Setting Up Time Tracking

Before you can start adding billable time to invoices, you need to ensure time tracking is properly set up in your QuickBooks Online account.

Enable Time Tracking

1. Click the Gear icon and select "Account and Settings"
2. Go to the "Time Tracking" section
3. Click "Edit" in the "Time Tracking" box
4. Turn on "Use time tracking"
5. Check the box for "Make time billable"
6. Click "Save" and then "Done"

Set Up Services

You'll want to set up service items to associate with your billable time entries:

1. Go to "Sales" and click "Products and Services"
2. Click "New" and select "Service"
3. Enter a name for the service (e.g. "Consulting")
4. Set the sales price/rate
5. Check "I sell this product/service to my customers"
6. Select an income account
7. Click "Save and close"

Repeat this process to set up all the billable services you offer.

Set Up Employees/Contractors

Make sure all employees or contractors who will be tracking billable time are set up in QuickBooks:

1. Go to "Workers" and click "Employees" or "Contractors"
2. Click "New employee" or "New contractor"
3. Enter their details and set their hourly cost rate
4. Click "Save"

Tracking Billable Time

Now that everything is set up, you can start tracking billable time in QuickBooks Online. There are two main ways to do this:

Single Time Activity

For one-off time entries:

1. Click the "+" icon and select "Single time activity"
2. Select the employee/contractor
3. Choose the customer and service
4. Enter the date, duration, and description
5. Check the "Billable" box and enter the billable rate
6. Click "Save"

Weekly Timesheet

For entering time in bulk:

1. Go to "Time" and click "Weekly Timesheet"
2. Select the employee/contractor and week
3. Enter hours worked each day, selecting the customer and service
4. Check the "Billable" box for billable entries
5. Click "Save"

Adding Billable Time to Invoices

Once you've tracked billable time, you can easily add it to customer invoices:

Creating a New Invoice with Billable Time

1. Click the "+" icon and select "Invoice"
2. Choose the customer
3. If there is unbilled time, you'll see a message asking if you want to add it
4. Click "Yes" to open the "Add billable time" window
5. Select the time entries you want to add
6. Click "Add selected items"
7. The billable time will be added as line items on the invoice
8. Review and edit the invoice as needed
9. Click "Save and send" or "Save and close"

Adding Billable Time to an Existing Invoice

1. Go to "Sales" and click "Invoices"
2. Find the invoice you want to edit and click on it
3. Click "Edit" in the top right
4. Click "Add" in the line items section
5. Select "Time" from the dropdown
6. Choose the billable time entries to add
7. Click "Add selected items"
8. Review and save the updated invoice

Best Practices for Billable Time

To ensure accurate and efficient billing, follow these best practices:

Enter Time Promptly

Encourage employees and contractors to enter their time daily or weekly at the latest. This ensures all billable hours are captured and nothing is forgotten.

Use Detailed Descriptions

When entering time, use clear and detailed descriptions of the work performed. This provides transparency to clients and justifies the billed hours.

Review Time Before Invoicing

Before adding billable time to an invoice, review the entries for accuracy. Check that all time is accounted for and the rates are correct.

Communicate with Clients

If you're billing for a large amount of time, consider giving the client a heads up before sending the invoice. This can help avoid surprises and potential payment delays.

Set Up Time Tracking Policies

Establish clear policies for time tracking, including what is billable vs. non-billable, minimum time increments, and how to handle different types of work.

Advanced Time Tracking Features

QuickBooks Online offers some advanced features to streamline your time tracking and billing process:

Projects

For complex client engagements, use the Projects feature to organize all billable time and expenses in one place:

1. Go to "Projects" and click "New project"
2. Enter the project name and select the customer
3. Add team members and set their billing rates
4. Track time and expenses specifically for the project
5. Generate project-specific reports

Classes and Locations

Use Classes and Locations to further categorize billable time:

1. Enable Classes and Locations in your account settings
2. When entering time, assign the appropriate class or location
3. This allows for more detailed reporting and analysis of billable time

Automated Invoicing

Set up automated invoicing for recurring billable time:

1. Go to "Sales" and click "Recurring Transactions"
2. Click "New" and select "Invoice"
3. Set up the recurring schedule and invoice details
4. Choose to automatically add unbilled time
5. Save the template

Time Tracking Apps

QuickBooks Online integrates with various time tracking apps like TSheets. These can offer more advanced features like GPS tracking, job costing, and mobile time entry.

Reporting on Billable Time

QuickBooks Online provides several reports to help you analyze and manage billable time:

Time Activities by Customer Detail

This report shows all time activities for each customer, including billable status and amount.

Unbilled Time

Use this report to see all unbilled time activities, helping ensure nothing slips through the cracks.

Time Cost by Employee or Vendor

This report breaks down time costs by worker, useful for analyzing profitability.

Project Profitability

For businesses using Projects, this report shows time and expenses vs. income for each project.

To access these reports:

1. Go to "Reports"
2. Search for the report name
3. Customize the date range and other filters as needed
4. Run the report

Troubleshooting Common Issues

Here are solutions to some common issues you might encounter when dealing with billable time:

Time Not Showing as Billable

• Check that the "Billable" box is checked for the time entry
• Ensure the service item is set up as billable
• Verify the employee/contractor is set up correctly

Billable Time Not Appearing on Invoice

• Make sure you're creating the invoice for the correct customer
• Check the date range of the billable time vs. the invoice date
• Verify the time hasn't already been billed on a previous invoice

Incorrect Billable Rates

• Review the rate set on the service item
• Check if a custom rate was entered on the time activity
• For projects, verify the team member's project-specific rate

Unable to Edit Billed Time

Once time has been added to an invoice, it can't be edited directly. Instead:

1. Remove the time from the invoice
2. Edit the original time entry
3. Add the updated time back to the invoice

Conclusion

Adding billable time to invoices in QuickBooks Online is a straightforward process that can significantly streamline your billing workflow. By following the steps and best practices outlined in this guide, you can ensure accurate and timely billing for all your billable hours.

Remember to regularly review your time tracking and billing processes to identify areas for improvement. With practice, you'll develop a smooth and efficient system that keeps your cash flow healthy and your clients well-informed about the valuable time you're dedicating to their projects.

Citations: [1] https://www.dummies.com/article/technology/software/money-management-software/quickbooks/how-to-bill-for-time-in-quickbooks-2021-277688/ [2] https://quickbooks.intuit.com/learn-support/en-ca/sales-customers/how-do-i-add-time-activity-billable-time-sheet-to-existing/00/832496 [3] https://quickbooks.intuit.com/learn-support/en-us/help-article/invoicing/enter-billable-time-job-quickbooks-online/L7Rliz6dh_US_en_US [4] https://quickbooks.intuit.com/learn-support/en-us/help-article/manage-customers/create-invoice-billable-time-expenses/L7RYKgXJU_US_en_US [5] https://quickbooks.intuit.com/learn-support/en-us/employees-and-payroll/how-to-put-billable-time-on-an-invoice-if-using-quickbooks-time/00/1187303 [6] https://quickbooks.intuit.com/learn-support/en-us/other-questions/new-invoice-experience-summary-bills-and-linking-time/00/1359733