Timesheet software: benefits and what to look for

Published Wednesday 27 May 2026

Table of contents

• What is timesheet software?
• Types of timesheets: paper, spreadsheet, and software compared
• Common problems timesheet software solves
• The advantages of timesheet software
• What to look for in timesheet software
• How to choose timesheet software for your business
• How to set up timesheet software
• Make time tracking simple with Xero
• FAQs on timesheet software

Key takeaways

• Timesheet software with GPS (Global Positioning System) verification and mobile access eliminates time theft and manual data entry errors that can cost small businesses thousands in overpayments and compliance fines each year.
• Choosing timesheet software that integrates directly with your accounting and payroll systems automates data flow and reduces processing time from hours to minutes each pay period.
• Mobile-friendly timesheet solutions with real-time scheduling let you update rosters, send shift notifications, and process leave requests instantly, cutting down on administrative overhead.
• Project and client tracking capabilities help you bill clients with itemized hours and analyze labour costs by job, so you can improve pricing and spot workflow bottlenecks early.

What is timesheet software?

Timesheet software is a digital tool that tracks when your employees start and finish work, replacing manual methods with automated, cloud-based time recording. It sends hours directly to your payroll system, reducing errors and saving you time every pay period.

Most timesheet software runs in the cloud, so you can access it from any device. Employees clock in using their phone, tablet, or computer. The software captures exact start and end times, eliminating guesswork and manual data entry.

Beyond basic time tracking, many systems include features that simplify day-to-day workforce management.

• Scheduling tools: Create and share rosters with your team.
• GPS verification: Confirm employees are on-site when they clock in.
• Project tracking: Log hours against specific jobs or clients.
• Payroll integration: Send approved hours directly to your accounting software.

For small businesses, timesheet software turns a time-consuming admin task into an automated process that takes minutes instead of hours.

Types of timesheets: paper, spreadsheet, and software compared

Before choosing a timesheet solution, it helps to understand the three main approaches businesses use to track employee hours. Each has trade-offs around accuracy, cost, and the time you spend on admin.

Paper timesheets

Paper timesheets are the most basic method. Employees write down their start and end times on a printed form, and you or a manager collects the sheets at the end of each pay period. There's no upfront cost beyond printing, and the process is easy to understand.

The drawbacks add up quickly, though. Paper forms are easy to lose, hard to read, and difficult to verify. You rely entirely on trust to confirm whether an employee actually started at the time they wrote down. If you need a timesheet template to get started, a paper-based approach can work temporarily for very small teams.

For growing businesses, the manual effort of collecting, reading, and entering paper timesheets into payroll becomes a bottleneck that costs more time than it saves. If you're still on paper, a free timesheet calculator can help bridge the gap while you evaluate software options.

Spreadsheet timesheets

Spreadsheets are a step up from paper. You can build formulas to calculate total hours, overtime, and pay automatically. Sharing a spreadsheet file is easier than passing around paper forms, and you get a basic digital record.

However, spreadsheets still rely on employees entering their own hours honestly and accurately. Spreadsheets rely on manual entry only, without automated clock-in, GPS verification, or a direct connection to your payroll system. You still need to transfer the data manually.

Version control is another challenge. When multiple employees edit the same file, entries get overwritten or duplicated. As your team grows, a spreadsheet quickly becomes difficult to manage and prone to the same errors as paper.

Timesheet software

Timesheet software automates the entire process. Employees clock in and out from their phones or computers, and the software records exact times without manual input. Hours flow directly into your payroll and accounting systems.

Cloud-based timesheet software also adds features that paper and spreadsheets can't offer: GPS verification, real-time scheduling, project tracking, and automated notifications. These tools give you visibility into your workforce and eliminate the manual handoffs that cause errors.

The upfront cost is higher than paper or spreadsheets, but most small businesses find the time savings and accuracy improvements pay for themselves within the first few pay periods.

Common problems timesheet software solves

Manual time tracking creates headaches that cost you time and money. Paper timesheets and spreadsheets are error-prone, slow to process, and distract everyone from their actual work. Industry surveys suggest that 62% of Canadian workers admit to committing some form of time theft, suggesting the cost of manual tracking extends well beyond simple data entry errors.

Here are the five biggest problems businesses face before switching to timesheet software.

Manual schedules are hard to update and communicate

A paper schedule is accurate when you post it, but things change fast. When someone calls in sick, you're stuck ringing around to fill the shift. Your other employees have no idea a shift has opened up.

Paper schedules also confuse employees. They mix up dates or confuse their start times with someone else's. A central, real-time system helps teams communicate clearly and reduces no-shows caused by outdated information.

Paper timesheets lead to time theft and inaccurate hours

Paper timesheets rely on employees remembering and honestly recording their hours. In practice, this leads to guesswork and generous rounding: an extra five minutes here, ten minutes there.

These small amounts that employees overestimate add up. If five employees each round up by 15 minutes per day, you're paying for over six hours of work that didn't happen every week. Paper systems lack the ability to verify actual start and end times or address the behaviour.

Industry research shows that 34% of Canadian employees who track time admit to buddy punching, more than double the 16% rate in the United States. This makes time verification features especially relevant for Canadian businesses relying on manual systems.

Employees resist time-consuming paperwork

After a long shift, the last thing your team wants is to fill out forms. Time recording becomes an afterthought, and the data suffers.

When employees treat timesheets as a chore, they rush through them. Entries get missed, hours are estimated, and you end up with incomplete records. That sloppy data creates problems downstream when you're trying to run payroll or bill clients accurately.

Small errors create payroll disputes and compliance issues

Manual time tracking involves multiple handoffs. Employees write down their hours, then you or your payroll manager enter them into a database. Each step introduces risk, and for a non-incorporated employer, these errors can make you liable to a fine of up to $10,000 for a first offence.

A three looks like a five. A two looks like a seven. Keystroke errors happen during transcription. These small mistakes lead to incorrect pay, frustrated employees, and potential disputes.

When problems arise, tracing the source is difficult. You're left comparing paper records against database entries, trying to figure out where things went wrong. For compliance purposes, this lack of a clear audit trail can become a serious issue. Under the Canada Labour Code, employers must keep employment and payroll records for at least 36 months after employment ends.

Processing manual timesheets wastes valuable time

Chasing employees to submit their timesheets takes time. Entering those numbers into payroll takes more time. Handling data twice can consume hours every pay period.

That's time you could spend on your business, or money you're paying someone else to handle admin. Manual scheduling adds another layer of complexity, requiring you to juggle availability, shifts, and last-minute changes without proper tools.

The advantages of timesheet software

Timesheet software automates time tracking and gives you tools to manage your workforce more effectively. Instead of chasing paper forms and manually entering data, you get accurate records and can see in real time who's working and when.

Modern timesheet software uses your employees' mobile devices to streamline daily operations.

• Post and update rosters: Share schedules instantly and make changes on the fly.
• Enable mobile clock-in: Let employees start and end shifts from their phones.
• Handle leave requests: Process time-off requests without paperwork.

These cloud-based systems require no hardware installation and work on any device with internet access.

Real-time scheduling and shift management

Schedule changes happen instantly with timesheet software. You create rosters and send them directly to employees' phones. When you assign a job, they get a notification immediately.

If someone needs time off, they request it through the app. You approve or decline with a tap, then advertise the open shift to available team members. The process is streamlined, and everyone knows who's covering.

Accurate mobile time tracking with GPS verification

Employees clock in and out using their phones, and the software records the exact time automatically. Everything is paperless, precise, and recorded to the exact minute.

GPS stamping adds another layer of accuracy. The system logs where each employee is when they clock in, so you can verify they're actually on-site. This creates a reliable audit trail for payroll and helps prevent time theft before it starts.

Research from Nucleus Research estimates that time theft losses average 2.2% of gross payroll. For a business with $500,000 in annual payroll, that represents $11,000 in potential losses that GPS verification can help prevent.

Better communication and instant notifications

Timesheet software keeps everyone informed automatically. You don't need to chase people or make phone calls.

The system sends alerts for a range of situations.

• Overtime warnings: Notify employees when they're approaching overtime hours, which helps manage compliance with regulations like an employee's right to refuse overtime, which must be documented.
• Approval reminders: Alert managers when timesheets need review.
• Schedule updates: Inform the team instantly when you publish new rosters.
• Open shifts: Let available employees know when coverage is needed.

These real-time notifications help your team communicate clearly and stay aligned.

Track time by project, client, or job code

Timesheet software lets employees log hours against specific projects, clients, or job codes. This lets you see in detail where your labour costs are going.

For client billing, you can itemize invoices with exact hours worked. If a client queries a bill, you have the data to back it up.

For internal analysis, you can spot which jobs take longer than expected and identify workflow bottlenecks. This insight helps you price future work more accurately and improve team efficiency.

Seamless integration with payroll and accounting software

The right timesheet software connects directly to your payroll and accounting systems. Approved hours flow automatically into payroll, which calculates pay and tax without manual data entry.

Your accounting software updates in real time, showing you labour costs as they happen. You can see what you're spending on wages by day, week, or project.

This integration eliminates the need to handle data twice, which is what makes manual timesheets so time-consuming. What used to take hours now happens automatically in the background.

What to look for in timesheet software

Not all timesheet software offers the same features. Here's what to prioritize when evaluating your options.

Mobile accessibility and ease of use

Your team should be able to clock in from any device without training. Simple software encourages consistent use by employees. Look for apps that work on both iOS and Android with a clean, intuitive interface.

Integration with accounting and payroll

The best timesheet software connects directly to your existing systems. Look for solutions that sync with your accounting software to eliminate manual data entry and reduce errors during payroll processing.

GPS tracking and verification

For businesses with field workers or multiple locations, GPS stamping confirms employees are on-site when they clock in. This prevents time theft and creates reliable records for compliance and client billing.

Reporting and analytics

Good software shows you where your labour costs are going. Look for reports that break down hours by employee, project, client, or location so you can make informed decisions about staffing and pricing.

Scheduling and shift management

If you manage shifts, choose software that includes roster creation, shift swapping, and availability tracking in one platform. This keeps scheduling and time tracking connected, so changes update automatically.

Automated reminders and notifications

The software should alert employees about upcoming shifts, remind them to submit timesheets, and notify managers when approvals are needed. Automation reduces the time you spend chasing people for information. Consistent communication also supports employee retention by reducing daily friction for your team.

Cloud-based security and data backup

Cloud software keeps your data secure and backed up automatically. Your records stay safe even if a device breaks or gets lost, and you can access your data from anywhere.

How to choose timesheet software for your business

The right timesheet software depends on your business size, industry, and existing systems. Here's how to narrow down your options.

Consider your team size and structure. A sole trader tracking billable hours has different needs than a business managing shift workers across multiple locations. Make sure the software scales with your team.

Think about your industry requirements. Field service businesses need GPS tracking and mobile access. Retail and hospitality need shift scheduling. Professional services need project and client tracking for billing.

Check integration with your current software. If you already use accounting or payroll software, look for timesheet solutions that connect directly. This saves time and reduces errors from manual data transfer.

Evaluate free versus paid options. Free software works for basic tracking, but growing businesses typically need features like integrations, advanced reporting, and dedicated support that come with paid plans.

Assess the learning curve. The software only works if your team actually uses it. Look for intuitive interfaces and mobile apps that require minimal training.

Review support and training resources. When issues arise, you need help quickly. Check whether the provider offers onboarding support, help documents, and responsive customer service.

For small businesses that want timesheet software connected to their accounting, Xero's time tracking and integrated apps provide a complete solution.

How to set up timesheet software

Setting up timesheet software is straightforward and most cloud-based solutions are ready to use within a day. Here's a step-by-step guide to get your team tracking time quickly.

1. Choose your software and create an account

Start by selecting the timesheet software that fits your business needs and budget. Sign up for a free trial if one is available, so you can test the features before committing. During setup, enter your business details, time zone, and pay period schedule.

2. Configure your settings and pay rules

Set up your overtime rules, break policies, and any provincial employment standards that apply to your business. Canadian businesses should configure settings to reflect their province's requirements for hours of work, overtime thresholds, and mandatory breaks. If you're also setting up payroll for the first time, you can handle both configurations at the same time. Add your job codes, departments, or project categories if you plan to track time by client or job.

3. Add your employees and set permissions

Create a profile for each employee with their name, role, pay rate, and contact details. Assign permissions so managers can approve timesheets while employees can only view and submit their own. Most software lets you send email invitations so your team can set up their own accounts.

4. Connect your payroll and accounting software

Link your timesheet software to your existing payroll and accounting systems. If you use Xero, Xero Projects includes built-in time tracking for project-based billing, and third-party time-tracking apps in the Xero app marketplace connect directly to your accounting data. This integration means approved hours flow straight into pay calculations without manual entry.

5. Train your team and run a test pay period

Walk your team through the basics: how to clock in, submit timesheets, and request time off. Keep the training brief and focus on the mobile app, since that's what most employees will use daily. Run one pay period as a test, comparing the software's output against your existing records to catch any configuration issues early.

6. Go live and review your first results

Once your test period checks out, switch fully to the new system. Review your first real pay run closely to confirm hours, overtime, and deductions are calculating correctly. After the first month, check your reports to see how much time you've saved on admin and whether any settings need adjusting.

Make time tracking simple with Xero

Timesheet software works best when it connects to your accounting and payroll systems. Xero connects time tracking directly to your accounting data, so your hours and costs stay in sync.

Xero Projects integrates directly with your accounting software, so approved hours flow straight into payroll. You get accurate pay runs without manual data entry, and real-time visibility into your labour costs.

With time tracking apps that connect to Xero, you can simplify your entire workflow.

• Send schedules to employee phones: Post rosters and update them instantly.
• Track hours automatically: Employees clock in and out from any device.
• See labour costs in real time: Know exactly what you're spending on wages.
• Run payroll faster: Approved timesheets feed directly into pay calculations.

Ready to simplify time tracking? Try Xero and get one month free.

FAQs on timesheet software

Here are answers to frequently asked questions about timesheet software for your business.

How long does it take to set up timesheet software?

Most cloud-based timesheet software takes less than a day to set up. You create employee profiles, configure your settings, and your team can start clocking in immediately.

Can employees use timesheet software on their phones?

Yes. Modern timesheet software includes mobile apps that let employees clock in, view schedules, and request time off from their smartphones or tablets.

Does timesheet software integrate with accounting and payroll systems?

Many timesheet solutions integrate directly with accounting and payroll software, allowing approved hours to flow automatically into pay calculations without manual data entry.

Is timesheet software worth it for a business with only a few employees?

Yes. Even with a small team, timesheet software saves time on payroll processing and creates accurate records for compliance purposes.

How much does timesheet software cost?

Basic plans for small teams often start around $5 to $10 per user per month. More advanced solutions with GPS tracking, scheduling, and integrations typically range from $10 to $25 per user per month.

How do I get my employees to actually use timesheet software?

Choose software that's simple to use and works on mobile devices. Explain the benefits to your team, such as faster pay processing and easier leave requests, and provide brief training during rollout.