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Learning how to track employee hours is part of doing business. Time-tracking makes it possible to pay your team the right amount and accurately manage your business workflow. Small businesses don’t have a ton of people to keep track of, so you should be able to streamline team tracking and payroll management on your own, right?

Not necessarily. 

Right now, there are thousands of small businesses tracking employee hours or handling payroll in outdated and tedious ways. When your time-tracking solution is inefficient, it’s more time-consuming, and there’s a higher chance of mistakes. 

The good news is there are a lot of different methods to track employee time developed over decades. Some are more efficient than others, and only the latest provide for all the needs of modern small businesses. 

Time-tracking tools

  • Pen-and-paper tracking
  • Daily sign-in sheets
  • Punch clocks
  • Spreadsheets
  • Time clock kiosks
  • Time-tracking software
  • On-site security tracking tools

Why track employee hours?

When business hours are steady, do you really need to track employee hours? After all, everyone’s working the same shift every day, right?

In reality, time tracking is essential for every business. Even small businesses should know how to track employee hours. Investing in a detailed time-tracking solution that integrates smoothly with your team’s workflow can provide very real benefits to your business and every member of your team.

Here’s why companies of all sizes should be tracking employee hours.

Payroll accuracy

Your team deserves (and has a legal right) to be paid for every hour they work, down to the minute. Even people who work part-time have earned every minute they put into the business. 

Apart from paying employees their earnings, it also helps with calculations for things like overtime and to keep track of labour costs and even costs for client projects your team members work on (think billable hours).

The right time-tracking solution make accurate and fair payroll processing possible. Those hours keep your small business afloat, from early mornings to late-night inventory.

Project management

Speaking of billable hours and the specific projects done for clients, keeping track of time spent on a given task helps with planning. Projects aren’t only about making sure the job is complete and accurate payments are received. Project managers can also use time tracking to assess overall success. Are these projects costing more than you’re making? Is their room for business growth by taking on future projects or do you need to dial it back?

Labour law compliance

Time tracking also keeps your business prepared for compliance audits. Labour laws are strict about accurate pay for time worked, which means that you need consistent and accurate employee timesheets.

The more precise and easy-to-use the system to track employee work hours, the more accurate your compliance records can be. Digital time-tracking systems often come with built-in record-keeping so that compliance records are created automatically every day.

For Canada, check out the Canada Labour Standards Regulations. For the US, it’s the Fair Labor Standards Act.

Schedule management

Tracking employee time can show you how closely your team is sticking to the schedule. Time-tracking software typically has great scheduling features so that you can build a practical schedule and keep track of the real-world hours worked based on your plans.

When you set a system in place on how to track employee hours, you can identify who is always on time, who often replaces a shift and whether your schedule results in people frequently staying late. Knowing this information can then help you optimize and improve your schedule over time.

Time-off management

Tracking the time your employees work also makes it easier to manage time-off scheduling. You can see who’s taking their allotted vacation time and sick days, who still hasn’t used them and sift through time-off requests more easily. When it comes to time-off requests in particular, time-tracking will give you scope on when others are available to cover for those who want to take a day off. 

Productivity optimization

Lastly, tracking employee time helps you to optimize your small business productivity. You can track employee productivity, including their use of time, when they’re most productive and who is finishing their work early or late. As a result, you can balance task assignments. 

A brief history of time tracking.

There are many options to track employee hours. No surprise, since the idea of hourly employees has been around for a few hundred years

One of the first ways to track time was by keeping a pen-and-paper ledger — aka manual time tracking. When the punch-card time clock was invented in the late 1800s, the world adopted the first mechanized method to track employee hours. The introduction of the spreadsheet took the business world by storm for tracking all sorts of data, including employee hours.

Today, software and interactive kiosks make it possible to quickly record an employee’s clock-in and clock-out times to accurately track hours and wages.

But right now, businesses are keeping track of work hours using methods from every era — from pen-and-paper time tracking to the latest mobile apps.

The best way to track employees’ hours can come down to the specific business needs and the kind of workforce they have. For example, a traditional brick and mortar business might be happy with a time clock, whereas a business with remote employees will approach it differently to find a solution that works for their entire team. 

Small businesses are especially susceptible to varying time-tracking methods because they’re just learning the ropes for working with time entries. So, let’s take a closer look at these options.

The 7 methods to track employee hours

Pen-and-paper tracking

The oldest type of employee time tracking is pen-and-paper tracking. The office manager uses a paper ledger to keep track of when staff arrive or leave. Pen-and-paper tracking works as well as it ever has and has a very wide margin for accuracy.

If the office manager is on point, employee start and end times can be accurate down to the second. However, it’s just as easy (and unfortunately more common) for hours to be generalized based on the schedule rather than carefully noting when people arrive or leave.

If a person’s arrival or departure is missed, the time can be guessed and written down at any point after the fact. Not only is pen-and-paper time tracking prone to mistakes and generalizations, but it is also time-consuming and requires the attention of someone with skills more effectively spent on other tasks.

Daily sign-in sheets

Daily sign-in sheets rely on employees to sign themselves in and out every day. In the morning, whoever opens up will set out the sign-in sheet, and everyone else signs their name, clock-in and clock-out times as they come and go.

This method can be accurate, but only if employees are consistently both honest and correct about their times. Even super reliable employees can be tempted to pad their hours to cover showing up late or leaving early or earn a few slivers of overtime.

If you’ve ever run or worked in a job with a sign-in sheet, you also know that legible handwriting from a dozen different people can be a serious challenge.

Punch clocks

Punch clocks were invented in the late 1800s and swept the factory-strewn workforce like wildfire. These physical time clocks made it possible to automatically print the time and date on a thick paper card, recording a person’s exact time that they interact with the clock whether they are arriving or leaving. 

The traditional punch clock keeps a mechanical clock and a stamp inside. Later, variants developed that punched holes in cards at a specific location for the time, printed the time or punched the time in small holes that form print. Mechanical time clocks are rarely used today, but some are still in operation.


Before digital time clocks took over, employers loved using spreadsheets to track employee hours. The spreadsheet is the digital evolution of the pen-and-paper method. Many, many small businesses get started with private spreadsheets in programs like Microsoft Excel or, today, Google Sheets.

Spreadsheets are just a digital way to keep well-ordered notes. Unfortunately, they are also subject to all the same weaknesses and human error as time-tracking with pen-and-paper. On the upside, you can easily sort and search your records, and you never have to puzzle out handwriting.

Time clock kiosks

The modern update to the time clock is a digital kiosk. Employees are able to log themselves in through a digital system, creating a real-time digital record of when they interact with the kiosk on their way in or out. Often, these kiosks are tiny thumbprint scanners using biometrics to prevent “buddy punching” in which coworkers punch in and out for each other. There are other biometric time clock options, too.

The two major downsides of time clock kiosks are:

  1. Employees may not be paid for the time they spend in line at the kiosk (not everyone can punch in at the same shift-start-time).
  2. Biometric scanners sometimes don’t work correctly. That’s not just frustrating, it also causes inaccurate time-tracking records.

Time-tracking software

Time-tracking software is the latest and most practical way to achieve accurate payroll records. There are now many tools and platforms that make time tracking accessible, individual and digital.

Most time-tracking software comes with an app that employees can use on their mobile devices, pairing geofencing and self-tracking. With this mobile time clock, employees can clock themselves in without a line at the time clock, buddy-punching or the flaws of pen-and-paper sign-ins. As for geofencing, it’s a feature that lets the employer set a designated work area and then the app will detect when the employee is at or leaving the job site.

Time-tracking apps and software also typically create records that can be easily integrated with payroll and stored as compliance records. Some also offer reporting, allowing you to optimize strategies based on time-clocking data.

On-site security tracking tools

Lastly, there are some extremely advanced on-site time tracking technologies available, typically only used by high-security organizations in which absolute security is necessary. AI-backed security cameras and/or digital activity tracking can detect the presence of employees and keep time-tracking records. In this case, activity tracking is a secondary feature after a high level of internal security.

While interesting, these solutions are not practical or necessary for most brands, big or small.

Start tracking employee hours with Time by Wagepoint.

We designed Time by Wagepoint to provide a clean, practical time-tracking solution for small businesses. Time is a simple, straightforward time and attendance software. It only has the features you need to keep track of employee hours. (Psst! We’re working on an integration process that’ll make it even easier to import your employees’ time into your payroll software.)

We know that there are dozens of business-management software suites with time-tracking tools, but they’re typically loaded with a ton of features that overwhelm a small business’ operations and cost too much to boot.

Here’s what Time by Wagepoint brings to the table.

Employee mobile app

With Time, you don’t need a full suite or even to be a member of other Wagepoint services. Employees have access to an app on their iOS and Android devices where they can clock in, clock out, request time off and stay up-to-date on their schedules. 

Management dashboard and tools

Managers and small business owners can build complete employee schedules with a few taps, balance workloads, cover shifts and approve time-related requests with a similarly accessible app and browser login.

Useful time reports

Time doesn’t overwhelm you with unnecessary features but does include valuable reporting and data presentation to help you optimize your team’s schedules with clear and useful data insights.

Helpful alerts

Lastly, Time by Wagepoint includes helpful alerts like late clock-in, missing time, geofence violations and other matters a manager might want to address. This helps business owners and managers access the tools they need to avoid time-tracking mistakes and address issues that might become apparent in employee time patterns.

Optimize the way your small business tracks employee time.

Tracking employee time is important for both your business and your employees. It makes sure that your team is always fairly compensated, helps with compliance and gives you the tools to optimize your team. Time by Wagepoint provides small businesses with the best tools for simple, practical time tracking with all the benefits of digital solutions and none of the downsides.

Discover Time by Wagepoint for yourself and optimize your employee time tracking with the 14-day free trial.