2016-11-21 00:00:00 Managing People English If you pay your employees an hourly rate then it's essential to use time tracking software. Read the latest guide to time tracking. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/Woman-Employee-Time-Sheets-Business.jpg https://quickbooks.intuit.com/ca/resources/managing-people/employee-time-sheets-and-time-tracking-for-your-business/ The Guide to Time Tracking for Small Business Owners

The Guide to Time Tracking for Small Business Owners

10 min read

If you pay someone for hourly work, it’s crucial to implement a time tracking system. Using a time tracking app like TSheets ensures accuracy during pay periods and eliminates the need for manual tracking. Read more to learn about the benefits of time tracking and explore how to create a system that works for your employees.

What Are the Benefits of Employee Time Tracking?

Time tracking lets you create a record of the hours your employees work so you can pay them correctly and manage your salary costs. Making this electronic process helps reduce errors and prevent disagreements between you and your employees. Traditionally, employees sign into a time clock or handwrite notes on a timecard, and you, in turn, manually enter the information in your payroll software. That’s still an option if you prefer the paper method. But using time tracking tools can eliminate double entries and streamline the process.

Tracking Time Manually

If you prefer a traditional method of tracking time, consider mounting an automated time clock to the wall. Every employee gets a time card. Each time the person leaves and returns to work, they slide the card under the print mechanism on the clock, where it receives a timestamp. The clocks print the exact time worked each day. Keep in mind; you have to enter those hours manually to process payroll, which can add a significant amount of time to the process. For small companies, a manual method of entering start and stop times on a spreadsheet may save money and serve as a convenient method of tracking time.

Using an Online Time Tracker

Online timesheets allow your employees to track their time electronically. Additionally, specific time tracker programs allow your employees to enter expenses, track mileage, and assign their hours to particular projects or clients.

Regardless of the program, you select, online timesheets save time for your human resources and accounting departments. Rather than manually entering information from paper timesheets, these employees need to review the electronic timesheets and use the information to cut payroll cheques. This process also reduces data entry mistakes. Additionally, online timesheets save all the information entered by your employees. If there’s a dispute about hours, you need to turn to the audit trails of the timesheet program. The detailed documentation can also be useful at tax time. To maximize the potential of your online timesheets, you should look into a time tracker that syncs with your accounting software.

Once you sync the app to your software, you can easily create invoices based on hours logged or generate payroll cheques. For example, if an employee logs 30 hours on a time-tracking app, when you sync the app to QuickBooks, it can automatically create a cheque to reimburse your employee for that time. Similarly, if you have hours coded by project and an employee logs 10 hours on a specific job site, you can ensure the software notes those costs on the correct invoice. This saves you time and eliminates mistakes associated with manual entry.

Choosing the Best Time Tracker Software

Invest some time into finding the right time-tracking app for your needs. In some cases, you may want a simple timer to track just your hours. In other cases, you may need an app that multiple employees can use to sign in and out or add expenses as required. Luckily, most apps offer a free trial period so you can test out their features before signing up for the service. Also, make sure the app syncs with your QuickBooks accounting software so you can streamline payroll and invoice tasks. Finally, make sure the app is user-friendly so your employees can quickly adapt it.

Consider using a cell phone application that uses GPS to track and monitor employee hours when they’re away from the office. This type of mobile attendance system lets you monitor locations legally so you can confirm the hours logged by the individual. The GPS starts monitoring movement when the employee logs in for the day and stops when they clock out.

There are also several mobile apps for keeping time cards that serve as a basic check-in and check-out tool. Each participating employee downloads the application on a phone then uses it to log in and out for the day while also accounting for breaks. The programs export data in several formats, including through Google Documents and in CVS format for export into spreadsheets. Both applications and the QuickBooks program are ideal for use by remote workers because you can access them from anywhere.

Alternatively, another easy way to log time is within the QuickBooks Online app. Employees can enter time and expense reports from anywhere online using the app. All you have to do is activate the function from your account settings, which provides users with time entry-only access so they can’t see account information or other features of the program. With a single license, you can add as many employees as you like. This time-tracking feature works in conjunction with payroll invoicing, so you can automatically generate and print payroll cheques or export the information to your payroll provider.

What to Consider When Choosing a Time Tracker

In most cases, time-tracking apps charge a small monthly fee per employee, but pricing structures vary, and you should look closely at the costs to ensure they fit into your budget. In addition to the price of the service, also consider whether or not you need to invest in new hardware. Most time-tracking apps are cloud-based, so you don’t need to worry about storage or processing power. Instead, you simply need a few laptops or smartphones that you can connect to the internet. As an employer, you can opt to provide these tools to your employees. However, as most Canadians own smartphones, you may simply want to have your employees use their own phones. In this case, you need to ensure you meet your legal obligations. In particular, at tax time, you should fill out Form T2200 (A declaration of Conditions of Employment). This simply notifies the Canada Revenue Agency (CRA) about expenses your employees incur as part of their employment contract. This form also allows your employees to claim these expenses on their tax returns.

Our Top Pick: TSheets Time Tracking

Compatible with QuickBooks, TSheets Time Tracking boasts high user satisfaction. The program allows you to create schedules, and it lets employees clock in and out from anywhere using a computer, laptop, or smartphone app. Employees may even text or call in a code to sign in if they are don’t have a smartphone or are in an area with no cellphone coverage. GPS capabilities allow you to check on the location of your workers in the field, and the dashboard shows you instantly who is working, where they are, and how many hours they log. With the tap of a button, you can sync your workers’ hours to your accounting software. This eliminates mistakes related to manual entry, saves time, and streamlines your payroll process. The app starts with a free trial so you can test it out, and if you like it, the service is available for a monthly fee.

The app offers a wealth of features. Learn more, below:

TSheets also supports shift scheduling. To schedule shifts in TSheets:

  1. Install the TSheets Scheduling add-on if you don’t already have it.
  2. Click Manage and select Schedule to access the schedule calendar.
  3. Double-click a cell in the schedule calendar.
  4. Click Actions in the top left corner and select Add Shift.
  5. Choose the start and end times of the shift.
  6. Customize the shift by adding a colour, job description, and an employee.
  7. Click the Publish button to publish the shift information to the calendars of the assigned employee.
  8. The assigned employee receives a notification of the shift assignment.

Managing Overtime Hours

If you have hourly employees, you may want to use banked over time instead of paying outright for overtime. In terms of dollars, it costs you the same, but the employee might prefer this benefit over pure cash. Banked overtime, or time-off in lieu, describes paid time off that’s earned through working overtime hours. When employees work overtime, they earn 1.5 times their hourly rate. With banked overtime, employees earn 1.5 hours of regular pay time off for each hour of overtime worked. Economically, these two options are equal for you as a business owner but having paid time off might be more important to some employees.

You and your employee should agree in writing when they can take the time off, say within three to six months of the week they work the overtime hours. You can choose to extend the period in which they can take time off through a collective bargaining agreement. You can use customized agreements between an individual employee and you, or you can set up a group overtime agreement covering all employees.

Canadian law allows you to offer banked over time regardless of where in the country your business is located. Note, it is important to follow your provincial labour laws regarding overtime. For example, Ontario has provincial laws regarding banked over time that you need to know about and follow if your business is located in the province.

To offer banked overtime to your employees, all you need to do is track their overtime hours just as you normally do. Then, you can convert the overtime hours to paid time off, which helps you calculate how much time away from work they accumulate.

Managing Incorrect Time Tracking

Whether it’s intentional or accidental, sometimes employee time-tracking records don’t line up with the actual amount of time worked. It can be difficult to recognize discrepancies, especially when an employee works from a remote location, but if you do notice a problem, it’s important that you address it.

Time clock errors aren’t always the result of employees intentionally misleading you. Unless you’re positive that the mistakes are due to purposeful dishonesty, it’s important that you handle time-tracking mistakes as if they’re just that: mistakes. Falsely or even justifiably accusing an employee can severely damage employee relations, so be sure to tread lightly while still remaining firm.

The best way to handle time-tracking issues is to prevent them from happening in the first place. One of the most common errors is not having and consistently enforcing an attendance and time-tracking policy. Your employees should know exactly what consequences to expect if their time tracking is off. Of course, there’s a difference between an honest mistake and intentional deception, so make sure your policy distinguishes between the scenarios. When employees know what’s at stake, they’re much more likely to be careful when punching in or out.

Another common employee tracking error is not following through with discipline. If one employee sees that a team member gets away with falsifying records, they might be inclined to do the same. Sometimes even honest mistakes require discipline to prevent them from occurring again or to set an example. That doesn’t mean you need to terminate an employee or take other drastic measures. A suitable punishment for an honest error is simply requiring the employee in question to check in with a supervisor when clocking in and out for a predetermined amount of time.

It’s absolutely necessary to discuss time-tracking issues with your employees. Address the situation as quickly as possible and be kind but firm. Consider upgrading your time-tracking software to reduce errors further. As long as you communicate with your staff effectively and provide a reliable way for them to track time, you should see a decline in time clock errors.

Time tracking gives you documented proof of an employee’s hours, which eliminates guesswork on paydays. This keeps employees satisfied, and it ensures your business maximizes profits by not spending more than you have to. Consider analyzing the various methods of time tracking to discover one that works best for your company size, and pair the system with your accounting software.


Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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