How to Track Time in QuickBooks: A Comprehensive Guide

Tracking time in QuickBooks is essential for businesses that bill clients based on hours worked or need to manage employee hours efficiently. Whether you are using QuickBooks Online or QuickBooks Desktop, time tracking can help improve productivity, ensure accurate billing, and streamline payroll processing. This comprehensive guide will walk you through the steps to set up and use time tracking in QuickBooks, covering both versions, along with tips for effective time management and troubleshooting common issues.

Benefits of Time Tracking in QuickBooks

Tracking time in QuickBooks offers numerous advantages:

1. Accurate Billing: Ensure clients are billed accurately for hours worked, avoiding underbilling or overbilling.
2. Payroll Efficiency: Streamline payroll processing by automatically calculating employee hours and wages.
3. Productivity Insights: Gain insights into employee productivity and project efficiency by analyzing time data.
4. Cost Management: Monitor labor costs and manage budgets more effectively by tracking time against projects or tasks.
5. Compliance: Maintain compliance with labor laws and regulations by accurately recording employee work hours.

Setting Up Time Tracking in QuickBooks

Time tracking in QuickBooks can be set up for both QuickBooks Online and QuickBooks Desktop. Here’s how to get started:

QuickBooks Online

Step 1: Enable Time Tracking

1. Log in to QuickBooks Online: Access your QuickBooks Online account using your credentials.
2. Navigate to Account and Settings: Click on the Gear icon (⚙️) at the top right corner and select “Account and Settings.”
3. Select the Advanced Tab: In the left-hand menu, click on the “Advanced” tab.
4. Enable Time Tracking: In the “Time tracking” section, click the pencil icon to edit settings. Check the box next to “Add Service field to timesheets” and “Make Single-Time Activity Billable to Customer.” Click “Save” and then “Done.”

Step 2: Set Up Employees and Contractors

1. Add Employees: Go to the “Workers” tab in the left-hand menu and select “Employees.” Click “Add an employee” and fill in the required details.
2. Add Contractors: Go to the “Expenses” tab in the left-hand menu and select “Vendors.” Click “New vendor” and fill in the contractor’s details.

Step 3: Create Timesheets

1. Create Single-Time Activity: Click on the “Time” tab in the left-hand menu and select “Single Time Activity.” Fill in the date, employee/contractor, customer/project, and hours worked. Check the “Billable” box if applicable.
2. Create Weekly Timesheet: Click on the “Time” tab and select “Weekly Timesheet.” Fill in the required details, including employee/contractor, customer/project, and hours worked for each day of the week.

QuickBooks Desktop

Step 1: Enable Time Tracking

1. Open QuickBooks Desktop: Launch QuickBooks Desktop and open your company file.
2. Navigate to Preferences: Go to the “Edit” menu and select “Preferences.”
3. Select Time & Expenses: In the left-hand menu, click on “Time & Expenses” and select the “Company Preferences” tab.
4. Enable Time Tracking: Check the box next to “Yes” for “Do you track time?” and select the first day of your workweek. Click “OK.”

Step 2: Set Up Employees and Vendors

1. Add Employees: Go to the “Employees” menu and select “Employee Center.” Click “New Employee” and fill in the required details.
2. Add Vendors: Go to the “Vendors” menu and select “Vendor Center.” Click “New Vendor” and fill in the contractor’s details.

Step 3: Create Timesheets

1. Create Single Activity: Go to the “Employees” menu and select “Enter Time.” Choose “Time/Enter Single Activity.” Fill in the date, employee/vendor, customer/job, and hours worked. Check the “Billable” box if applicable.
2. Create Weekly Timesheet: Go to the “Employees” menu and select “Enter Time.” Choose “Use Weekly Timesheet.” Fill in the required details, including employee/vendor, customer/job, and hours worked for each day of the week.

Using Time Tracking for Invoicing and Payroll

Once time tracking is set up, you can use the tracked time for invoicing clients and processing payroll.

Invoicing Clients

1. Create an Invoice: In QuickBooks Online, go to the “Sales” tab and select “Invoices.” In QuickBooks Desktop, go to the “Customers” menu and select “Create Invoices.”
2. Add Billable Time: In the invoice creation screen, click “Add Time” to include billable hours tracked in timesheets. Review the hours and rates before finalizing the invoice.
3. Send Invoice: Complete the invoice details and send it to the client.

Processing Payroll

1. Run Payroll: In QuickBooks Online, go to the “Workers” tab and select “Run Payroll.” In QuickBooks Desktop, go to the “Employees” menu and select “Payroll Center.”
2. Review Hours: Ensure that employee hours from timesheets are accurately reflected in the payroll run.
3. Complete Payroll: Follow the prompts to complete the payroll process, including calculating wages, taxes, and deductions.

Integrating Third-Party Time Tracking Apps

For enhanced time tracking capabilities, you can integrate third-party time tracking apps with QuickBooks. Popular apps include TSheets (now QuickBooks Time), ClockShark, and TimeCamp.

Integration Steps

1. Select the App: Choose a time tracking app that meets your business needs and is compatible with QuickBooks.
2. Install the App: Follow the installation instructions provided by the app vendor.
3. Authorize Access: Authorize the app to access your QuickBooks data.
4. Configure Settings: Set up integration preferences, such as sync frequency and field mapping.

Best Practices for Time Tracking in QuickBooks

Implementing best practices for time tracking can help maximize efficiency and accuracy:

1. Regularly Review Timesheets

• Weekly Review: Review and approve timesheets weekly to ensure accuracy and completeness.
• Employee Verification: Have employees verify their timesheets for any discrepancies.

2. Set Clear Guidelines

• Time Entry Policies: Establish clear policies for time entry, including how and when to record hours worked.
• Billable vs. Non-Billable: Define billable and non-billable activities clearly to avoid confusion.

3. Use Reports for Insights

• Time Reports: Generate time reports to analyze employee productivity, project costs, and profitability.
• Payroll Reports: Use payroll reports to verify employee hours and ensure accurate payroll processing.

4. Automate Where Possible

• Automated Time Tracking: Use automated time tracking features or apps to reduce manual data entry.
• Recurring Entries: Set up recurring time entries for regular tasks to save time.

Troubleshooting Time Tracking Issues

Common issues with time tracking in QuickBooks can include incorrect timesheet entries, sync errors, and integration problems. Here’s how to troubleshoot these issues:

Incorrect Timesheet Entries

1. Verify Entries: Double-check timesheet entries for accuracy and completeness.
2. Edit Timesheets: Correct any errors by editing timesheets in QuickBooks.

Sync Errors with Third-Party Apps

1. Check Connection: Ensure the time tracking app is properly connected to QuickBooks.
2. Update Software: Make sure both QuickBooks and the time tracking app are up to date.
3. Contact Support: Reach out to the app vendor’s support team for assistance with sync issues.

Integration Problems

1. Reconfigure Settings: Reconfigure integration settings, such as field mapping and sync preferences.
2. Reauthorize App: Reauthorize the third-party app to access QuickBooks data.
3. Review Logs: Check integration logs for errors and follow recommended troubleshooting steps.

Advanced Time Tracking Features

For businesses with more complex time tracking needs, consider using advanced features available in QuickBooks or third-party apps:

1. Project Time Tracking

• Track by Project: Track time by specific projects to monitor progress and costs.
• Budgeting: Set project budgets and compare actual time spent against budgeted hours.

2. Mobile Time Tracking

• Mobile Apps: Use QuickBooks mobile apps or third-party time tracking apps to record time on the go.
• GPS Tracking: Enable GPS tracking for field employees to verify work locations and hours.

3. Custom Reporting

• Custom Reports: Create custom time tracking reports to analyze data specific to your business needs.
• Dashboards: Use dashboards to visualize time data and monitor key metrics.

Conclusion

Tracking time in QuickBooks is essential for accurate billing, efficient payroll processing, and effective project management. By setting up and using time tracking features in QuickBooks Online or QuickBooks Desktop, integrating with third-party apps, and implementing best practices, businesses can optimize their time management processes. Regularly review timesheets, set clear guidelines, use reports for insights, and troubleshoot issues promptly to ensure smooth and efficient time tracking. With the right tools and strategies, you can maximize productivity, manage labor costs, and improve overall business performance.