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.
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.
Timesheets track the number of hours your employees work during a pay period, and they also have applications in client billing and project management.
Other benefits of timesheets include:
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.
Timesheets are relatively straightforward, but learning how they work before implementing them never hurts. Here are the basics:
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.
Just as there are several types of payroll frequencies, so, too, are there several frequencies for filling out and submitting timesheets. These include:
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.
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.]
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.
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.
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.