What Is a Timesheet? Everything You Need to Know

A timesheet is a document that records the hours an employee works on tasks, shifts, or projects—used primarily to manage payroll, measure productivity, and track billable work.

Whether you’re running a creative agency, a consulting firm, or managing a remote team, understanding what a timesheet is and how it works can dramatically improve how you manage time, budgets, and performance. While timesheets started as paper logs, modern teams now rely on digital timesheet software to track time in real time, automate approvals, and generate actionable insights.

In this guide, we’ll explore the core purpose of a timesheet, how to use one effectively, what to include, and why businesses of all sizes benefit from using automated tools like timesheet software.

How to Use a Timesheet

Using a timesheet begins with establishing a consistent process for time entry and review. Employees record their working hours on a daily or weekly basis, typically logging start and end times for specific tasks or projects. These entries may include breaks, overtime, or unpaid time depending on the business’s policies and local labor regulations.

Once submitted, timesheets are reviewed by managers or team leads to verify accuracy. Approved timesheets are then used for payroll processing, project cost analysis, or client billing. In more advanced systems, timesheet data can feed directly into invoicing or financial forecasting tools, allowing for seamless operations and fewer errors.

Digital timesheet tools make this process significantly easier. Employees can start and stop timers in real time, track their time against specific tasks, and submit entries automatically at the end of each period. Managers can approve or flag entries with a single click. This automation not only increases accuracy, but also saves hours of administrative work every pay period.

How Timesheets Work

A timesheet functions as a workflow, not just a document. It typically begins with an employee logging their time—either daily, weekly, or per task. Once completed, the timesheet is submitted to a supervisor for review. If everything checks out, the timesheet is approved and forwarded to finance, HR, or the project management team, depending on the context.

Digital systems take this process a step further. They enable automatic tracking, integrate with calendars and task managers, and generate reports in real time. These systems can also trigger reminders, automate approval workflows, and flag anomalies such as missing entries or excessive hours. Automating timesheets enables your team to track work hours accurately, eliminate manual errors, streamline approvals, and focus more on productive work instead of administrative tasks.

What to Include in a Timesheet

A well-structured timesheet should capture all the essential details that reflect how an employee’s time is spent. At minimum, this includes the employee’s name, the specific date, the time they clocked in and out, and the total hours worked. It should also record any breaks taken, which are necessary for accurate payroll calculation.

To provide deeper insights into work allocation, timesheets typically include the name of the project or task, whether the hours were billable or non-billable, and a section for supervisor approval or notes. This information ensures accountability, supports client invoicing, and provides a record for audits or compliance reviews.

Timesheet Components

While the layout of a timesheet may differ across industries and tools, there are essential elements that every effective timesheet should include:

• Employee name or identifier: To associate the time entry with the right person.
• Date and Time Logs: Including start time, end time, and total hours.
• Break Periods: To ensure accurate calculation of work hours.
• Task or Project Codes: For tracking time against specific deliverables.
• Billable Status: To distinguish between internal and client work.
• Approval Section: A manager’s sign-off or digital confirmation.
• Notes Field: For optional comments or context on unusual entries.

Many timesheet tools also include visual dashboards, filters, and export options to support reporting and analytics. The more structured and user-friendly the timesheet, the more likely your team will adopt it and maintain consistent, high-quality data.

How to Track Hours Accurately

Accurate time tracking is critical to running an efficient and transparent business. Inaccurate timesheets can lead to payroll discrepancies, budget overruns, or client billing conflicts. There are several ways businesses can track hours:

• Manual entry remains a common method, but it’s prone to human error and time rounding. Employees often forget to record time promptly, which can result in inflated or missing data.
• Timer-based tracking, where users start and stop a digital clock as they work, offers more precision and encourages real-time logging.
• More sophisticated solutions use automated tracking, which runs in the background and monitors app usage, activity levels, or keyboard and mouse input. This is especially useful for remote teams or freelancers who work across multiple platforms and clients.

What Timesheets are Used for

Timesheets serve multiple functions across different areas of a business. Primarily, they’re used to calculate payroll, helping ensure that employees are paid correctly based on the hours they’ve worked. But they also play a crucial role in project management and budgeting—allowing teams to compare actual hours to estimated timelines.

In client-service industries like marketing or consulting, timesheets help track billable hours to invoice clients accurately. Additionally, managers use timesheet data to analyze productivity, identify overworked team members, and make informed decisions about hiring or resource allocation.

For service-based businesses, timesheets directly impact revenue. Without accurate time tracking, companies risk undercharging clients or misallocating labor. For internal teams, they help managers spot inefficiencies, plan workloads, and balance staffing levels across departments.

The data captured in timesheets can also be analyzed over time to improve operations. Patterns in logged hours may reveal where teams are overextended, which tasks consume the most time, and how project scopes align with actual execution.

Timesheets for Payroll

In the context of payroll, timesheets serve as the authoritative source of truth for hours worked. They are used to calculate wages, including regular time, overtime, holiday pay, and other compensation variables. Timesheet data helps ensure that payroll is accurate, timely, and compliant with labor laws.

For hourly employees, this process is straightforward: hours worked multiplied by the hourly rate. For salaried employees, timesheets might be used to track paid time off, sick leave, or compliance with labor standards. Some organizations also use timesheets to track productivity or validate time spent on grant-funded work or client retainers.

Digital timesheets simplify payroll by syncing directly with accounting or HR platforms. This reduces the need for manual data entry and significantly lowers the risk of payroll errors. It also creates a transparent audit trail, which is essential for tax compliance and dispute resolution.

Timesheets Built for Modern Teams

While the concept of a timesheet is universal, the way teams track time today has changed dramatically. TrackingTime is a timesheet solution built for modern businesses that want to simplify time tracking without sacrificing control or accuracy.

Designed with flexibility in mind, TrackingTime offers real-time tracking, project-based timesheets, and team-wide visibility from a single platform. Whether you’re managing an in-office team, a remote workforce, or a mix of both, your employees can track time from desktop, mobile, or directly within the tools they already use—like Trello, Asana, or Slack. And learn how to introduce timesheet software to your team.

TrackingTime automatically compiles time entries into structured, customizable timesheets. Managers can review and approve hours, while finance teams can export timesheet data for payroll, invoicing, or budget analysis. With built-in reports and productivity insights, it’s more than just a time tracker—it’s a decision-making tool.

Manual Timesheets vs. Timesheet Software: What’s the Difference?

While the purpose of all timesheets is the same—tracking hours worked—the method you choose can significantly impact your business operations. Manual timesheets, such as spreadsheets or paper forms, may seem simple at first but often lead to inefficiencies, errors, and compliance risks. On the other hand, digital timesheet software automates the process, improves accuracy, and delivers real-time insights for smarter decision-making.

Here’s a side-by-side comparison:

Manual timesheets may work for very small teams or temporary needs, but they don’t scale well. As your team grows, the administrative cost and risk of errors increase. Timesheet software streamlines the process, provides deeper visibility into time data, and ultimately helps teams operate more efficiently. Not sure? Try free timesheet templates.

Timesheets are Essential for Smart Business Management

Understanding what a timesheet is—and why it matters—is essential for businesses looking to scale sustainably. Timesheets aren’t just about tracking hours; they’re about unlocking insights into how work gets done, where resources are going, and how your team’s time contributes to revenue and results.

For growing businesses, time is the most limited and valuable resource. When tracked correctly, it becomes a source of truth that informs hiring decisions, shapes client pricing, and improves overall performance. When ignored or mismanaged, it leads to budget overruns, payroll mistakes, and operational blind spots. If you need digital timesheets, check out our timesheet software solution.