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?
There is no mandatory standard form for your hours. If you want to apply a deduction for which the hours criterion applies, you must be able to substantiate the time spent. A maintained timesheet with a diary, quotations, emails and invoices helps with this. An overview that only states global numbers afterwards is more difficult to substantiate.
Hours criterion for self-employed workers
Certain business deductions require you to meet the hours criterion: a minimum of 1,225 hours per calendar year to your business(es). Even if you start later in the year, this number is not reduced pro rata.
In addition, you generally spend more time on your business than on other work, such as employment. If you were not an entrepreneur in one of the five preceding years, that second requirement does not apply. The SME profit exemption does not have an hours criterion. You must also always meet the other conditions of the relevant scheme. See the conditions of the Netherlands Tax and Customs Administration.
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.
Fictional day example: You spend 2.5 hours on a client assignment and 45 minutes on quotations and administration. You log 2.5 direct and 0.75 indirect hours: a total of 3.25 hours. Only actually worked time counts; availability without tasks does not.
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
Choose a tool that you use consistently and from which you can export the data. Above all, compare how you describe tasks, correct timers, distinguish between direct and indirect hours, and keep evidence.
| Method | Practical benefit | Attention |
|---|---|---|
| Spreadsheet | Choose your own fields and summaries. | Fill in regularly and keep a backup. |
| Timer app | Start and stop for an activity. | Check for forgotten timers and breaks. |
| Timesheet module in accounting software | Log hours spent on clients and projects. | Check available features, export and package terms. |
An app does not automatically assess which time counts for tax purposes.
Time registration in MoneyMonk
Do you use MoneyMonk for your hours? Record for whom you work and what you do for each activity. Check in your own software package which time-tracking features and exports are available. Include indirect work and check corrections to timers; software totals on their own are not proof that you meet the hours criterion.
Time registration in Excel
Excel is a handy choice if you want to manage your own overview. For example, use our free Excel timesheet template. It contains 300 blank rows with date, activity, client or project, start and end time, break, calculated duration, direct or indirect hours, and a reference to evidence.
Complete one line per activity and record times as 09:00. Enter breaks in minutes, including 0 if you took no break. If you work past midnight, split the registration across two days. Check the calculated duration and keep your underlying appointments and documents. The template does not determine whether you are entitled to a deduction.
What to record for the Dutch Tax and Customs Administration
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
- Forgetting the requirement to spend more time on your business than on other work, or incorrectly applying the start-up exception to it
Even if you outsource your bookkeeping, you still keep track of your worked hours yourself. Your accountant cannot determine afterwards how long you spent on an assignment. Take a look what services our accounting package includes.
