What is a Timesheet and How Does It Work?

Companies that use billable hours to invoice their clients always use timesheets to track the hours spent on the project. But what is a timesheet?

In this article, we’ll get into the nitty-gritty of timesheets, timesheet definition, their importance, and why you need electronic timesheets.

Let’s dive right in.

What is a timesheet for service-based companies?

Service-based businesses usually bill clients on an hourly basis. Because of this, they almost always have to include the billable hours in their invoices. But what’s a timesheet’s function for companies who work within the service industry?

In this section, we’ll answer the question “What are timesheets?” and talk a little about how they work.

Timesheet meaning

Let’s define a timesheet.

Simply put, a timesheet is a method of recording employee work time. There are two types of timesheets: paper and digital.

A paper-based timesheet is a sheet of paper that employees use to manually track their time. A digital timesheet does this automatically. Timesheets are also used for tracking the hours that have been worked on specific tasks and employee arrivals and departures from a job site. 

This information is crucial for finance and payroll departments that want to calculate paychecks correctly. 

They are also extremely helpful in tracking sick days, paid holiday allowances, as well as vacation time. Small businesses can decide the type of timesheet to use that fits best with their tracking system. 

Generally, you have 3 ways to record time:

• Through daily timesheets,

• Through weekly timesheets, and

• Through monthly timesheets.

Service-based companies may decide to use either project timesheets or work timesheets for tracking working hours.  

How do timesheets work?

The way timesheets work is by entering the start and end times of working hours during the day. Whether it’s a paper or electronic timesheet, the employee has to enter the time they clock in and clock out. Depending on how many details a company expects, you might also enter the time for each task completed.

The employee is always responsible for filling out a timesheet correctly, therefore they should be fully informed on how to fill out a timesheet accurately. After they’ve filled it in, it should be handed to their manager for approval.

After the manager approves the timesheet, it’s submitted to the HR department for final approval before payroll. If the timesheet is rejected for any reason, the employee should have the option to correct any mistakes or submit a new timesheet.

What are timesheets used for?

Businesses use timesheets for a variety of reasons. They help companies better manage the time employees spend working, as well as provide an overview of the current status of ongoing projects. 

Some other use cases for timesheets include the following:

• Employee time tracking,

• Payroll processing,

• Accounting,

• Resource management, and

• Tracking time off.

Let’s get into each of them.

Employee time tracking

One of the main reasons timesheets are used is to track the time employees work. You can calculate how many hours an employee puts in during a week and make sure they don’t frequently work overtime. This is especially good for part-time employees and freelancers who shouldn’t go over the 20-hour-a-week mark.

Payroll processing

Timesheets are usually the basis of payroll processing, especially for employees who are paid by the hour. Because timesheets record detailed information about an employee’s working hours, calculating payroll becomes more manageable, transparent, and fair. Everyone gets paid for the work they do. 

Accounting 

Besides making the payroll process easier, work timesheets lighten some of the burdens of your usual accounting. You’ll have readily available data that will help you keep an eye on costs to make sure you’re using your resources wisely.

Resource management

One of the largest costs a company has is its workforce. This is why knowing how to manage timesheet data is incredibly important when allocating resources. Is progress going slower than usual? You might want to offer more incentives by adding another team member or raising the hourly rate. Is one team performing tasks faster than others? Then you can delegate more projects and assignments to them.

Tracking time off

With the help of timesheets, managers can see which employees are on vacation, taking time off, or are sick. This way, they’ll be able to assign shifts to available employees and manage the company’s workforce. As a result, all projects are being taken care of and nothing gets put on the back burner.

Benefits of using work timesheets

Timesheets are an important part of any service-based business. They allow the employer to keep track of time spent by employees. It also helps them to identify the most efficient and productive employees.

This is why digital timesheets are becoming more popular in the workplace. They are easier to use and offer many benefits for both employers and employees, such as more accurate invoicing, automation of your billing process, and compliance with FLSA laws. 

Let’s take a look at some benefits of using timesheets.

More transparent billing

Timesheets are also used to make billing more transparent. When you’re working with clients, it’s important to show how their money is being used. With timesheets, you can see how each employee spent their time, how much time was spent on the project, and the total amount of hours worked by each employee or team. These make an invoice look more professional and help build trust with your clients.

Billing automation

Besides the benefit of more accurate and transparent billing, with timesheets you can automate your billing process. Especially if you use digital time sheets,  as soon as a job is done you can generate a timesheet in minutes with all the necessary data and attach it to your client billing. All of this is done within minutes, and you won’t have to worry about forgetting to send an invoice to your clients.

Project management

A good timesheets system will also offer a macro view of all your ongoing projects, improving your time management. You’ll be able to know how far along client projects are and how much your employees are working. Especially when clients what an update on their project, you can quickly look at your timesheets and offer insights.

Improving productivity

Timesheets not only show how many hours an employee spends working but also how much of that work is productive. If an employee has been working for a week but hasn’t yet finished their assigned tasks for that week, then it’s time to see if there are any distractions that are affecting their productivity. You can also see if the company needs a motivation booster.

Staying compliant with the law

Because the FLSA requires employers to keep employee work records for at least three years, timesheets show detailed information on your employees’ work throughout these years. You can use timesheets for tax purposes and to have a better view of payroll so you won’t violate any laws.

What information do timesheets contain? 6 key elements of timesheets

Timesheets have a few key elements that make them important for timekeeping, payroll, and tax purposes. These include:

• An employee’s name - this is usually written first, at the top of the timesheet. It should also be a full name, with no nicknames or shortened names (ex. John Reed).

• The project or pay period - depending on whether you’re tracking working hours per project or per usual working period, you should specify the duration (ex. 02.04.2022 - 15.05.2022).

• The dates worked - a timesheet needs to include the specific dates of each day worked. These can also include the working hours for each date (ex. Day 1 - 02.04.2022, 8 hrs; Day 2 - 05.02.2022, 5 hrs).

• The total number of days worked - because there are weekends and days off, a timesheet needs to show the number of working days for a specific period (ex. Duration of project - 4 weeks, Days worked - 20).

• Total hours in a week - either for billing or tracking purposes, if a project lasts for more than a week you should include the hours spent in a work week (ex. Week 1 - 80hrs, Week 2 - 74 hrs).

• Total hours worked - somewhere at the end of a timesheet, you would have to include the total number of hours spent on the project (ex. 268 hours).

How to manage timesheets: 5 practical tips for timesheet managers

As a timesheet manager, you are responsible for, among other things, organizing your team, assigning shifts, and also approving employee timesheets. We’ve got 5 tips to help make your timesheet management hassle-free!

Tip 1 - Explain the importance and company policy

As a start, get your team together and explain the importance of timekeeping. Make it clear that this is not only good for the business, but it’s extremely beneficial for the employees. Afterward, you can talk about the company policy for time tracking to keep everyone on the same page.

Tip 2 - Train your team

Not everyone on your team will be good at tracking their working hours. This is why you should make an effort to train your team. Give everyone the tools they need, show them how to do it, and check in periodically to make sure everything is going smoothly.

Tip 3 - Use timesheet automation

To make the process of timekeeping even more manageable, use a time-tracking tool. Timesheet automation takes away the burden of manually inputting employee hours, recording dates, calculating working hours, and creating detailed timesheets. It will save you a lot of time and resources. 

Tip 4 - Remind your team

Make it a habit of regularly reminding your team to fill in and submit their timesheets. Some weeks are busier than others, so it’s important to send a quick email or mention it at a team meeting. You can also use text messages, push notifications (if you’re using an app) or post-it notes to remind everyone to hand in their timesheets.

Tip 5 - Go over submitted timesheets

Finally, don’t forget to check submitted timesheets for any errors. Before sending them for payroll, make sure that important details like the name and dates are correct, as well as the calculations of working hours. 

Digital timesheets

Digital timesheets, which can typically be used through a timesheet app, are perfect for making time tracking, payroll, and resource management effortless and uncomplicated. They automate your workflow and automatically record the amount of time your employees spend working.

An electronic timesheet is typically a web-based form that can be filled out on a computer or mobile device. It converts time entries into data that is then stored in a central database and entered into payroll software for calculating wages.

Important features of a timesheet software

A timesheets system can help you manage time in every aspect of your project. It can collect data on the time a team member works on a task, but it can also track scheduling, resource allocation, and other variables.

Some of the most important features of a timesheet software include

• Less likely to lose your data,

• Track employee overtime hours,

• No more scattered paper documents,

• Finding information instantly,

• More security,

• Generate multiple reports, and

• Real-time data.

Get the Atto timesheet management system and easily manage timesheets for your business

With Atto, you no longer have to worry about misplaced, late, or inaccurate timesheets. Our time tracking software automatically generates timesheets for you, making sure that deadlines are met on time. 

Atto’s timesheet management system has an intuitive UI that gives you access to:

• Comprehensive timesheet reports that show regular time, overtime, breaks, time off, and more.

• Scheduled email reports to coincide with your payroll schedule. 

• Integrations with Quickbooks Online and Xero

• Timesheets based on work done by an employee, team, or toward a category of job. 

• Wage estimates and pay rates.

• Timesheet rounding increments and clock in/out times are rounded automatically.

And much more!

Try Atto for Free

FAQs & more timesheet definitions

What is a timesheet attestation?

A timesheet attestation is the process of an employee confirming the clock in and out times that they present in their timesheet. Usually, the employee signs their timesheet before handing it in for approval. This protects the employer from complaints about timecard accuracy.

What is a timesheet audit?

A timesheet audit tracks any changes made to the timesheet, by employees, approvers, or who's ever in charge. There is usually an audit form that has to be filled in with important information and its purpose is to manage and track company resources. 

What is a timesheet floor check?

A timesheet floor check is used to ensure that the time entries of your employees are completed on time, that employees comply with company timekeeping policies, and to keep an eye on labor costs. This enforces transparency and correctness from both the business and its workforce.

What is a timesheet approval?

A timesheet approval is a process of having an employee’s time card approved by their manager or department before sending it to payroll. A manager usually looks over the employee’s clock-in and out times, dates, and number of working hours, and can make any necessary adjustments.

What is a timesheet invoice?

A timesheet invoice is a type of billing process where a business includes all of the hours that its employees worked on for a client project. It’s usually used by businesses that rely on billable hours to charge customers for the service they provide.

What is a timesheet report?

A timesheet report is a type of report that shows how many hours were spent on a client project, how many employees worked on the project, how much time each part of the project took, as well as a comparison to previous forecasts and estimations.

What is a manual timesheet?

A manual timesheet is a method of timekeeping on paper or cardboard. It has to either be filled in by hand or punched in at specific stations set by the company. It differs from automatic time tracking in that it relies on the employee’s efforts to accurately track their working hour, rather than punch cards.

What is the difference between a timesheet and a daysheet?

The difference between a timesheet and a daysheet is that a timesheet captures time records and the total number of employee working hours during a specific period, usually over a week or month. A daysheet, on the other hand, only focuses on a specific day.

What is the difference between a time card and a timesheet?

The difference between a time card and a timesheet is that a time card is a physical card or paper that needs to be punched in or stamped by a time clock to record employee start and end times. A timesheet is a document, usually digital, that tracks working hours and is used for payroll, billing, and accounting.

How long do you need to keep your employee timesheets?

Employees need to keep their timesheets for at least two years, according to the FLSA. Employers, on the other hand, need to keep all employee records for at least three years. In addition to these, any documents or records that are used for tax purposes need to be kept for at least four years.

What is a supplemental timesheet?

A supplemental timesheet is a document that is submitted in addition to an employee’s regular timesheet. It usually holds information like employee breaks, overtime, time off, sick days, and more. A supplemental timesheet can also be used in cases of a former timesheet having mistakes or a voided paycheck.

What is the best timesheet app?

The best timesheet app is, naturally, Atto. Atto is incredibly easy to use, offers an easy setup, and helps you generate timesheets in just a few minutes. Every working hour is tracked, and all your employees have to do is tap to clock in, and tap to clock out.