Why Small Businesses Should Be Tracking Employee Time

Most small business owners recognize that time tracking is as indispensable as accounting, payroll, and even human resources. This is because accurate time tracking directly shines a light on the most key aspects of your company. With accurate time tracking, it’s clear what your employees need to be paid, you know if you’re making money, and you can see if everyone is working at a healthy rate. Although, that just scratches the surface.

If you’re still not convinced, here are five reasons why you absolutely should be tracking employee time.

reasons to track employee time at your business

1. Boosts profitability

When you accurately track time, it’s easier to see exactly where your money is going. As a result, you can better monitor project budgets and can reprioritize tasks if something isn’t playing out how you planned.

If you’re using time tracking software, you can see crucial information and data in real-time.

The solution highlights where your business is spending the most and what is bringing in the highest profit. This allows you to better examine if you’re spending too little, too much, or just enough on any project or task.

2. Improves the payroll process

If you have a small number of employees, manually tracking time via spreadsheets or pen and paper may suit you just fine. Even when you need to manage payroll calculations because the volume you’re managing isn’t overwhelming.

However, when your workforce grows, you just don’t have the time to sit down and pour through piles of paperwork or spreadsheets. The time and resources that you’re wasting on calculating payroll for every employee can be put to better use.

Manually doing everything can open you up to errors and payroll mistakes, which is something you and your employees can’t afford. In fact, the IRS reported that 33% of employers make payroll errors.

A time tracking solution makes it easier to avoid errors and helps employees manage their hours as they can instantly see any unnecessary additions or subtractions in their pay. This allows you and your employees to immediately rectify any payroll errors without any trouble.

3. Increases productivity

Using time tracking allows your team to stay on track with ongoing projects and tasks. In real-time, you can view where a potential hiccup could occur. And, you can use that insight to create an effective strategy to help your team remain productive.

In addition, you can see how much your employees are working, so it’s clear if a certain individual or team is regularly working past their capacity. If you see your team is working past their capacity, you can lighten their workload so they don’t burnout.

In fact, Gallup said, “When employees say they often or always have enough time to do all of their work, they are 70% less likely to experience high burnout.”

By catching this, you create a true company culture that creates a healthy work-life balance.

4. Offers transparency

When allocating hours for your employees, most managers aren’t totally sure about the working process. This is where time tracking provides total transparency so you know how long it takes a task to be completed and can instantly see where things fall through the cracks.

This level of transparency allows you to re-examine an employee’s workload so you can offer the appropriate resources needed for the employee to comfortably and efficiently complete their job duties.

Additionally, if a certain task or project requires additional manpower, that’s something you can see in real-time. This allows you to plan ahead so work doesn’t falter.

5. It’s required (for some employees)

This is more of a no-brainer, but it goes without saying—it’s required by law! The FLSA (Fair Labor Standards Act) requires that all businesses track overtime-eligible employees’ working hours as part of their recordkeeping.

The FLSA states that employers are required to maintain an accurate record of each overtime-eligible employee that includes a detailed breakdown of the number of hours worked per day and per workweek. In addition to the date and time of the starting workweek, employers must also keep records of the hourly pay rate, regular earnings, overtime hours worked, and overtime earnings for employees.

These views are made solely by the author.

Rea Regan

Rea Regan is the Marcom Manager at Connecteam, is responsible for ensuring customer success, and is a dedicated author for Connecteam’s business blog. She helps clients build smart, effective employee management strategies and brings years of experience and knowledge in helping businesses improve employee engagement. With a degree in Technical Writing, Rea is an expert in simplifying complex processes into easy tips that managers can implement instantly.

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