Why Is an Employee Timesheet Important?
Tracking employee hours for accurate pay is the most obvious benefit of a timesheet. However, employee timesheets provide insights into your business. Take a deep dive into your employee timesheets and you will better understand employee productivity, the cost of running your business, and accurately quoting clients for your goods and services.
At the base level, an employee timesheet captures the number of hours your employees work. However, if you use an employee timesheet template like the one attached, you can also track where your employees spend their time. If you uncover a disproportionate amount of hours spent on a particular project over others, this may indicate ineffective use of resources, or poor performance. Tracking activity specific work on a timesheet can provide insights into employee productivity.
Costs of Doing Business
Similar to tracking productivity, tracking time per activity can uncover unexpected costs of doing business. Perhaps employees are spending time on administrative tasks as opposed to project tasks. You still pay employees for administrative time, but unless you understand the time going into administrative work, you can’t offset those administrative costs into the overall price of your goods or services.
How do you land on a number to quote your goods or services to clients? Do you consider the time spent by your employees on the creation of the goods or services? If not, you should. After all, you are paying your employees for production. Shouldn’t the price of the goods and services reflect the cost of production? Pairing hours worked with a specific activity is helpful in adequately quoting clients, and an effective employee timesheet template should help you track hours and activity together.
The Components of an Employee Timesheet
Timesheets can be as simple as the Excel timesheet template provided, or include enterprise-grade software that automatically tracks time based on employee activity. Regardless, every employee timesheet should include some common elements: time tracking mechanism, hourly rate, and a calculator.
Time tracking seems straightforward. An employee records how much time he or she works, and enters the number in the timesheet. However, if you add a little more color to your time tracking mechanism, you can gain better business insight. For instance, tracking the activity or project where employees are spending their hours can help you understand productivity, problem areas, need for additional resources, and other planning elements (as earlier mentioned). Additionally, the time tracking mechanism must include a consistent time interval. While employees are typically paid at an hourly rate, time can be tracked at different intervals. For instance, law firms typically accrue time billed to clients in six minute increments.
The simplest employee timesheet templates include two hourly rates (standard pay and overtime pay). However, particular projects or activities might warrant a higher or lower hourly rate. The employee timesheet template provided segments hours worked by project. You, as the employer, can utilize these segments to pay hourly rates on a per project basis. The timesheet template could easily be altered to change project to activity if that suits your business needs.
The timesheet calculator brings the first two components together for a final, payout amount. The timesheet calculator automatically aggregates standard time and overtime hours worked over an applicable pay period, applies the appropriate pay rate, and calculates the total. At this point, you will be left with an employee’s gross pay. Taxes, benefits, and other deductions will need to be subtracted from the gross pay amount, but the calculator will provide the gross pay amount.
Who Is Responsible for the Timesheet?
Have the business benefits of an effective employee timesheet convinced you to use a timesheet template like the one provided? If not, perhaps highlighting the party responsible for accurate timekeeping will. Federal and state law unequivocally place the burden for accurate timekeeping and employee payment on you, the employer. You can create company policies that require employees to keep their own time. You can even put time tracking in employee job descriptions.
In the end, none of this matters to the government. Time tracking, minimum wage compliance, overtime payments, record keeping, employee classification, and every other element associated to paying your employees is solely your responsibility as the employer. If you fail to track and pay per federal and state law, the consequences can be heavy. Wage and hour lawsuits commonly appear as class action suits that can sink your company. In sum, if you see no value in the business insights employee timesheets provide, at least use an effective timesheet template to avoid the pitfalls of poor time tracking.