet that she sends to her Accounting department.

She clicks Logged Time, and the report form opens. She selects CATEGORY TYPES from the Filter by field and checks Capitalized and Operational.

In the Group by field, she selects Account and Issue. This way, the time logged to each Jira issue is grouped separately into the two accounts: Capex and Opex. 

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She'll export this report as an Excel spreadsheet to send to her company's Accounting department - Exporting Reports. Then they can use this data to apply for tax credits.

Finally, she'll save this report so that she can run it again later - Saving and Deleting Reports