- Timesheets show the number of hours an employee has worked during a pay period.
- Timesheets allow you to more easily process your payroll, bill clients, and track and manage projects while saving time and cutting costs.
- To begin using timesheets for your company, choose the right type for your business, have your employees clock in and out daily, and then collect and approve all timesheets.
- This article is for small business owners who are interested in learning about timesheets and how to track employee hours.
Many American workers know the routine of punching in and out, but office employees may be less familiar with timesheets, and in some cases, that can be a problem. If your small business employs hourly employees or bills clients by the hour, you need timesheets to keep yourself – and your employees – accountable. Just as importantly, timesheets will streamline operations and reduce costs. Learn more below.
What is a timesheet?
A timesheet is a document that shows how many hours your employees have spent working, whether on-site or remotely. You use timesheets to calculate how much to pay your hourly employees when running payroll for a specific pay period. For example, if an employee who earns $15 per hour works 80 hours during your biweekly pay period, you'll pay them $15 x 80 = $1,200 before taxes and deductions.
A timesheet can also show the number of hours some – or all – of your employees have spent working on a particular project. If you're charging your client per hour instead of a flat fee, you can determine more precisely how much to bill them and have ample backup documentation. For example, if you charge $40 per hour for your accounting services and an employee spends 10 hours total working on a client's taxes, you'll charge $40 x 10 = $400.
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Timesheets also come in handy for figuring out how long certain processes take. If you see on a timesheet that one task related to a certain project has taken a disproportionate amount of time, you can determine how you to handle this task more quickly in the future.
Key takeaway: Timesheets track the number of hours your employees work during a pay period, and they also have applications in client billing and project management.
Benefits of timesheets
Other benefits of timesheets include:
- Easier payroll processing. The more employees you have, the harder it can be to remember how many hours each one worked per week. And if you pay an employee for less time than they actually worked, you may appear to be stealing wages. Since timesheets make employees' total number of hours worked readily available, they eliminate many payroll processing challenges.
- Transparent internal practices. By having all of your employees use timesheets, you can address a common employee concern that some team members work less and get paid more. By using time and attendance software, your team knows that everyone is following the same rules and that hours are being monitored.
- Transparent client billing. If you bill your clients by the hour, there's always a chance that one of your clients will question the total amount you charged. With your timesheet handy, you can prove that you indeed worked the amount of time for which you're billing the client. Payment should then (hopefully) be right around the corner.
- Better project management. Timesheets help you better track and manage projects in two key areas. One, timesheets indicate how much time certain tasks require, and you can factor this time into future projects. Two, timesheets show which employees take the least time to perform high-quality work. As a result, you know which employees you should assign for your highest-priority projects.
- Workplace efficiency. By identifying your most productive employees, you can improve the speed and efficiency of your operations. You can also save money, since employees who work faster can take on more projects.
Key takeaway: Timesheets benefit you, your employees and your clients. They improve the accuracy of your payroll; they implement a transparent, equitable system for employees in tracking the number of hours worked; and they provide data that helps you manage client billing and project management more easily and accurately.
How timesheets work
Timesheets are relatively straightforward, but learning how they work before implementing them never hurts. Here are the basics:
1. Choose between digital and paper timesheets.
Depending on how you pay your employees and your company's infrastructure, digital or paper timesheets may be better suited for your needs. Choosing a digital timesheet will streamline integrating your time and attendance data with your payroll processing software, so they're likely easier for business owners like yourself. They also make data storage far easier and lower the chances of data loss or human error.
However, in certain jobs, the old punch card and wall-mounted reader remain the norm. These paper timesheets continue to be popular, since they're more simple and less expensive. So if you need the least expensive timesheet solution possible, choose paper. However, since employees can't specify the number of hours spent by project with paper timesheets, nor can you integrate paper timesheets with your payroll software, digital timesheets may be worth the investment.
2. Decide how often employees must file their timesheets.
Just as there are several types of payroll frequencies, so, too, are there several frequencies for filling out and submitting timesheets. These include:
- Daily timesheets, where your employees log their time at the start and end of every workday
- Weekly timesheets, in which employers log all of their hours for the workweek
- Biweekly timesheets, in which you designate a given date during a two-week period that employees submit all of their hours worked
- Bimonthly timesheets, in which you designate two dates per month during which employees submit the total number of hours they worked
- Monthly timesheets, in which your employees submit the total number of hours worked at the end of the month
No matter which frequency you choose, your employees should still clock in and out for all of their shifts. This provides dual benefits: You're not left estimating the number of hours an employee worked when it's time to run payroll. And it can ensure employee accountability, as it's far harder for employees to engage in time theft if they have to record the number of hours they worked each workday.
3. Have your employees clock in and out.
At the start of an employee's shift, your employees should clock in for the day. Then, they'll clock out once they finish work. Your employees should also clock in and out at the start and end of their breaks, and indicate their vacation days so you don't overpay them.
Employees bear sole responsibility for clocking in and clocking out – you don't need to do it for them. This way, your employees are accountable for accurately reporting their hours and answering questions you have about potentially inaccurate timesheets. [Learn what time clock rounding is.]
4. If applicable, have your employees categorize their time by project.
Although timesheets are commonly associated with hourly workers, full-time employees may need to use them as well. In fact, timesheets are especially important for full-timers if you bill clients by the hour. In this case, your full-timers should indicate not only when they worked but what projects they worked on and for which clients. With this information, you can accurately bill your clients and answer clients' billing questions.
5. Approve your employees' timesheets weekly.
You should collect your employees' timesheets after their final shift during a workweek or at the end of each workday. You'll then need to approve these timesheets for payroll. If you have a question about an employee's timesheet, you can ask the employee about the hours in question.
Key takeaway: Choose the right type of timesheet for your business – paper or digital – then have your employers clock in and out daily and approve all timesheets.
When implementing timesheets for your business, you'll likely get the best results if you start from a template. Below are two Microsoft templates:
The first template is a basic timesheet that indicates the employee's start time, end time and lunch break for each date worked. You'll also see the total hours worked broken down into regular and overtime hours next to a reminder of how many hours comprise your company's workweek. Your name and the employee's name appear at the top.
The second template is suited for business owners who bill clients by the hour. In addition to your company's name, address, and signature fields, this weekly timesheet lists a client code, a project code, and billable hours worked. Your employees can add more rows if they work on several billable projects each day. You can also build customizable timesheets with many time and attendance software programs.