What is time registration?
Time recording means that you record all the hours you work on your business. You record what task you do, how long you work on it and when you made those hours. These can be direct hours for clients or indirect hours needed to keep your business running smoothly. You decide how you keep track of this as long as you can clearly show what you have done. The registration forms a tool to keep a grip on your work and helps you assess your efforts per month or year.
Why is time tracking important?
If you record your hours, you get a clear picture of your efforts and can plan better. You see how much time you spend on certain jobs and can adjust your rates and quotations accordingly. It is also useful towards clients because you can show what work you have done. Registration is important for the tax authorities because you have to be able to prove how many hours you spent on your business. This plays a role in tax benefits for entrepreneurs and determines whether you meet the conditions.
Is time registration mandatory?
You are not obliged to record your hours, but you must be able to substantiate them if you want to use entrepreneurial deductions. When audited, the tax authorities ask to see your efforts. Without registration, you cannot prove it.
Hours criterion for self-employed workers
The hours criterion means that you must spend a minimum of 1225 hours on your business per calendar year to be entitled to deductions for entrepreneurs. This number applies for the whole year and is not reduced if you start later. You must be able to show clearly that you have achieved these hours and that you are serious about working on your business. For entrepreneurs who work in salaried employment alongside their business, another factor is that they need to spend more time on the business than on their job. By recording your hours, you automatically build up this proof.
Which hours count?
You may count all hours in which you actively work on your business. These are direct and indirect hours that contribute to your business. Preparation hours before you start also count as long as they are focused on your business. Hours in which you are available without work do not count. The tax authorities will check whether you can make it plausible that you actually worked these hours.
Examples of hours that do and do not count
| Type of hours | Counting | Notes |
| Direct hours | Yes | Work for customers, billable |
| Indirect hours | Yes | Administration, travel time, marketing, quotations |
| Preparation hours | Yes | Work before registration with CoC |
| Standby without task | No | Just being available doesn't count |
| Private activities | No | No business activity |
How can you track your hours?
You can record your hours in several ways. Many self-employed people start with a spreadsheet in which they record their activities and hours per day. You can also use a diary in which you keep track of what you have done. Digital solutions are often more practical as they automatically create totals and provide an overview. Most importantly, your method should make it clear when you worked and what you did. So choose a solution that you can keep track of daily without much effort.
Apps for time recording
There are several apps to help you record your hours quickly and clearly. You choose whether you want a simple timer or an app with more features. Below are common options that work well for self-employed people.
MoneyMonk offers a free hour registration module. You register your time per task and immediately see how many hours you have made towards the hour criterion.
Toggl works with a simple timer that lets you start and stop your hours. You can see exactly how much time you spent on a task and create reports for your records.
- Timesheet (for Android)
Timesheet is an Android app that lets you record hours per project. The app shows overviews and graphs and offers export options for your administration.
The Hours App automatically clocks you in and out at set times. You set working hours and the app records the hours so you don't forget anything.
Time registration in MoneyMonk
MoneyMonk records your hours per task and gives an overview of your progress towards the hour criterion. The app works fast and is suitable for daily registration.
Time registration in Excel
Excel is a handy choice when you want to control the structure yourself. You note date, task and hours and have totals calculated automatically. This allows you to keep an overview per month or quarter and adjust the structure yourself.
What to register for the Inland Revenue
For the tax authorities, it is important that you can show how many hours you worked and on what. You therefore note down for each day the date, type of task, duration of work and for whom you made those hours. Underlying information such as appointments, mails and invoices must be consistent with your registration. You keep these records for at least seven years because they are part of your administration. The tax authorities will check whether your registration is logical and complete during an audit.
Common mistakes
Many self-employed people make mistakes when tracking hours. This happens especially when registration is not updated daily.
- Listing only billable hours while indirect hours also count
- Not including enough details so activities are not clear
- Late retrospective reconstruction of hours resulting in missing hours
- Preparation hours forgotten while counting
- Assume 1225 hours goes down at late start of year
- Overlooking the 50 per cent requirement when combined with salaried employment
