Time tracking raises questions for many entrepreneurs and teams. Is it mandatory? What counts towards the hour criterion? And how do you keep track of it easily? In this blog, we answer the 10 most frequently asked questions so that you can get started immediately — clear, practical, and comprehensive.
The key insights
- Time tracking is mandatory for employers
- Both direct and indirect hours count towards the hour criterion
- Good tracking prevents disputes and missed benefits
- Digital tools make tracking faster and error-free
- Poor time tracking costs time, money, and insight
1. What is time tracking and why is it important?
Time tracking is the systematic recording of the time you spend on various activities.
For self-employed professionals, this is important to demonstrate that they meet the hour criterion of 1,225 hours per year (for, among other things, the self-employment deduction). For employers, keeping track of hours worked is mandatory under the Working Hours Act.
In addition, good record-keeping provides insight into:
- productivity
- invoicing
- the workload of you and your team
2. Is time tracking mandatory?
For employers, it is mandatory to keep accurate records of hours under the Working Hours Act. This applies to all employees, including part-timers and agency workers. For self-employed professionals, it is not legally mandatory, but it is essential to demonstrate that they meet the hours criterion for tax benefits.
What you need to know:
- Employers are required to keep track of hours under the Working Hours Act
- Self-employed professionals are not required, but they *must* be able to prove their hours for tax benefits
- Proper record-keeping prevents disputes about hours with clients or employees
📚 Read all about the requirements of the Tax and Customs Administration for time registration.
3. What is the hours criterion for self-employed professionals?
The hours criterion means that, as a self-employed professional, you must spend at least 1,225 hours per calendar year on your business to qualify for tax benefits such as the self-employment deduction and the start-up deduction.
These hours include both:
- Direct work for clients
- Indirect activities such as administration, acquisition, and travel time.
Accurate timekeeping is necessary to demonstrate during an audit by the Tax and Customs Administration that you meet this criterion.
4. Which hours may I count towards the hours criterion?
For the hours criterion, you may count both direct and indirect hours:
- Direct hours: Time spent on activities for clients, such as carrying out assignments.
- Indirect hours: Time spent on administration, acquisition, networking, courses, travel time between clients, and other activities that contribute to your business.
Hours that do not count include vacation and sick leave hours. It is important to keep detailed time records in which you specify these activities.
5. How do I keep good time records?
Effective time tracking contains the following elements:
- Date and time: Note when you performed the work.
- Description of the activity: Indicate exactly what you did.
- Number of hours worked: Specify how much time you spent on the activity.
You can use Excel, apps, or specialized software for this. It is recommended to track your hours daily to ensure accuracy. Are you still working with Excel? Then check out the best Excel formulas for time tracking.
6. What methods are available for time tracking?
There are various methods to keep track of your hours:
- Manual recording: Use of paper forms or Excel sheets.
- Digital tools and apps: Software specifically designed for time tracking, often with extra features such as reporting and integration with other systems.
- Automated systems: Tools that automatically record time based on your activities, such as using a timer or integration with your calendar.
The choice depends on your personal preference and the complexity of your work.
📚 These are the best time tracking software choices of 2025.
7. How long do I have to keep my time records?
According to the Tax and Customs Administration, you must keep your time records for at least 7 years. This applies to both digital and paper records. It is important to keep your records accessible and legible during this period so that you can demonstrate compliance with tax obligations during an audit.
8. What are the benefits of good time tracking?
Accurate time tracking offers several benefits:
- Insight into time allocation: You can see how much time you spend on different activities.
- Better planning: You can plan and prioritize your work more efficiently.
- Accurate invoicing: You invoice accurately for the hours worked.
- Meeting tax obligations: You can demonstrate that you meet the hours criterion.
- Improved productivity: By gaining insight into how you spend your time, you can optimize your processes.
9. Can I link my time tracking to other systems?
Yes, most modern time tracking software can be easily linked to other business systems, such as:
- Invoicing systems: Quickly and easily create invoices based on recorded hours.
- Project management tools: Insight into progress and time spent per project.
These integrations ensure a more efficient workflow and reduce the risk of errors.
📚 Read more about the importance of integrations for your workflow.
10. What are the risks of poor time tracking?
Inadequate time tracking can lead to:
- Missed tax benefits: Insufficient proof for the hours criterion can result in missing out on tax deductions.
- Non-compliance penalties: Employers can face fines for failing to comply with the Working Hours Act.
- Inaccurate invoicing: Errors in time tracking can lead to over- or under-billing.
- Lack of insight: Without proper tracking, you miss the opportunity to optimize your business operations.
It is therefore essential to maintain reliable and accurate time tracking.
📚 Learn all about the most common time tracking mistakes.
Short summary
Good time tracking is indispensable for both freelancers and employers. It not only provides insight and efficiency but is also crucial for meeting tax and legal obligations. By using the right tools and methods, you can optimize your time tracking and improve your business operations.
👉 Want to keep your time tracking easy and error-free? Try TimeChimp free for 14 days.
