Are you keeping track of your time?
Home businesses need to track their time even more then brick and mortar businesses. It can make a big difference to the IRS at tax time. Do they see you as a business owner, or is this just a hobby? The difference can cost you a lot.
Whether you have been in business for a long time or you are just getting started you will need to spend a lot of time working on your business. Time tracking can be very helpful to you and you should start keeping track as soon as possible.
How Important is it to track your time spent on your online business?
If your just starting out you probably have a full time job to pay the bills until your business takes off and you are using every free second to work on your new passion, you haven’t even thought of tracking the time you are spending. It can get awful hectic and you can spend so much time working on one item that you forget about other important things you were going to do today. And you may forget where you were at on an important project and have to spend a lot of time going back to reviewing what you have completed and what you have left to do.
The same is true for established businesses, the daily work of running your business can get in the way of other needed tasks to grow your brand.
What is time tracking?
Time tracking is simply put writing down the time you spend doing a business related task. It can be as simple as writing down:
“2 hours updating the inventory order”
“1 hours reading about how to create an email list”
But it can also be a great way to enter the current stage of a project:
- “2 hours setting up my website. Now I need to choose a group of photos to use on the home page. I will do that over the next 2 days.”
- “1 hour creating an AdWords campaign, need to create keywords before starting the campaign.”
This can be a quick way to remind yourself where you left off on your larger tasks so you can pick up where you left off and avoid repeating a portion you have already completed.
How can time tracking help me and my business?
Keeping a time tracking list showing the name of the task, time you spend on it and the current status of the task can help keep on track and avoid repeating steps that will cost you valuable time.
It can also be used at tax time to show the IRS that you are in a real business and not just a hobby. As a business you can take advantage of a lot of deductions, as a hobby you get far fewer deductions and if you take the business deductions and the IRS decides your in a hobby you would have to pay back the deductions from previous returns. Keeping a record of the time you spend on your business can have many benefits for you.
Also time tracking can help you determine what you owe yourself for working on the business, once your business generates enough to start paying you.
Daily or Weekly
Your business may be very active and require a lot of your time making daily tracking difficult, but you can still track your time. A weekly task tracking list can be setup quickly at the beginning of each month and if the time is available on one or two days make a daily list for those days.
As you go along you will develop a pattern for your time tracking and will find it easier to keep up the entries.
How do I track my time?
The format you choose to track your time is up to you. It can be the latest online tracking software or as simple as writing it down on a free paper calendar.
I would recommend starting with the simplest way in the beginning. You don’t want to make “Deciding on a tracking tool” a task you need to track. The trick is to use something readily available and ease to use so you doesn’t become to hard to keep up.
I use Google Calendar to track my time. It’s free, it’s available to me on my phone or any computer that I can log into my Google account from.
Don’t stress if you miss an entry, you can go back and fill them in latter. It doesn’t have to be perfect, just enough to show you have been working towards a goal.