What is a Timesheet (And How Do They Work)?

If you’ve found yourself asking, "What is timesheet management?" you’re on the path to unlocking a vital tool for your business. A timesheet is more than just a record of work hours — it’s a powerful resource that can transform how you manage payroll, track overtime hours, ensure compliance with labor laws, and boost overall productivity. By understanding a timesheet and how it works and implementing effective timesheet software, you can gain valuable insights into your team's efficiency, make informed decisions, and ultimately drive your business forward.

In this guide, we’ll take you through everything you need to know about timesheets — from the basics to the advanced technologies that make time tracking easier and more accurate. We’ll show you how timesheets can help you streamline operations, reward hard work, and avoid common pitfalls that could cost you time and money.

By the end of this guide, you’ll have a clear answer to "What is a timesheet?" and the tools to implement an effective time tracking system that works for your unique business needs.

A timesheet is a fundamental tool businesses use to record the time employees spend on various tasks, projects, or work activities during a specific period, such as a day, week, or month. It is a vital record that helps track work hours, manage payroll, and ensure compliance with labor laws. But a timesheet is more than just a log of hours—it’s a resource that can significantly improve a business's efficiency and profitability.

The primary purpose of a timesheet is to provide an accurate record of the hours worked by employees. This information is crucial for several reasons:

Payroll management

Timesheets ensure that employees are paid accurately based on their worked hours, including any overtime hours. This is especially important for businesses that pay employees hourly or offer overtime. Accurate timesheets prevent overpayments or underpayments, which can affect employee morale and company finances.

Billing clients

Timesheets are essential for service-based industries to bill clients accurately. By tracking the time spent on specific projects or tasks, businesses can provide detailed invoices that justify the hours billed, increasing transparency and trust with clients.

Project management 

Timesheets help project managers monitor the time spent on different tasks, enabling better project planning and resource allocation. By analyzing timesheet data, managers can identify bottlenecks, optimize workflows, and ensure projects are completed on time and within budget.

Compliance with labor laws

Timesheets help businesses comply with labor laws, particularly those related to overtime, breaks, and minimum wage requirements. Accurate time tracking is essential to avoid legal disputes and potential fines.

Employee performance evaluation

Timesheets can be used to assess employee productivity by comparing the time spent on tasks against the output produced. This information can be valuable for performance reviews, identifying training needs, and rewarding high performers.

Digital vs. manual timesheets

There are two primary methods of managing timesheets: manual and digital.

Manual timesheets

Manual timesheets, often in the form of paper timesheets or punch cards, involve recording work hours by hand. While straightforward, these paper timesheets have several drawbacks:

• Tedious to use: Employees must remember to record their hours accurately, which can be time-consuming and prone to errors.

• Increased admin work: Manually tallying hours for payroll or billing requires additional administrative effort, increasing the risk of mistakes.

• Susceptibility to time theft: Manual timesheets are more vulnerable to time theft, such as employees clocking in or out for each other.

Digital timesheets

Digital timesheets, on the other hand, offer significant advantages over traditional paper timesheets, including improved accuracy, real-time tracking, and better security. They offer several advantages:

• Improved accuracy: Digital systems reduce human error by automatically recording time entries. Some systems even detect idle time to ensure accuracy.

• Integration with payroll and billing: Digital timesheets can integrate with payroll and billing systems, streamlining these processes and reducing admin work.

• Real-time tracking: Digital timesheets allow for real-time tracking of employee hours, providing managers with up-to-date insights into how time is being spent.

• Better security: Data stored in digital systems is more secure, with backups and access controls that prevent unauthorized alterations.

Choosing the right timesheet software for your business depends on several factors, including the nature of your work, the size of your team, and how you need to track and manage time. Below are the main types of timesheets, each suited to different business needs:

Daily timesheets

Daily timesheets are ideal for businesses that need to track work hours on a day-by-day basis. These timesheets record the start and end times for each workday and can include details like breaks, overtime, and the specific tasks or projects worked on.

Example: A field service company, such as an extermination business, might use daily timesheets to track hours spent at different job sites. This allows them to bill clients accurately for the time spent on their properties each day.

Weekly timesheets

Weekly timesheets capture the total hours worked over a seven-day period. These are particularly useful for businesses that pay their employees weekly or biweekly or for those that need to track various time categories like regular hours, overtime, PTO, and sick leave.

Example: A retail business might use weekly timesheets to monitor employee attendance and ensure compliance with labor laws regarding rest periods and maximum work hours.

Bi-weekly timesheets

Bi-weekly timesheets are similar to weekly timesheets but cover a two-week period. These are commonly used by businesses that process payroll every two weeks. They reduce the administrative workload compared to weekly timesheets while still providing detailed tracking of hours worked.

Example: A consulting firm might use bi-weekly timesheets to track time spent on client projects over a 14-day period, allowing for easier management of longer-term tasks and projects.

Monthly timesheets

Monthly timesheets are best suited for businesses that operate on a monthly billing or payroll cycle. These timesheets track the total hours worked across an entire month, making them useful for employees who work on long-term projects or who earn commissions.

Example: Sales teams often use monthly timesheets to track the hours spent on client interactions, which helps in calculating monthly commissions and performance bonuses.

Timesheets for salaried workers

Timesheets for salaried workers are not always tied directly to payroll, but they are valuable for tracking work hours, allocating labor costs, and monitoring productivity. These timesheets can be set up as daily, weekly, or monthly records, depending on the business's needs.

Example: A marketing manager on a salary might use a weekly timesheet to track time spent on various campaigns, which helps in resource allocation and identifying time-intensive tasks.

Timesheets are vital for tracking employee hours, managing payroll, overseeing projects, and billing clients. They capture the hours an employee works within a specific period, including start and end times, breaks, and overtime. This data is used to calculate wages, monitor project progress, and generate accurate client invoices.

Applications of timesheets

Payroll management: Accurate timesheets prevent overpayments or underpayments, which can affect employee morale and, consequently, employee productivity. This prevents payroll errors and ensures compliance with labor laws.

Project management: In construction, project managers use timesheets to log hours spent on different tasks, enabling them to allocate resources effectively and keep projects on schedule and within budget.

Client billing: Law firms track every minute spent on a case using timesheets, allowing them to bill clients accurately based on the actual time worked, fostering transparency and trust.

Transition from paper to digital timesheets

The move from paper to digital timesheets has revolutionized time tracking:

• Improved accuracy: Digital timesheets automate time tracking, reducing human error and ensuring that only productive hours are logged.

• Real-time insights: Managers can monitor employee hours in real time, leading to better decision-making and more efficient project management.

• Seamless integration: Digital timesheets integrate with payroll, billing, and project management systems, streamlining processes and saving time.

• Enhanced security: With cloud storage and regular backups, digital timesheets offer better security and reliability than paper records.

The transition to digital timesheets, as emphasized by tools like Paymo, provides businesses with a more efficient, accurate, and secure way to manage time tracking, ultimately leading to better operational outcomes.

Benefits of using timesheets

Utilizing digital timesheet software can help businesses eliminate the inefficiencies associated with paper timesheets, improve payroll processing, and enable accurate PTO tracking. Timesheets are useful for improving workflows, so it comes as no surprise that they are useful. 

Timesheets help organizations: 

• Eliminate wasted time

• Improve payroll processing

• Enable PTO bank accruals and withdrawal tracking

• Delegate responsibilities

• Create accurate invoices

• Maintain industry standards that comply with break time laws.

Let’s take a more detailed look at how you can leverage timekeeping tools to your advantage.

Know how time is being spent and reduce wasted time

Knowing exactly how employees spend their time during the workday is the first step in reducing wasted time and saving money.

Tracking the project or task hours of both individual workers and teams informs future project forecasting. Collecting the number of hours worked on any given task provides a clear view of the efficiency of your workforce. This then allows managers to take appropriate measures to improve production capacity and efficiency.

Time tracking is also beneficial for monitoring freelancers' hours. This helps companies identify situations where freelancers' billable hours are excessive compared to industry norms or internal benchmarks.

Payroll processing

Timesheets expedite the payroll process considerably. Accurate clock-in and clock-out times become the basis for calculating work hours. Managers can use manual or automated methods to tally these hours for more accurate payroll. This data also helps teams create accurate client invoices.

Track employee time off and accruals

Timesheets help human resources, management, and employees keep track of PTO and other time off accruals. Automated time management solutions log time accrued and time used as the worker earns it. When employees use leave, the software automatically deducts from the current balance.

Stay compliant with work schedule laws and regulations

Federal law does not require companies to provide workers with rest breaks. However, Department of Labor standards require employers who schedule breaks to consider the break time as compensable work time.

However, there is a catch: Fair Labor Laws instruct employers to follow state laws and regulations for lunch and rest breaks.

For example, employees who work four hours or more must receive a ten-minute break in California. The timesheet must reflect a full ten minutes. No rounding up is allowed.

State laws also govern how many consecutive hours employees need off between shifts. To complicate employee scheduling further, there are state-specific scheduling laws for minors (the age also varies by state). Even exempt and non-exempt workers vary by state.

Even at a glance, helping your HR department remain compliant becomes a real challenge. Automated time tracking simplifies compliance by sending alerts to HR teams when workers exceed scheduled hours or fail to take scheduled breaks.

Since 2016, the Department of Labor has recovered almost $200 million in back wages. Don’t become another statistic. When companies take the time to train employees on how to record time accurately, it saves them time and money. 

Improved project management and resource allocation

We now know that staying compliant with all federal, state, and local laws is essential to avoid lawsuits and sanctions. That said, timesheets can also aid project management and resource allocation strategies to prevent these legal issues. 

Using timesheets and time tracking apps to see time logged on previous projects gives companies a realistic glimpse into how long future projects will take. With this data, project managers and HR teams can create schedules for each workweek.

Time data informs project budgeting and forecasting models when utilized as a project management tool. Automated time logging can also improve billing and invoicing processes.

Accurate and automated billing and invoicing

When billing and invoicing processes are based on actual employee hourly rates, clients will see more accurate, detailed invoices. These invoices also go out faster for improved collection rates. This then results in faster payments and improved cash flow.

Clients get answers faster when workers spend less time preparing statements and invoices. This allows them to manage their finances better and make decisions that prolong their relationship with your company.

Know how time is being spent and reduce wasted time

Knowing exactly how employees spend their time during the workday is the first step in reducing wasted time and saving money.

Tracking the project or task hours of both individual workers and teams informs future project forecasting. Collecting the number of hours worked on any given task provides a clear view of the efficiency of your workforce. This then allows managers to take appropriate measures to improve production capacity and efficiency.

Time tracking is also beneficial for monitoring freelancers' hours. This helps companies identify situations where freelancers' billable hours are excessive compared to industry norms or internal benchmarks.

Payroll processing

Timesheets expedite the payroll process considerably. Accurate clock-in and clock-out times become the basis for calculating work hours. Managers can use manual or automated methods to tally these hours for more accurate payroll. This data also helps teams create accurate client invoices.

Best features for timesheet software & time tracking software

As you can see, the benefits of digital time tracking software far outweigh the benefits of manual timesheet options. From saving money and time to gaining deeper insights into workforce performance, digital time tracking software helps growing businesses.

When comparing digital timesheets and time tracking software, keep these features in mind:

• Automated timesheet creation and smart approvals

• Intuitive time-off requests and approvals 

• Compatibility with various operating systems and devices

• Powerful integrations with payroll and HR management tools

• Sleek UI/UX with a small learning curve 

• Easy-to-use functionality to simplify clock-in and clock-outs

• Automated reminders and hourly limits to reduce overtime and missed shifts

• Versatility for freelance, remote, in-office, and field teams

Hubstaff is an excellent timesheet app that offers all these features. It helps employers monitor employees' workflow, manage client billing efficiently, and control employee time.

If you're looking for timesheet software with intuitive timesheet data and insights, sign up for a free 14-day trial to see how our technology works.

Track employee time off and accruals

Timesheets help human resources, management, and employees keep track of PTO and other time off accruals. Automated time management solutions log time accrued and time used as the worker earns it. When employees use leave, the software automatically deducts from the current balance.

Stay compliant with work schedule laws and regulations

Federal law does not require companies to provide workers with rest breaks. However, Department of Labor standards require employers who schedule breaks to consider the break time as compensable work time.

However, there is a catch: Fair Labor Laws instruct employers to follow state laws and regulations for lunch and rest breaks.

For example, employees who work four hours or more must receive a ten-minute break in California. The timesheet must reflect a full ten minutes. No rounding up is allowed.

State laws also govern how many consecutive hours employees need off between shifts. To complicate employee scheduling further, there are state-specific scheduling laws for minors (the age also varies by state). Even exempt and non-exempt workers vary by state.

Even at a glance, helping your HR department remain compliant becomes a real challenge. Automated time tracking simplifies compliance by sending alerts to HR teams when workers exceed scheduled hours or fail to take scheduled breaks.

Since 2016, the Department of Labor has recovered almost $200 million in back wages. Don’t become another statistic. When companies take the time to train employees on how to record time accurately, it saves them time and money. 

Improved project management and resource allocation

We now know that staying compliant with all federal, state, and local laws is essential to avoid lawsuits and sanctions. That said, timesheets can also aid project management and resource allocation strategies to prevent these legal issues. 

Using timesheets and time tracking apps to see time logged on previous projects gives companies a realistic glimpse into how long future projects will take. With this data, project managers and HR teams can create schedules for each workweek.

Time data informs project budgeting and forecasting models when utilized as a project management tool. Automated time logging can also improve billing and invoicing processes.

Accurate and automated billing and invoicing

When billing and invoicing processes are based on actual employee hourly rates, clients will see more accurate, detailed invoices. These invoices also go out faster for improved collection rates. This then results in faster payments and improved cash flow.

Clients get answers faster when workers spend less time preparing statements and invoices. This allows them to manage their finances better and make decisions that prolong their relationship with your company.

Effectively managing timesheets is essential for accurate time tracking, improved productivity, and compliance. Here are some actionable tips:

1. Choose the right timesheet software

Select a user-friendly timesheet software that integrates with your existing systems. Look for features like automated tracking, real-time reporting, and mobile access to streamline processes. 

Tip: Opt for software with strong customer support to ensure smooth implementation and user adoption.

2. Ensure accuracy

Minimize errors by using automated time tracking and encourage employees to log their hours as they work. Regular audits of timesheet entries can catch inaccuracies early.

Tip: Implement idle time detection and set up alerts to ensure all logged hours are productive.

3. Boost user adoption

Make timesheet submission easy and quick. Provide training on the importance of accurate time tracking and set up automated reminders to prompt timely submissions.

Tip: Simplify the process and communicate its value to ensure consistent use across the team.

4. Customize to your needs

Tailor timesheets to capture the data most relevant to your business, such as project codes and billable hours. Regularly review and update templates to keep them aligned with your needs.

Tip: Adjust templates as your business evolves to ensure you’re capturing the most useful information.

5. Foster accountability

Promote a culture where accurate time tracking is everyone’s responsibility. Highlight its importance for fair pay, project success, and overall efficiency.

Tip: Recognize and reward consistent, accurate timesheet submissions to encourage adherence.

6. Monitor and analyze

Regularly review timesheet data to spot trends and inefficiencies. Use these insights to make informed decisions about resource allocation and workflow optimization.

Tip: Generate reports that offer actionable insights into how time is spent, helping to refine processes and boost productivity.

Final words

Hubstaff is an excellent timesheet app that offers all these features. It helps employers monitor employees' workflow, manage client billing efficiently, and control employee time.

If you're looking for timesheet software with intuitive timesheet data and insights, sign up for a free 14-day trial to see how our technology works.