Jeff Haskett and Brent Johnson started building software five years ago to help fellow startups not leave money on the table.
Now, the table is about to get much bigger.
Clarus R&D Solutions LLC is on track to top $6 million revenue this year, nearly doubling its 2020 revenue, which was more than double from the previous year. Rocketing sales made it the fifth fastest-growing private company in Columbus Business First's 2021 Fast 50 awards.
"I've always been really thrilled with what this company could be," said Haskett, Clarus CEO.
At 30 Central Ohio employees and about 10 contractors, the staff also has doubled since the end of 2020. By the end of next year, it could hit the goal early of 40 Ohio jobs for a state job-creation tax credit.
Clarus makes TurboTax-like software to automate an otherwise cumbersome process to claim a tax credit on research and development expenses for startups and small businesses, even if they aren't yet profitable.
A 2015 law applies the credit not just to corporate income tax but Social Security payroll taxes on employees. The credit is capped at $250,000.
"The degree to which these will be taken this year and into the future will be in the billions, not millions," Haskett said. "There are dollars that are available, and especially for small businesses, they were unused."
Johnson, an accountant, noticed the change in a tax law that passed in 2015, and turned to Haskett, who was steeped in Central Ohio tech startups. Here was a significant source of capital that didn't require giving up equity.
"This allows them to pay their rent, or hire another employee," Haskett said. "We know how difficult it is to raise capital.
"The money is available – it just needs to find its way into the hands of people who can put it to use."
Taking the credit requires proving eligibility through documenting product development, subject to a four-part test; computing the R&D expenses; and filling out the 2-page schedule for the return. With some online questions, Clarus automates what's otherwise a consultation that could cost $30,000 in hourly accounting fees for an average credit of $35,000.
Starting with a cadre of Central Ohio startups, the client list grew to 1,300 small businesses nationwide. Since inception it has helped customers claim a combined $130 million in credits.
All of those clients have accountants – mostly small shops that don't have a specialized practice in tax credits. So Clarus built new software that accountants can white-label under their own brand for tax preparation services, which also expands Clarus sales into medium-size businesses.
In January, Clarus plans to launch enterprise scale software for large corporations to claim R&D credits. Since its revenue is a small percentage of successfully claimed credits, that's a much larger source of revenue.
The software business had spun out of Clarus Partners, where Johnson was managing partner. He's chief strategy officer at R&D. The separate companies share branding and had shared space until this fall.
The accounting business in 2019 merged into Blue & Company LLC, and this year sold its Dublin Road headquarters, prompting a move for the software spinout.
Clarus R&D settled into a Grandview Heights office this month. It's sub-leasing an already furnished suite on Goodale from a consulting firm that shifted entirely to work-from-home.
Coming out of the pandemic, the startup adopted a flexible schedule. Teams, such as those in marketing and engineering, coordinate two days a week to convene in the office.
"Being able to work and collaborate together is really important for us," Haskett said. "We're a young and growing company, and we need to be together to invent things."
