What Is a Timesheet and How Does It Work?

A timesheet serves as a record of the hours an individual spends working. It provides a clear, verifiable log of work performed, forming a basis for various financial and operational processes within an organization.

Understanding a Timesheet

A timesheet is a document or system designed to capture the duration an employee dedicates to work or specific tasks. Its primary purpose is to ensure accurate payroll, enabling employers to correctly calculate wages, including regular pay and any applicable overtime. For businesses that bill clients based on time, such as consulting firms or law offices, timesheets are also crucial for precise invoicing. This detailed record-keeping promotes transparency and accountability regarding employee work contributions and associated costs.

Essential Information on a Timesheet

Timesheets typically record several key pieces of information to ensure completeness and compliance with labor laws, such as the Fair Labor Standards Act (FLSA). This usually includes the employee’s full name or ID, the specific dates of work, and the start and end times for each shift or task. Additionally, recorded breaks, total hours worked per day, and total hours for the entire workweek are common entries. For project-based work, timesheets might also include project codes or task descriptions to track time allocation.

Methods of Time Tracking

The methods for maintaining and submitting timesheets have evolved significantly. Traditional paper timesheets involve manual entry of hours, often on pre-printed forms. Digital spreadsheets, like those in Excel, offer a more organized approach, allowing for calculations and easy storage. Dedicated online time-tracking software provides features such as real-time tracking, automated calculations, and integration with payroll systems. Furthermore, physical time clocks, which employees punch in and out of, and digital time clock systems using biometrics or swipe cards, offer precise timestamps for attendance.

How Timesheets Are Utilized

Once an employee completes their timesheet, a typical flow involves a supervisor or manager reviewing and approving the recorded hours. This approval process verifies the accuracy of the time submitted before it moves to the next stage. Approved timesheets are then used for payroll processing, where wages are calculated, including regular earnings and overtime compensation. The IRS requires employers to keep employment tax records, which include timesheets, for at least four years after filing the fourth quarter for the year. For service-based businesses, completed timesheets also serve as a foundational document for client invoicing, ensuring clients are billed accurately for the services rendered based on recorded hours.