Setting Up Time Tracking QuickBooks

When customers pay for your services, they’re really buying your knowledge of how to get the job done the best and fastest possible way. That’s why a carpenter who can barely hit a nail on the head charges $15 an hour, whereas a master who hammers faster and straighter than a nail gun charges $80 an hour. When it comes right down to it, time is money, so you want to keep track of both with equal accuracy. Product-based companies track time, too.

For example, companies that want to increase productivity often start by tracking the time that employees work and what they work on. There are hordes of off-the-shelf and homegrown time-tracking programs out there, but if your time-tracking needs are fairly simple, you can record time directly in QuickBooks or use its companion Timer program, which you can provide to each person whose work hours you want to track. The advantage of QuickBooks’ time tracking is that the hours you record are ready to attach to an invoice or payroll

In this chapter, you’ll learn how to record time in Quick- Books itself. Appendix D (online at www.missingmanuals.com/cds) explains the ins and outs of the stand-alone Timer program. If you track billable hours for lots of employees or contractors, Intuit offers online time-tracking programs. Time Tracker is a for-a-fee online timesheet service. Intuit Time and Billing also tracks time, but it has features to help professional service companies track time, choose time to bill, and then create invoices for billable time in QuickBooks.

Because these applications cost extra, this chapter simply tells you where to learn more about them. Mileage is another commodity that many businesses track—or should. Whether your business hinges on driving or merely requires the occasional jaunt, the IRS lets you deduct vehicle mileage, but it requires documentation of the miles you deduct. QuickBooks’ mileage-tracking feature helps you track the mileage of company vehicles, which you can use not only for tax deductions, but also to charge customers for mileage.

Setting Up Time Tracking

For many businesses, approximations of time worked are fine. For example, employees who work on only one or two tasks each day can review the past week and log their hours in a weekly timesheet. But for people with deliciously high hourly rates, you want to capture every minute spent on an activity. QuickBooks can help you track time whether you take a conscientious approach or a more cavalier one. In fact, you can choose from three different ways to record time in QuickBooks:

• Enter time data in QuickBooks. When QuickBooks is running, you can enter time for individual activities or fill in a weekly timesheet. If you enter time for a single activity, the Time/Enter Single Activity dialog box includes a stopwatch, so you can either time the task or simply type in the number of hours.

• Use an online application and download online timesheets. Intuit’s online time-tracking applications let people fill out timesheets online. You review the submitted timesheets online and download time records into your company file.

• Use the QuickBooks Timer stopwatch. This program, which comes free on the QuickBooks CD, lets you time activities as you work so you can track your time to the second—as long as you remember to start and stop the Timer at the right moments. (If you forget to turn the Timer on or off, you can edit time entries to correct them.) The best thing about Timer is that you can use it to record time even when QuickBooks isn’t running. Moreover, you can give a copy of Timer to all your employees and subcontractors so they can send you time data to import into QuickBooks.

No matter which technique you use to capture time, the setup is the same: You tell QuickBooks that you want to track time and then set up the people who have to track their time (employees and outside contractors alike). You use the customers and items you’ve set up in QuickBooks to identify the billable time you work. If you want to track non-billable time, you need a few more entries in QuickBooks, which you’ll learn about in the following sections.

Turning on Time Tracking

 If you created your company file with the EasyStep Interview and told QuickBooks that you want to track time, the preferences and features for tracking time should be ready to go. To see whether time tracking is turned on, choose Edit➝Preferences➝Time & Expenses, and then click the Company Preferences tab, shown in Figure 8-1. (Only a QuickBooks administrator can turn time tracking on or off, which is why time-tracking preferences are on the Company Preferences tab.)   •‰Setting Up Time Tracking  

Figure 8-1:╇ If you use QuickBooks to generate hours for payroll, you should set the program’s work week to end on the same day as your pay periods. For example, if you pay employees on Fridays, in the “First Day of Work Week” drop-down list, choose Saturday, so that QuickBooks’ work week ends on Friday, just like your payroll.

If the Yes option below “Do you track time?” isn’t selected, click it. (If your company file is in multi-user mode, QuickBooks tells you that you have to switch to single user mode first.) The only other time-tracking preference is the first day of the work week. QuickBooks sets this preference to Monday to match the Monday through- Friday work week of so many businesses. For round-the-clock services, self employed people, and workaholics, choose whichever day of the week feels most like the beginning of the week. For example, many companies on a seven-day work week start the week on Sunday. To learn about time-related invoicing options.

Setting Up the People Who Track Time

You can’t enter or import people’s time into QuickBooks unless their names appear in one of your name lists (the Employee List, Vendor List, or Other Name List). If someone whose time you want to track isn’t on a name list yet, here’s how you decide which list to use:

• Employee List. Use this list only for the people you pay using QuickBooks’ payroll features.

• Vendor List. Add subcontractors and outside consultants (people or companies that send you bills for time) to this list, whether or not their time is billable to customers. (Their time is undoubtedly billable to you.)

 • Other Names List. By process of elimination, anyone who isn’t a vendor and isn’t paid via QuickBooks’ payroll belongs on the Other Names List. For example, employees you pay using a third-party payroll service or owners who take a draw instead of a paycheck qualify for this list.

People who track time directly in QuickBooks (with a weekly timesheet or in the Time/Enter Single Activity dialog box, not with the standalone Timer program) need the program’s permission to do so. When you set up QuickBooks users, you can set their permissions so they can enter time.

Setting Up Items and Customers for Time Tracking

The good news is that you don’t have any additional item and customer setup to do to be able to bill time. The Service items and customer records you create for invoicing also work for tracking billable time. When you track time, you choose the Service item you’re working on. Then, QuickBooks totals your hours and figures out how much to charge the customer based on the number of hours you worked and how much you charge per hour for the service.

The only reason you’d need additional items is if you track all the hours that people work, both billable and non-billable. For example, if you’re trying to reduce overhead costs, you might add items to track the time spent fixing software bugs, exchanging bad products, and holding meetings. The level of detail for non-billable activities is up to you, as shown in Figure 8-2.

Figure 8-2:╇ If you want to capture non-billable activities in one big pot, create a single Service item called Overhead. For greater detail about non-billable time, you can create a top-level item, such as Overhead, and then create subitems for each type of non-billable work you want to track. Be sure to create one catch-all item, such as Administrative, to capture the time that doesn’t fit in any other non-billable category.

Here is how you fill in item fields when you create items to track time that you don’t bill to a customer:

• Type. Use the Service item type because that’s the only one Quick- Books’ time tracking recognizes.   ime in QuickBooks

• Rate. In the New Item or Edit Item dialog box, the Rate box is where you enter how much you charge for the service. Because no money changes hands for non-billable time, leave this box set to 0.00.

• Account. You can’t create an item without assigning it to an account. Go ahead and create an income account and call it something like Non-billable Work or Overhead. If you number accounts, assign a number that places the account near the end of your Income type accounts (like 4997, because Quick- Books uses 5000 for the first Cost of Goods Sold account). Because non-billable time doesn’t bring in any income, the account balance remains zero no matter how much non-billable time you assign to it.

• This service is performed by a subcontractor, owner, or partner. If a subcontractor performs non-billable work for you, turn on this checkbox. That way, you can assign the subcontractor’s costs to an expense account and use time tracking to make sure the subcontractor’s bills are correct. For non-billable items performed by owners and partners, leave this checkbox turned off.

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