manage employees

Guide to creating a working hours log

Accurately tracking employee attendance and time is crucial for any business owner. Ultimately, you need to know that your employees are efficient and productive so you can scale your business. Tracking employee time helps you streamline your payroll process so you know how much time an employee worked and how much to pay them.

These records can also help you calculate overtime pay more accurately and give you a better understanding of how much each department and each employee costs your business. A key tool for employee time tracking is a working hours log. In this post, we’ll provide definition and key tips for creating your own working hours log. Click on the links below to jump ahead, or read the post in full for a comprehensive guide:

What is a working hours log?

A working hours log is a work-time tracker that keeps track of your employees’ attendance. Other names for a working hours log include timesheet, work hours log, and work hour tracker. These are logs or records of when your employees clock in, go to lunch, and clock out so you know when they are on-premises and doing their jobs.

Why employers use working hours logs

Employers use working hours logs for many reasons, from ensuring their employees are doing what they’re supposed to do to figuring out how much time and money go into tasks throughout the day. Other reasons employers use timesheets include:

Billable hours

Tracking total hours is part of project management, especially for businesses that invoice their clients based on hours. Billable hours are the number of hours that will be charged to a client. A client agrees on a set rate for each hour, and the business bills them based on how many hours have been spent on the project.

Many businesses, from law firms to marketing consultants, use billable hours to charge their clients. It’s important to track time for this billing method so you know what your business is making. Without knowing how much time your employees spend on a project, you can’t accurately determine how much to charge your client. This could end up costing you money. Let’s take a look at this in action:

Say you charge a client $500 per hour, but you’re not quite sure how much time your employees spend on the project. If you aren’t tracking this information, you could be charging the client less than what it costs for you to pay your employees. This means you won’t be making any money on the project.

Ensuring profitability

If your business doesn’t use billable hours for invoicing clients, you can still utilize working hours logs to get a better idea of what to charge. A weekly timesheet provides insight into how much time your employees spend on one client during a given period. This can help you set more accurate, profitable rates.

Many businesses use freelancers and it’s important to understand how much time they spend on a given project. You can’t guarantee a remote contractor’s hours because they’re not in the office. Time tracking apps for freelancers can help you understand exactly how much work and money goes into a project before billing your client.

Better employee management

Using logs to track hours helps you see how much your team is working. You can view working hour logs for individual employees or assess the amount of time an entire team spends on projects. This helps provide thorough insight into total costs of payroll, allowing you to keep better tabs on business finances.

Working hours logs can prove helpful for your employees, as well. Simple timesheet data can help you see which individuals are going over their hours too often. Perhaps you notice several employees within the same department are consistently working overtime to meet the demands of your business. This tells you that you need to hire more employees before your current employees come to you begging for help, which may indicate you need to hire up.

Maintains records of work

Work-time trackers give business owners and managers useful information about their employees’ working hours and create a record of what the teams worked on and when. This proves valuable if a client asks for a detailed report of why something took as much time as it did, or if they check in to see what your team is working on. With accurate work-time tracking, you can see exactly what your employees have been working on so you can relay that information to the client.

How to create a working hours log

Creating a work hour tracker is simple, and you don’t need extensive knowledge of spreadsheets to do so. Here are some step-by-step instructions to help you create a working hours log:

1. Use Excel or Google Sheets

The easiest way to start a working hours log is to use a CSV or Google Sheets. You can customize an employee timesheet to include as much information as your payroll and HR departments will need to accurately calculate employee pay. You can include:

  • Dates
  • Times employee clocked in and out
  • Total employee hours per workday
  • Total employee hours per week
  • Total number of overtime hours
  • Sick days and vacation days
  • Holiday hours
  • Hourly rates
  • Employee work schedule

2. Calculate total hours worked

Calculate the total hours worked per employee.

3. Calculate maximum “regular” hours of scheduled (work done before overtime)

Anything over 40 hours on a timesheet is considered overtime, which means you’ll need to calculate each employee’s “regular” scheduled hours, then their overtime.

4. Subtract regular hours from total hours

Generally, the maximum regular weekly work period for most employees is 40 hours. So, if an employee worked a total of 45 hours, subtract 40 from 45 to determine that they worked five hours of overtime. The federal rate for holiday pay and overtime is time and a half. This means you’ll need to multiply those five hours of overtime and any time worked on federal holidays by 1.5.

Why employers should make the switch to employee time-tracking software

A small business might not have a lot of money to invest in more robust time-tracking solutions, and spreadsheets can be an excellent place to start. However, as your business grows, you may find that manually tracking employee hours with spreadsheets eats up valuable time and leaves you vulnerable to inaccuracies. Manual processes can consume time not only for the payroll department but for your employees’ productivity as well. Entering time multiple times a day can be daunting and easy to forget for employees who simply want to start working as soon as they sit down at their desks.

While tracking attendance and hours is important, your business needs more than a tracking tool to grow. Here’s why employers should switch to automated employee time-tracking software:

  • Automate time-consuming processes

Time-tracking software automates all of the time-consuming processes that come with using spreadsheets as timesheets. Instead of having your payroll staff add up hours for each individual employee, processes are automated. Everything from direct deposit information to holiday pay is already in the system and ready to calculate an employee’s paycheck.

  • Streamline time-management tasks for business owners and managers

Business owners and managers don’t have enough time in the day to manage their own time and the time of their employees. It might be nice to check in on your employees throughout the day to make sure they’re doing their work, but no matter the size of your business, this isn’t usually possible. Time-tracking software streamlines management tasks so the minor things that need to be taken care of throughout the day, such as managing employee attendance, are automated.

By integrating with your payroll, time-tracking software also helps you calculate payroll taxes so you know exactly how much it costs to maintain your staff.

  • Gain real-time insight into team attendance and productivity

Employee time-tracking software also gives real-time insight into your team members and their productivity. You’ll be able to view when your employees are coming into work and leaving and see when they’re most productive. You might even be able to pinpoint which employees are the weak links.

For example, you may notice two employees in one department who do the same tasks. Employee A might clock in 55 hours or more a week, while employee B only works a straight 40, the minimum required to keep their benefits. From this data, you can accurately gauge which employees go above and beyond for your business, and which are doing the bare minimum to earn their paychecks.

Final notes

Creating a DIY working hours log is a good place to start if you want to manage your employees and their attendance better. However, DIY spreadsheets come with limitations. As your business scales, making the switch to time-tracking software can save you time, help you gain more clarity into productivity, and ensure your employees are paid correctly.

QuickBooks Time can help you track your employees’ productivity by streamlining time management for your business, so you can get back to what you do best.

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