Earn money with time tracking

Your time-tracking records provide insight into how you spend your time. If you meet the hours criterion (urencriterium), you are eligible for a number of important tax benefits. How does this work exactly? How do you keep track of your hours without spending too much time on it? Read the top 5 questions and answers about time-tracking.

1. What are time-tracking records?

Time-tracking records (urenadministratie) offer a way of keeping track of the number of hours you spend on your business. Time tracking provides insight into how much time you spend on which business activities. You can keep track of this with a timesheet.

2. Why are time-tracking records important?

If you know how much time you spend on something, you can plan your work more realistically. It also helps you to better determine your cost price or hourly rate.

In addition to these advantages, time tracking also offers tax benefits, such as the  tax relief for new companies (startersaftrek) and the private business ownership allowance (zelfstandigenaftrek). You are allowed to deduct these from your profit. That means you pay less income tax, increasing your earnings. These tax schemes do not apply to bvs, by the way. In that case, you have to deal with corporation tax.

3. How does the hours criterion work?

To ensure that only 'real' entrepreneurs benefit from tax schemes, the Tax Administration has set the hours criterion. This criterion means that you have to spend at least 1,225 hours per calendar year on your business to be considered an entrepreneur for tax purposes.

You calculate the hours criterion per calendar year, so from January through December. The hours criterion is 1,225 hours even if you started later in the year. Are you unable to reach these 1,225 hours? Then you may apply private business ownership allowance and tax relief for new companies.

If you work a full calendar year, you need to work approximately 24 hours on your business per week to qualify for the hours criterion.

4. Which hours can I count?

You count every hour you spend on your business. If you are a full-time entrpreneur, you will have no trouble meeting the hours criterion. Part-time entrepreneurs do not always achieve the required number. 

Always register your direct and indirect hours separately. Each hour you charge your customers for is a direct hour. In your indirect hours, you work on preparation, new ideas, or acquiring new clients. Hours spent doing administration, building a website, and visiting clients are also indirect hours. 

5. How do I keep proper time-tracking records?

You start keeping records as soon as you have decided to start a business. You already register the hours you spend preparing the business, even if you are not yet registered with the Netherlands Chamber of Commerce KVK. Those hours count towards the hours criterion. And you may be able to deduct expenses from your income tax. 

Keeping track of your hours digitally is the most convenient method for most entrepreneurs. You can use an app, time-tracking software, or Excel.

App, software, or accounting programme

Some time-tracking apps are free. They usually offer fewer options than paid apps. For example, you cannot use them to send invoices, or you can only send watermarked invoices. Paid apps also allow you to add projects, save receipts, or keep a mileage registration. Time-tracking apps are often also part of an online accounting package. Time-tracking apps and online accounting packages are usually quite user-friendly, even if you have limited accounting knowledge.

Use comparison websites to find out which time-tracking app or software best suits your company. Some packages are more suitable for online shops, others for service providers. The price depends on how many functionalities the package offers, but you can expect a price of at least a few euros per month. 

Time-tracking in Excel

Of course, you can also keep track of your hours with a timesheet in Excel. You will find several free timesheet downloads online. On a timesheet, you register:

  • the date
  • customer/client
  • description of activity
  • direct or indirect hours
  • hourly rate
  • number of hours
  • turnover

Use one tab per month or quarter worked, depending on the size of your business. If you have many clients, a tab per month is probably clearer.